Library filed under Taxes & Subsidies from Germany
Germany's economy minister wants to cut the support price paid for electricity from solar and wind power generators by about a third by 2015 ...Europe's biggest economy is in the throes of shifting away from nuclear and fossil fuel-powered generation to so-called renewable sources, but the move has sent electricity costs for consumers soaring.
Hundreds of German companies have been largely exempt from a surcharge on electricity bills used to promote renewable energy sources such as solar and wind, which other consumers pay.
Before Germany’s big shift to renewable energy, electricity for industry was produced where it was needed; near the manufacturing heartlands of the Ruhr and greater Stuttgart. But now that nuclear reactors are being switched off, and renewables are taking priority over energy generated from fossil fuels, the country’s energy is being generated a long way from its heavy industry.
Angela Merkel, the German chancellor, has declared that reforming Germany’s transition to renewable energy is a key priority of the incoming government. “Above all we must curb the explosion in costs of renewable energy subsidies. One of the first major projects of the new federal government will be an amendment to the renewable energy legislation,” Ms Merkel said in her weekly podcast.
BASF (BASFn.DE) chief executive Kurt Bock said German jobs could be lost if the chemicals giant has to start paying electricity grid fees to shift the burden of funding a renewable energy infrastructure to large companies. "If politicians burden us with such a fee, then there is a danger that production will be transferred somewhere else."
A leading Social Democrat warned on Wednesday that the European Union planned to investigate German renewable energy discounts for industry, a move that could end up hitting a raft of companies operating in Europe's biggest economy.
Before the Obama Administration marches America to renewable-energy nirvana, it may want to inspect what success looks like in Europe. The Continent is much closer than the U.S. to realizing its dream of replacing carbon energy sources with wind and solar, and the dream is starting to look like a nightmare.
Consumers are less willing to foot the whole bill for policies to mitigate global warming. The shift in the debate is most conspicuous in Germany, where the Energiewende – Chancellor Angela Merkel’s historic drive wind and solar – has left German consumers with among the highest prices for electricity in Europe. The German environment ministry says the total cost of the Energiewende could reach about €1tn.
The German chancellor's experiment to wean Europe's biggest economy off nuclear and fossil fuels and push it into renewables is at risk because generous subsidies have proved so popular with investors in green power that the country is straining under the cost. ...The offshore wind industry, in particular, is clamouring for continued support as its expansion has proven more costly than expected.
Last year, wind, solar and other nonfossil-fuel sources provided 22 percent of the power for Germany, but the country increased its carbon emissions over 2011 as oil- and coal-burning power plants had to close gaps in the evolving system ...Germany's power grid has been strained by new wind and solar projects on land, compelling the government to invest up to $27 billion over the next decade to build roughly 1,700 miles of high-capacity power lines and to upgrade lines.
Generous state incentives for solar, wind and biogas have driven up prices, which are now among Europe's highest and set to rise 20 percent more next year, topping 1,000 euros annually for the average three-person household. ...But Steinbrueck charged that "the management of this energy transition is a disaster ... it is the biggest brake on investment we have."
It is only gradually becoming apparent how the renewable energy subsidies redistribute money from the poor to the more affluent, like when someone living in small rental apartment subsidizes a homeowner's roof-mounted solar panels through his electricity bill. The SPD, which sees itself as the party of the working class, long ignored this regressive aspect of the system.
At least one green energy developer recognizes that these stimulus subsidy programs have a record of doing more harm than good, and he isn't reluctant to say why. Patrick Jenevein, CEO of the Dallas-based Tang Energy Group, posted a Wall Street Journal article arguing that "the sequester offers Washington a rare opportunity to roll back misguided subsidies and maybe help reverse wind power's stalling momentum."
Under the law, German electricity users pay a charge that goes towards funding renewable energy generation. Competition Commissioner Joaquin Almunia believes that exemptions granted to some energy-intensive German companies from those charges run counter to EU law. The Commission plans to launch proceedings and also require companies to repay the charges they were exempted from in the past.
Solar energy is notoriously unreliable as a power source and Germany has seen its market hobbled by oversupply and ferocious competition from players such as China. Merkel, campaigning for a third term, has promised an overhaul of subsidies for renewable energy after the September general election ...Berlin "has so far invested 216 billion euros ($A308.24 billion) in renewables
Germany's plans to pioneer green energy seem to be suffering a setback. The government's push to expand renewable power sources is being bankrolled by the taxpayer. RT's Peter Oliver reports, many are questioning whether that money is being wisely spent. Duration: 3 minutes 13 seconds
Because producers of renewables are paid a fixed price, their subsidy rises as the spot price of electricity falls. On cloudy days Germany relies ever more on brown coal. ...The cost of this mess is passed on to electricity users. Household fuel bills have gone up by a quarter over the past three years ...because the contracts guaranteeing renewables prices are set for 20 years, the problem will get worse as more supplies come on stream.
Merkel's policy to wean Europe's biggest power market off fossil fuels and to embrace renewables has led to a boom in green energy sources, but ballooning costs have led to calls for cuts to feed-in tariffs and for industry to pay more. "Dealing with the renewable energy reform is the most urgent of the energy topics, in my view."
The costs of start-up financing for green energy and the compensation for expansion of the power grid are added to customers' electricity bills in the form of a special tax. The entire subsidy system is supposed to come to an end when green energy becomes competitive. That, at least, is the theory. But the reality is different. No longer can one simply describe the tax as a way to get renewable energies off the ground. Indeed, following Berlin's decision two years ago to shelve nuclear energy and accelerate the expansion of renewables, the EEG has become a giant redistribution machine.
Shortly after a blade came loose at the Ocotillo Express Wind facility in Imperial County earlier this month, facility operator Pattern Energy deftly handed the matter off to turbine builder Siemens Energy. With a muted press statement issued Friday, it looks as though Siemens is now trying to pass the buck as well.