Overview of the windfall tax acts in Germany and its European neighbors
Due to the high electricity prices, windfall tax laws have been enacted in all EU member states that skim off surplus revenues from the sale of electricity. As a rule, only electricity producers are affected by this regulation (with the exception of Poland). The windfall tax laws stipulate that electricity producers may keep part of the market revenues generated as "legally permitted revenue". Any revenue more than this (surplus revenues) must be surrendered. Many member states have decided to deduct not 100 % but 90 % of the surplus revenues in order to leave plant operators an economic incentive.
Table of Contents
- Windfall tax acts in Germany, Austria, Poland, France, Belgium and the Netherlands
- “Abschöpfungsbetrag” in Germany
- “Energiekrisenbeitrag-Strom” in Austria
- "Odpis na Fundusz" in Poland
- “Inframarginale elektriciteitsheffing” in the Netherlands
- "La rente inframarginale" in France
- “Overwinst heffing” in Belgium
Windfall tax acts in Germany, Austria, Poland, France, Belgium and the Netherlands
This article points out how Germany, Austria, Poland, France, Belgium and the Netherlands, where Next Kraftwerke is active, have implemented the requirements of the EU-Regulation and which country-specific differences exist. Please note that the term “windfall tax” is not to be understood in the literal sense. While some member states implemented a tax others decided to implement other types of levy. First, you will find a brief overview in which the essential regulatory content is presented. Then you will find summaries of the windfall tax laws for the individual countries, which go into more detail. Please note that the summaries are only intended to give you a first impression of which regulations apply.
Figure 1: Mechanism of the windfall tax acts based on EU regulation (EU) 2022/1854
| Germany | Austria | Poland | Netherlands | France | Belgium | |
| Debtor | electricity producers | electricity producers | electricity generators, energy trading companies | electricity producers | electricity producers | electricity producers |
| Tax | other levy | yes | other levy | yes | yes | yes |
| 1 MW limit | yes | yes | yes | yes | yes | yes |
| Market revenue cap | technology specific price cap | 140 €/MWh | technology specific market revenue cap | 130 €/MWh, 285 €/MWh (biomass fuels) | technology specific price cap | 130 €/MWh, 180 €/MWh (biomass, biogas, waste) |
| Skimming extend | 90 % | 90 % | 100 % | 90 % | 90 % | 100 % |
| Levy period | 01.12.2022 - 30.06.2023 (max. 30.04.2024) | 01.12.2022 - 31.12.2023 | 01.12.2022 - 31.12.2023 | 01.12.2022 - 30.06.2023 | 01.07.2022 - 31.12.2023 | 01.08.2022 - 30.06.2023 |
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“Abschöpfungsbetrag” in Germany
In Germany, electricity producers must pay a levy (“Abschöpfungsbetrag”) to the grid operator to whose grid the power plant is connected. The “Abschöpfungsbetrag” is therefore not a tax. In deviation from the EU requirements, Germany has opted for a technology-specific revenue cap without any reference to a fixed electricity price level. Surplus revenues are determined based on hypothetical revenues and costs, with a safety margin added to the reference costs. Only in the case of PPAs (concluded before 01.11.2022) can the actual revenue situation, rather than the hypothetical one, be considered when determining the surplus revenues.
Figure 2: German windfall tax “Abschöpfungsbetrag”
To whom does the windfall tax act apply?
The price cap applies only to electricity producers. Energy trading companies are not affected.
How does the German windfall tax act work in principle?
Electricity producers must pay the levy (“Abschöpfungsbetrag”) for each contribution period to the grid operator to whose grid the power plant is directly connected. In the contribution period a monthly surplus revenue („Überschusserlös”) is calculated. 90 % of the monthly surplus revenues are the “Abschöpfungsbetrag” and are skimmed off.
- 1st contribution period: 01.12.2022-31.03.2023 — “Abschöpfungsbetrag” must be paid by 15.08.2023
- 2nd contribution period: 01.04.2023-30.06.2023 — “Abschöpfungsbetrag” must be paid by 15.11.2023
Which energy sources are affected by the levy?
The price cap applies not to power plants that convert light heating oil, liquefied petroleum gas, natural gas, biomethane, hard coal, blast furnace gas, coke oven gas or special gases from production processes in the chemical industry and the carbon black industry into electricity. All other energy sources are affected.
Does the 1 MW limit apply?
