Library filed under Impact on Economy from Germany
Chancellor Angela Merkel of Germany vowed Wednesday to fight a European Union investigation into her government’s policy of exempting hundreds of companies from a surcharge on electricity that is used to promote renewable resources.
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.
Germany will threaten jobs and hamper growth if it persists with expanding renewable energy at the current pace, a chemical lobby said. Continuing with uncapped subsidies to renewable developers and removing aid for companies that use a lot of energy risks 211 billion euros ($285 billion) in gross domestic product and 1.3 million jobs by 2030.
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.
"We need a drastic policy shift. They haven't paid any attention to costs. These are now huge." German electricity costs are ratcheting up faster than elsewhere in Europe, and are now twice US levels. Households and the "Mittlestand" backbone of the economy are carrying the burden, paying cross-subsidies to exempted sectors of heavy industry. "Spiralling energy costs will soon drive us into the wall. It has become dangerous."
Germany's drive to increase renewable energy sources has created the biggest discrepancy between consumer and producer power prices in 15 years, turning the cost of electricity into a political battleground before the Sept. 22 national election. Because of taxes and charges that subsidize the country's 550 billion-euro ($734 billion) plan to expand solar and wind power, residential bills are more than twice the amount that utilities pay to deliver the electricity.
Instead, the country has a ruinously expensive green dream, priced at €700bn (£590bn) from now until the late 2030s by environment minister Peter Altmaier if costs are slashed - and €1 trillion if they are not. The Germans are surely the most romantic nation on earth.
This year, German consumers will be forced to pay €20 billion ($26 billion) for electricity from solar, wind and biogas plants -- electricity with a market price of just over €3 billion. Even the figure of €20 billion is disputable if you include all the unintended costs and collateral damage associated with the project. Solar panels and wind turbines at times generate huge amounts of electricity, and sometimes none at all. Depending on the weather and the time of day, the country can face absurd states of energy surplus or deficit.
So attractive are the incentives, or feed-in tariffs, that the rapid expansion of renewable power has driven up the surcharges which fund them and are paid for by consumers. The charge rose by 47 percent this year alone. Both households and industry are feeling the pain and exporters complain that the energy shift has driven up power prices so much that their competitiveness is being eroded.
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.
As electricity bills soar and Germany's transition to renewables falters, patience is wearing thin. Many companies complain of the high costs, and fear a threat to their existence.
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
Germany is indeed avoiding blackouts—by opening new coal- and gas-fired plants. Renewable electricity is proving so unreliable and chaotic that it is starting to undermine the stability of the European grid and provoke international incidents. The spiraling cost of the renewables surge has sparked a backlash, including government proposals to slash subsidies and deployment rates. Worst of all, the Energiewende made no progress at all in clearing the German grid of fossil fuels or abating greenhouse emissions—nor is it likely to for at least a decade longer.
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.
Speaking at an energy conference in Berlin, Ms. Merkel said she still supports further expansion of renewable energy such as wind and solar power to reduce carbon dioxide emissions. But she said the costs need to be contained as global rivals are benefiting from lower energy prices. Utility executives welcomed her recognition, but criticized her for remaining vague on specifics.
Germany's push for wind and solar and its retreat from nuclear power is driving electricity costs to untenable levels and destroying support for the green agenda, the International Energy Agency (IEA) has warned.
Germany must shield its consumers from paying too much of the cost of its ambitious switch from nuclear power and fossil fuels towards renewable energy, the International Energy Agency said on Friday. The IEA also said that Germany, with Europe's biggest economy, should make greater use of natural gas to smoothe the transition.
"That means that German companies are bound to invest a lot more in the US," Grillo commented. Energy-intensive firms like Wacker and BASF speak of clear competitive advantages in the US, with the first already building a production facility in Tennessee.
Germany is burning more coal because gas plants are not economical, subsidies for renewables are pushing up power prices, and a greater share of fluctuating renewables threaten the stability of electrical grids, Michael Suess, chief executive officer of Siemens Energy, said.
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.