Thursday, 24 May 2012

The failure of the German energy transition policy

A year ago German Chancellor Angela Merkel praised her government´s new energy transition policy: 

"We can be the world's first industrialized country to successfully navigate the transition to the electricity of the future". 

Twelve months later Merkel has to face this grim reality:  

Germany Stalled on the Expressway to a Green Future

There is no recognizable strategy, no grand design upon which to organize the transition into the age of renewable energy. The only thing clear is that installing more solar panels and wind turbines won't be enough. The other task -- and the more challenging and costly one -- is to adapt the rest of the energy system to new conditions.
Germany lacks the power lines it needs to bring electricity from the north to the more industrialized south. It lacks the technologies needed to store renewable energy. And, finally, it lacks power plants to satisfy demand for electricity when the wind isn't blowing and the sun isn't shining. The estimated costs of the necessary infrastructure expansions range between €154 billion ($195 billion) in the next 10 years, according to the market research firm Trendresearch, to €335 billion by 2030, according to Bavaria's VBW industry association. Other forecasts are even higher.

Passing On Risks and Costs to Customers

So, who is supposed to pay for this? So far, politicians have succumbed to the illusion that the energy turnaround will basically pay for itself. But potential financiers have shown little interest in investing their capital in projects promising only slim returns.
Due to the lack of investment incentives, consideration is now being given to an alternative source of funding so that the necessary power plants, grids and energy-storage facilities can be built after all: passing the costs of the energy revolution on to electricity consumers.
This model has been already applied to solar energy for years. The EEG grants the operators of solar power plants fixed feed-in tariffs for more than 20 years, while electricity consumers foot the bill.
Although rates have gone down in recent years, several hundred billion euros have accumulated so far -- money critics refer to as "solar debts" that are being passed on from one generation to the next.
The excessive subsidies have made solar power by far the most expensive source of green energy. It is now emerging that the other components of the energy turnaround are also being artificially propped up with government help to make them profitable: offshore wind power, the power grid, energy-storage systems and gas-fired power plants.

Read the entire Der Spiegel article here


From Angela Merkel´s point of view, the problem is that this is a failure entirely of her own making. The Chancellor made a horrible mistake by overreacting to what happened in Fukushima.

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