Yes. The obligation to pay the levy does not apply to power plants with an installed capacity of up to 1 MW (note: For biogas plants, the rated capacity and not the installed capacity is decisive).
How high is the price cap on market revenues?
There are technology-specific revenue caps. The revenue cap for EEG-power plants is made up of the following two components:
“anzulegender Wert” plus safety margin (in principle the safety margin is 3 ct/kWh, but there exist technology specific safety margins for wind, solar, biogas and reclaimed wood).
To what extent are surplus revenues skimmed off?
90 % of the monthly surplus revenues are skimmed off.
How is the surplus revenue calculated?
The surplus revenues are calculated monthly. There are two options for the calculation of surplus revenues:
standard calculation method
SP = MR – LPR
- SP (€) = surplus revenue
- MR (€) = market revenue calculated based on hypothetical spot market revenues (in case of wind/solar the market revenue is calculated on basis of the “Monatsmarktwert”)
- LPR (€) = legally permitted revenue (electricity quantity multiplied with the technology-specific revenue cap)
PPA calculation method (electricity producers can only choose this calculation method if the PPA was concluded before 01.11.2022)
SP(PPA) = MR(PPA) – LPR(PPA)
- SP(PPA) = surplus revenue
- MR(PPA) = market revenue calculated based on the revenues from the PPA
- LPR(PPA) = legally permitted revenue (electricity quantity multiplied with the technology-specific revenue cap; the safety margin is usually lower than with the standard calculation method)
How long will the regulation apply?
01.12.2022-30.06.2023 (extension until 30.04.2024 possible)
“Energiekrisenbeitrag-Strom” in Austria
In Austria the electricity producers are obliged to pay the so called “Energiekrisenbeitrag-Strom” (EKB-S) to the responsible tax office. Austria has thus opted for a tax law implementation of the EU requirements. A special feature of the Austrian windfall tax law is that plant operators of renewable energy plants are favoured. If an electricity producer has invested in renewable energy or energy efficiency, these costs can be considered when calculating the EKB-S.
Figure 3: Austrian windfall tax “Energiekrisenbeitrag-Strom”
To whom does the windfall tax act apply?
The price cap applies only to electricity producers. Energy trading companies are not affected.
How does the Austrian windfall tax act work in principle?
Electricity producers must pay the “Energiekrisenbeitrag-Strom” (EKB-S) for each contribution period to the responsible tax office. In the contribution period a monthly surplus revenue („Überschusserlös”) is calculated. 90 % of the monthly surplus revenues are the EKB-S and are skimmed off.
If an electricity producer has invested in renewable energy or energy efficiency, these costs can be considered as an "Absetzbetrag" when calculating the EKB-S.
- 1st contribution period: 01.12.2022-30.06.2023 (EKB-S must be paid by 30.09.2023)
- 2nd contribution period: 01.07.2023-31.12.2023 (EKB-S must be paid by 31.03.2024)
Which energy sources are affected by the levy?
Wind energy, solar Energy, geothermal energy, hydropower, waste, lignite, hard coal, petroleum products, peat and biomass fuels (except biomethane) are affected by the Austrian windfall tax law.
Does the 1 MW limit apply?
Yes. Operators of power plants with up to 1 MW installed capacity are not affected.
How high is the price cap on market revenues?
The price cap on market revenues in Austria is 140 €/MWh.
To what extent are surplus revenues skimmed off?
90 % of the monthly surplus revenues are skimmed off.
How is the surplus revenue calculated?
The surplus revenues are calculated monthly. A surplus revenue exists when there is a positive difference between the market revenue and the legally permitted revenue.
SP = MR – LPR
- SP (€) = surplus revenue
- MR (€) = the realised market revenue received by a contributory obligor for the sale and supply of electricity in the Union; hedges are considered
- LPR (€) = 140 €/MWh * electricity quantity
How long will the regulation apply?
01.12.2022-31.12.2023
"Odpis na Fundusz" in Poland
In Poland electricity producers and energy trading companies are a subject of the Price Cap law. Both groups must deduct their ‘excessive’ profits in a form of a tax that is called "Odpis na Fundusz" (Contribution to a Fund). The electricity producers have obtained technology specific price caps, defined by the law. The trading companies have obtained margin caps (1 %, 1,5 %, 3 % or 3,5 %), they depend on what the purchaser does with the obtained energy and how the purchase is taking place. The deduction is calculated on basis of 10 days and must be paid monthly.
