Library filed under Energy Policy from Germany
German taxpayers could end up spending billions of euros to help close the country's nuclear plants as current funding plans involving utilities risk falling short, a report commissioned by the government and seen by Reuters showed on Friday.
The government is working towards a way to safeguard permanent electricity supply, with cash for loss-making plants at one end of the spectrum of possible solutions and letting markets decide with price spikes in low supply periods the other. Utilities argue the latter solution could cause more mass closures and leave the market under-invested too long.
RWE Innogy is slashing investment in renewable energies to €1 billion over the three years 2015-2017 ...RWE spent the same amount on renewables in 2014 alone. With parent company RWE weighed down by heavy debts, RWE Innogy continues to pursue the strategy it begun in 2014.
This is an error with ugly consequences. The energy revolution, as it is now applied, results in dirtier air. It ensures that Germany fails at its self-imposed climate goals. The energy revolution inadvertently promotes the use of dirty coal plants and destroys the relatively clean gas power plants. "In retrospect, it all makes sense," says Graichen.
The German coalition government is planning to withdraw from its 2020 climate change goals. Notwithstanding public protest, Federal Economics Minister Sigmar Gabriel (SPD) has abandoned the requirement of cutting 40 percent of CO2 emissions compared to 1990 levels by 2020.
Germany as a whole was a huge country which was doing very well, especially in the auto sector, said Henri Proglio, EDF’s chairman and chief executive. “But when it comes to energy they are in a disaster,” he told reporters in London. “The two major companies, Eon and RWE are under huge pressure. One is more or less dead, the other is in a very difficult situation.”
France's economy may be doing badly but Germany's energy sector is a "disaster", the head of French state-owned energy company EDF has said. Henri Proglio, EDF chief executive, acknowledged his country was "in a poor situation" and "under pressure".
Ordinary Germans foot the bill for these market distortions, having ponied up an estimated €100 billion ($129 billion) extra on their electricity bills since 2000 to fund the renewable drive. The government estimates this revolution could cost a total of €1 trillion by 2040.
In reality, economists and some government officials acknowledge, there are deeper reasons for the recent downturn. ...They start at home, where Chancellor Angela Merkel's abrupt exit from nuclear energy after the Fukushima disaster in Japan and aggressive push into renewables has unnerved German industry. A recent overhaul of the country's complex renewable energy law has done little to alleviate uncertainty over future policy or assuage fears about German energy competitiveness.
This important paper prepared for the benefit of the Edison Electric Institute (EEI) and Finadvice’s European clients examine the risks and failures of Germany's national plan to rely on renewable energy. Portions of the executive summary and conclusions are provided below. The full paper can be accessed by clicking the links on this page.
The European Union’s attempt to cap greenhouse-gas emissions over the next 16 years is threatened again as rising pollution from the bloc’s biggest economies shows even developed nations want to burn cheap coal.
While Germany continues to expand solar and wind power, the government’s decision to phase out nuclear energy means it must now rely heavily on the dirtiest form of coal, lignite, to generate electricity. The result is that after two decades of progress, the country’s CO2 emissions are rising.
Germany's decision to phase out of nuclear power after the 2011 Fukushima nuclear disaster in Japan has also made it a significant buyer of U.S. coal, mostly because the commodity is so inexpensive. "Before the financial crisis, Europe was happy to favor the environment, but when the economy started not doing well, they weren't quite ready to accept the high power price."
A vision for a greener future for the world seems very distant if you descend into the heart of one of Germany's largest coal mines. While researchers and officials are in Berlin preparing the next report from the UN's Intergovernmental Panel on Climate Change, the country's fossil fuel industry is as busy as ever.
Less than three years after Berlin embraced its new energy policy, a shifting global energy landscape is causing a rethink of the Energiewende inside and outside Germany. Foreign leaders, and plenty of pundits, blame the Energiewende for Europe's inability to answer Russia's invasion of Ukraine. Utilities, meanwhile, are bleeding money, slashing investments, and shutting down power plants.
The Greens' biggest triumph came with Germany's adoption of its Energiewende, the transition to renewable energy. The policy is a long-term bonanza for Gazprom. It means that Germany will buy more and more Russian gas because it cannot depend on electricity from unreliable wind and solar to power its industries and keep the lights on.
Electricity prices in Germany are already among the highest in the world. The price of industrial electricity has risen about 37 percent since 2005, according to the Federation of German Industries. The price in the United States has fallen by 4 percent over about the same time. The rise in energy prices has already cost Germany $52 billion in net exports and could prove even more damaging if steps are not taken to keep prices in check.
Germany is an example of how not to do green energy. Instead the solution is to research and develop better green energy technology. A study by some of the world’s top climate economists including three Nobel Laureates for the Copenhagen Consensus Center shows that subsidising existing renewables does so little good that for every euro spent, 97 cents are wasted. However, every euro spent on green innovation could avoid €11 in long-term damages from global warming.
Germans pay the highest electricity prices in Europe. Residential electricity prices, including taxes, are 60% higher in Berlin than in London, and are 40% above the euro-zone average. Germany’s energy minister, Sigmar Gabriel, recently estimated that the push to renewables is costing Germans €24 billion euros per year in higher bills. Were this to continue, Germany risked facing a “dramatic deindustrialization,” he said.
But in 2011, in the wake of the disaster at Japan's Fukushima Daiichi plant, the German government reversed course and put the nuclear plants back on the chopping block. That will leave a hole in the country's energy supply that renewables can't quickly fill, meaning fossil fuels will continue to be part of the German energy mix for a while longer. Since coal is the most greenhouse-gas-intensive fuel, coal's comeback could set back Germany's efforts to combat climate change.