Library filed under Energy Policy from Germany
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.
Germany's green energy drive is proving surprisingly good for dirty brown coal as utilities squeezed by rival renewables and low wholesale gas prices use more of it.
Renewables already added a 47 percent surcharge to electric bills at the beginning of this year. Now we're going to see something worse. The big, power-consuming manufacturers have been exempted from these charges so they can stay competitive with the rest of the world, but everyone else is going to bear the brunt.
The success of the turnaround is not only to be evaluated after the volume of the installed solar and wind capacity but also if the energy supply remains safe and affordable, he added.
That the German government is facing a massive budget shortfall for projects aimed at transforming the country into a model of alternative energy and environmental friendliness is hardly new. The European cap-and-trade system has for months been sliding into inconsequence as prices for CO2 emissions have stubbornly remained below €5 ($6.47) per ton.
Germany is dirtying the planet in the name of clean energy - and sticking its citizens with an ever-escalating tab so it can subsidize an energy source which will never generate sufficient power. This is the cautionary tale of command energy economics - one other nations would be wise to heed.
But six months before a federal election, questions remain, not least how to pay for the shift. Consumers are wary about the extent to which they will foot the bill and Merkel wants to reassure voters that she is trying to curb steep rises in power prices caused in part by subsidies for renewable energy.
Subsidies for renewable-energy producers that are financed in part through household electricity bills are causing electricity prices for ordinary consumers and industry to rise. Germany's biggest industrial power consumers have seen electricity prices per kilowatt hour rise nearly 40% in the past five years.
“The fundamental question is whether we want to push through this crazy 80 percent renewable energy share at the expense of the economy,” said Marc Tenbieg, managing director of the DMB Deutsche Mittelstands-Bund, which represents more than 14,000 small and mid-sized enterprises. “Why do we always have to be the trailblazer and show the other countries how it’s done? They are laughing their heads off.”
Germany plans to exempt 1,550 large firms from a power price surcharge that covers part of the cost of switching to renewable energy. Critics say the list of exemptions is spurious and unfair to households and small businesses. It risks undermining faith in the government's switch to clean power.
Stephan Kohler, the head of the German Energy Agency, says the country must act smarter and more realistically in its transition to renewable energy. The "feel-good" subsidies for locally produced wind and solar power have had unintended consequences, he says, and the environmental movement is often part of the problem.
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 draft bill endorsed by Chancellor Angela Merkel's Cabinet of Ministers would make power consumers pay as much as 0.25 euro cents a kilowatt-hour if wind farm owners can't sell their electricity because of delays in connecting turbines to the grid. The plan is aimed at raising investments after utilities threatened to halt projects.
Grid operators are reluctant to build power lines at sea because they have to pay compensation should they break down. So many wind farms could lack the means to transfer the power they are generating back to the mainland. The government is trying to pass on those costs to power consumers to reduce the risk for investors.
At issue is the German Renewable Energy Act, which requires power companies to buy wind and solar energy from producers at fixed prices, which are much higher than electricity produced by traditional methods such as coal- and natural gas-fired power plants. At the same time, power-hungry industries receive generous subsidies ...German consumers have to cough up the difference.
Germany's largest utilities RWE and EON AG (EOAN) are shunning cleaner-burning natural gas because it's more costly, while the collapsing cost of carbon permits means there's little penalty for burning coal. Wind and solar projects, central to Germany's plans to reduce nuclear energy and cut the release of heat- trapping gases, can't produce electricity around the clock.
Sudden fluctuations in Germany's power grid are causing major damage to a number of industrial companies. While many of them have responded by getting their own power generators and regulators to help minimize the risks, they warn that companies might be forced to leave if the government doesn't deal with the issues fast.
In an interview with German weekly newspaper Die Zeit, Altmaier said “with 35 percent of power from renewable sources, that still leaves 65 percent to be covered. It makes sense to replace old brown and black coal-fired plants which aren't good for the environment with modern and efficient coal and gas-fired power plants.”
German plans to cut carbon emissions with renewable energy are ambitious, but they are also risky.
Germany's revolutionary switch to renewable energies is stalling and the country's new environment minister has now admitted as much by casting doubt on the ambitious goals set last year. Media commentators say that he and the rest of Chancellor Merkel's government must do more.