Figure 4: The Polish windfall tax "Odpis na Fundusz"
To whom does the windfall tax act apply?
Electricity generators and energy trading companies.
How does the Polish windfall tax act work in principle?
Electricity generators:
Generators obtain an individual price cap, but they can sell to any offtaker at a price that can be set freely. Any revenue above the price cap must be reported and contributed the Fund.
Example: Energy generator has a cap at 355 zł/MWh. They can sell energy for 1000, 600, 550, etc. The difference between the selling price and the cap must be contributed to the Fund.
Energy trading companies:
Trading companies' margin on trading is capped. Trading companies can buy energy at a cost that is currently available, but the difference between these costs and the price of further resale (the margin) is capped.
In the wholesale market, the margin is capped at 1.5 % for transactions on a commodity exchange, an organized trading platform or as part of a single market coupling by designated operators (NEMO), and at 1 % for other transactions.
When selling on the wholesale market (to non-final offtakers) the allowed margin cannot exceed 1 % (OTC) and 1.5 % (regulated DAM/IDM).
If a trading company sells energy for a higher price, the difference between the 'allowed price' and the resale price must be contributed to the Compensation Fund.
Which energy sources are affected by the levy?
Wind energy (exception: participant of the auction system), solar energy (exception: participant of the auction system), geothermal energy, hydro energy (exception: participant of the auction system), biomass and biofluids, waste, lignite, liquid fuels, hard coal and gas fuels (excluding biogas and agricultural biogas) are affected by the Polish windfall tax law.
Does the 1 MW limit apply?
Yes. Electricity generators of power plants with up to 1 MW installed capacity are not affected on condition that an SPV may not have more than 3 MW in the portfolio, e.g.:
- A company with 3 installations, 1 MW each will not have a price cap
- A company with 4 installations or more, 1 MW each will have a price cap
How high is the price cap on market revenues?
Electricity producers
Technology-specific market revenue cap:
- PV: 355 PLN/MWh (75,68 EUR/MWh)
- Wind: 295 PLN/MWh (62,89 EUR/MWh)
Trading Companies
The volume-weighted average of the market price of electricity purchased on a given day by energy trading company * the margin defined as either 1 %, 1,5 %, 3 % or 3,5 %
To what extent are surplus revenues skimmed off?
100 % of the monthly surplus revenues are skimmed off.
How is the surplus revenue calculated?
Energy generators
Windfall tax is referred to as the "Contribution for the Fund" It is calculated as:
OFd=Wd*(XCRd-XcLd)
- OFd = the contribution to the Fund on a given day,
- Wd = volume of electricity sales on a given day,
- XCRd = the volume-weighted average market price of electricity sold on a given day for the obligated entity,
- XCLd = volume-weighted average cap price of sold electricity on a given day for the entity
Energy trading companies
- Commodity Exchange:
Contribution to the Compensation Fund = volume of energy sold*[(Sell price) – (volume-weighted average purchase price * 1,015)]" - Other customers (not end-user):
Contribution to the Compensation Fund = volume of energy sold*[(Sell price) – (volume-weighted average purchase price * 1,01)]"
How long does the rules apply?
01.12.2022-31.12.2023
“Inframarginale elektriciteitsheffing” in the Netherlands
In the Netherlands electricity producers must pay a tax, the so called “inframarginale elektriciteitsheffing”. The Dutch law has not yet entered into force.
Figure 5: The Dutch windfall tax “Inframarginale elektriciteitsheffing”
To whom does the windfall tax act apply?
The price cap applies only to electricity producers.
How does the Dutch windfall tax act work in principle?
Electricity producers must pay the “inframarginale elektriciteitsheffing” at the end of the taxable period (01.12.2022-30.06.2023) as a tax. In the taxable period a monthly surplus revenue („belastbare marktinkomsten”) is calculated.
Which energy sources are affected by the levy?
Inframarginal energy sources (e.g. wind, solar, hydropower, solid biomass, biogas, waste and nuclear energy) and coal are affected by the levy.
Does the 1 MW limit apply?
Yes.
How high is the price cap on market revenues?
The price cap on market revenues in the Netherlands is 130 €/MWh. For biomass fuels, the income cap will be at 285 €/MWh.
To what extent are surplus revenues skimmed off?
90 % of the monthly surplus revenues are the “inframarginale elektriciteitsheffing” and are skimmed off.
How is the surplus revenue calculated?
