Library filed under Taxes & Subsidies from Germany
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.
Merkel's main opponent in the election, Peer Steinbrueck of the Social Democratic Party, is capitalizing on discontent with the energy switch. In December, he said at an SPD summit that Germans now live in fear of power outages because of government missteps. One month later, the SPD beat Merkel's CDU in a vote in Lower Saxony -- the third straight regional defeat for the incumbent party and a sign that its lead in the national election may be eroding.
With consumer power bills increasing and Merkel facing elections in September, Germany's energy policy is rising on the political agenda. The cost of developing wind farms in the North Sea has surged following construction glitches and delays in linking turbines to the grid. "The entire energy switch has derailed," Marc Nettelbeck, an analyst at DZ Bank AG, said this week by phone from Frankfurt. "The difficulties connecting offshore wind farms to the power grid reduces their profitability and renders the original investment calculations of utilities invalid."
Bayerische Motoren Werke AG will harness winds whipping across eastern Germany to secure power -- and defend profits -- as costs rise due to Germany's 550 billion-euro ($740 billion) shift away from nuclear energy.
A joint proposal to cut the costs of increasing Germany's renewable energy capacity has been presented by the federal economy and environment ministers. If the measures are implemented, renewable energy association BEE fears a massive market collapse for investment in renewables.
With Spain in the grips of recession, the government wants to lower consumers' light bills. In Germany, Chancellor Angela Merkel faces an election in September and hopes to win points with voters by putting a stop to rising electricity bills. The independent steps have been slammed by businesses as German and Spanish politicians move to finance cuts for consumers by passing on the costs to companies.
The price of weaning the country off nuclear energy by 2022 is crushing the so-called Mittelstand, the three million small and medium-sized businesses like Worlee that account for about half of gross domestic product. "It could be the proverbial straw that breaks the camel's back," Chief Executive Officer Reinhold von Eben-Worlee said in an interview.
The main reason for the increase in energy costs is the simple fact that generating electricity with wind parks and solar arrays is more expensive. But allowing so many exemptions is taking its toll as well, and a better solution is overdue -- especially because this envious discussion over who's paying and who's not has the potential to chip away at support among the general public for the transition to renewable energy.
In total, the network operators hope to collect more than 20 billion euros to subsidise renewable energies. ..."The increase in this charge is manageable for many households, but there are also very poor, low-income households which could be negatively affected by this type of price rise," she said.
The country's four main grid operators said Monday that households will from January see a nearly 50 percent rise in the tax they pay to finance the switchover - from €3.6 cents to €5.3 cents ($6.7 cents) per kilowatt hour. A typical family of four will pay about €250 ($324) per year under the tariff, including a sales tax.
German Chancellor Angela Merkel's decision to cap taxpayer subsidies for renewable energy is aimed at limiting the political fallout. ...Merkel's government, already preoccupied with tackling the debt crisis in the euro area, is struggling to justify the rising costs to phase out nuclear power and replace it with more expensive wind and solar plants.
Germany's energy revolution is the government's only major project -- but the problems keep piling up. The pace of grid expansion is sluggish, and electricity costs for consumers are rising. The environment minister wants to fundamentally alter the way green energy is subsidized, but will it mean putting the brakes on the entire project?
Wednesday's proposals also coincide with a debate about spiraling electricity costs for private households ...Holger Krawinkel, head of energy issues at the Federation of German Consumer Organizations, said that the plan to pass on costs will further increase the bills that householders have to pay for the planned expansion of renewable energies.
Solar subsidies cost German consumers billions of dollars a year and are widely regarded as inefficient. Even environmentalists are concerned that Berlin's focus on solar comes at the detriment of other renewables. But the solar industry has a powerful lobby, and politicians have proven powerless to resist.
The aspect of the energy policy that has drawn the greatest criticism, however, is the fact that it has been accompanied by higher electricity prices for companies and consumers alike. ...Germany's largest steelmaker, ThyssenKrupp, even blamed the policies for the sale of one of its steel mills. European Energy Commissioner Günther Oettinger has even warned: "High electricity prices have already initiated deindustrialization in Germany."
"We're seeing a major step backward regarding clean-energy jobs because of a lack of strategic industry policy coming from the federal government," Steffen Streu, a spokesman for the economy ministry in Brandenburg, said. "It was always said that each coal job given up will re-emerge in the renewable sector. That's not the case at the moment."
Germany's nuclear phase-out is creating a new divide within the economy. On the one side are the energy-intensive businesses in the aluminum, cement and paper industries, which will see their electricity bills go up as a result of the nuclear phase-out. And on the other side is the growing renewable energy sector, which is starting to fill its order books as Chancellor Angela Merkel's nuclear turnaround becomes a reality.
Like solar, wind generation varies greatly depending on weather conditions. Power prices have dropped to negative values already at times of extreme wind supply and low demand. ..."If Germany adds 5 GW of solar this year, we may end up with over 50 GW of volatile wind and solar capacity that can't be controlled according to demand."
There are much cheaper ways to reduce carbon dioxide emissions than subsidizing renewable energies. CO2 abatement costs of PV are estimated to be as high as $1,050 per ton, while those of wind power are estimated at $80 per ton. By contrast, the current price of emissions certificates on the European emissions trading scheme is only 13.4 (Euro) per ton. ...Moreover, the prevailing coexistence of the EEG and emissions trading under the European Trading Scheme (ETS) means that the increased use of renewable energy technologies generally attains no additional emission reductions beyond those achieved by ETS alone.
As much as 100 billion euros ($143 billion) in planned investments in German offshore wind farms are at risk as developers struggle to get funding, jeopardizing the deepest emissions cuts in the European Union. Bochum's municipal utility expects its first wind park to be delayed by up to two years, Managing Director Bernd Wilmert said. HEAG Suedhessische Energie AG, a regional energy supplier known as HSE, had to go to twice as many banks as it would have needed last year to finance a 1.3 billion-euro North Sea wind farm, Chief Executive Officer Albert Filbert said.