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Germany's energy drive criticised over expense, risks

* Federal audit office report not yet published

* German ‘Energiewende’ transition among Europe’s most ambitious

* Household electricity bills highest in Europe

* Warns of supply shortfall risk after reactors switched off

* Network needs an estimated 85 bln euros by 2030

FRANKFURT, March 30 (Reuters) - Germany’s energy transition has proved too costly and underestimated the risks to supply, a federal audit office report seen by Reuters has found.

Reforms are needed to state taxes and fees to fix a system that has left Germany with Europe’s highest retail electricity prices and at risk of grid blackouts, the as-yet unpublished report said.

Chancellor Angela Merkel’s decision to abandon nuclear power by 2022 following Japan’s Fukushima nuclear disaster in 2011 has forced the sector to radically restructure.

The audit office’s report is a warning about the state of that transition and comes as Germans prepare to go to the polls in September.

Economy minister Peter Altmaier likes to underscore Germany’s role in moving to green energy under his stewardship.

“There is a risk of losing Germany’s competitiveness and acceptance of the energy transition,” the report said.

Germany’s energy-intensive industries, including the likes of steelmaker Thyssenkrupp and chemicals firm BASF , enjoy partial exemptions from some of the costs of supporting the rollout of wind and solar power.

However, more than 50% of householders’ power bills are made up of taxes and fees, most of which support the transition away from coal, gas and nuclear power.

This makes them 43% more expensive than the average of those across the 27-nation European Union.

SHORTAGE RISK

The audit office also warned of a looming energy supply shortfall as utilities prepare to turn off the last of their nuclear reactors and the government spurs a pullout from coal.

There is likely be a shortfall of 4.5 gigawatts (GW), equivalent to 10 large coal-to-power generation plants, on the power grid between 2022 and 2025, the audit office report said.

The report said the economy ministry’s approach has been “too optimistic and (its assumptions) partly implausible” and had tip-toed around addressing the worst-case scenarios, a view echoed by grid operators.

The government strategy calls for improving cross-border flows to spread localised and temporary supply risks, but its neighbours are doing the same.

Network investment is estimated to reach 85 billion euros ($99.77 billion) by 2030 refinanced via grid fees paid by the public.

The government strategy calls for improving cross-border flows to spread localised and temporary supply risks, but its neighbours are doing the same.

By certified international standards, Germany’s current network disruptions are minimal.

Network investment is estimated to reach 85 billion euros ($99.77 billion) by 2030 refinanced via grid fees paid by the public.

A spokeswoman said the economy ministry had contributed to the audit office report and was studying the final version.

$1 = 0.8519 euros Reporting by Markus Wacket, writing by Vera Eckert, editing by Jason Neely

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