The surplus revenues (“belastbare marktinkomsten”) are calculated monthly. The calculation is made according to the following formula:
BM = HO x (TM-VB)
- BM (€) = surplus revenue
- HO (MWh) = amount of electricity generated and fed into the grid (MWh)
- TM (€/MWh) = market revenues (revenues from agreements to sell electricity on the Dutch electricity market, whereby negative revenues from agreements to purchase electricity on the Dutch electricity markets are also taken into account; hedges are taken into account)
- VB (€/MWh) = legally permitted revenues
How long will the regulation apply?
01.12.2022-30.06.2023
"La rente inframarginale" in France
In France electricity producers must pay a tax (“la rente inframarginale”). The French law has special levy periods from 01.07.2022 to 31.12.2023.
Figure 6: The French windfall tax "La rente inframarginale"
To whom does the windfall tax act apply?
The French windfall tax act apply to electricity producers.
How does the French windfall tax act work in principle?
The "rente inframarginale" is a tax that must be paid by electricity producers. There are three taxation periods:
- 01.07.2022-30.11.2022
- 01.12.2022-30.06.2023
- 01.07.2023-31.12.2023
Which energy sources are affected by the levy?
The law does not apply to natural gas coal gases, water gases, lean gases and similar gases, other than petroleum gases and other gaseous hydrocarbons, coal and solid fuels derived from coal and coke and semi-coke of coal, lignite or peat retort coal. All installation benefiting from a CfD scheme (Contract for Difference, which is a subsidy from EDF OA/CRE) are not impacted by this tax.
Does the 1 MW limit apply?
Yes.
How high is the price cap on market revenues?
There are technology-specific revenue caps.
- Wind energy: 100 €/MWh
- Solar: 100 €/MWh
- Biomass: 130 €/MWh
- Biogas: 175 €/MWh
To what extent are surplus revenues skimmed off?
90 % of the monthly surplus revenues are skimmed off.
How is the surplus revenue calculated?
SP = MR – LPR
- SP = surplus revenue
- MR = market revenue
- LPR = legally permitted revenue (price cap * electricity quantity produced during the applicable time period)
How long will the regulation apply?
01.07.2022-31.12.2023
“Overwinst heffing” in Belgium
In Belgium electricity producers must pay a tax on their market revenues (“overwinst heffing”). The Belgian windfall tax law is comparatively strict, as on the one hand there is a fairly low price cap and on the other hand 100% of the surplus revenue is skimmed off.
Figure 7: The Belgian windfall tax law “Overwinst heffing”
To whom does the windfall tax act apply?
The Belgium windfall tax act apply to electricity producers. Other persons mentioned in § 2 (e.g. owners of nuclear power plants).
How does the Dutch windfall tax act work in principle?
Electricity producers must pay 100 % of market revenues above the price cap for the period 01.08.2022 to 30.06.2023. The so called “overwinst heffing” is a tax.
Which energy sources are affected by the levy?
Wind energy, solar energy (solar thermal and solar photovoltaic), geothermal energy; hydropower without reservoir, biomass fuel (solid or gaseous biomass fuels; excluding biomethane), waste, nuclear energy, lignite, crude petroleum products and peat are affected by the Belgian windfall tax act.
Does the 1 MW limit apply?
Yes.
How high is the price cap on market revenues?
The price cap is 130 €/MWh. There exist two exceptions of this price cap:
- Power plant with a variable production aid: LCOE + 50 € (but at least 130 €/MWh and maximum 180 €/MWh)
- Biomass, biogas, waste: 180 €/MWh
To what extent are surplus revenues skimmed off?
100 % of the monthly surplus revenues are skimmed off.
How is the surplus revenue calculated?
SR = MR – LPR
- SR = surplus revenue
- MR = market revenue
- Received income for each transaction in exchange for the sale and supply of electricity, regardless of the contractual form in which that exchange takes place, including power purchase agreements and other transactions to hedge fluctuations in the wholesale electricity market (excluding any aid or subsidy granted by a public authority)
- The calculation method depends on the technology where first a certain market revenue is legally presumed and in a second step the plant operator has the possibility to prove that the actual market revenue differs from the legally presumed revenue
- LPR = legally permitted revenue (price cap multiplied by the amount of sold and delivered electricity)
How long will the regulation apply?
01.08.2022-30.06.2023
Disclaimer: Next Kraftwerke does not take any responsibility for the completeness, accuracy and actuality of the information provided. This article is for information purposes only and does not replace individual legal advice.
