Germany's Energy Goes Kaput, Threatening Economic Stability

Posted: Dec 30 2013, 12:41pm CST | by , in News


Germany's Energy Goes Kaput, Threatening Economic Stability
Photo Credit: Forbes

If you want to do something big, you have to start small; and German innovation is well known around the world. Yet when it comes to energy policy, the country looks to have placed the cart before the horse. Germany has led much of Europe with ‘Energiewende’ or the renewable energy transition. Germany’s headlong pursuit of an all-renewable energy future has, however, left the county in desperate need of affordable energy.

German consumers already pay the highest electricity prices in Europe, and practically overnight the country has seen a dramatic about-face when it comes to energy policy. Electricity is now a luxury good in Germany. The latest report predicts that the renewable energy surcharge added to every consumer’s electricity bill will increase from 5.3 cents to between 6.2 and 6.5 cents per kilowatt hour — a 20-percent price hike.

These prices have taken their toll upon the middle class, creating chaotic supply challenges and have directly contributed to nationwide job losses. Massive subsidies for renewable energy are harming the economy, imposing significant regressive costs on poor and working class energy consumers.

In order to move the program forward, Germany’s leadership is now grappling to balance renewable energy subsidies with affordable energy.

In an unexpected move, Germany approved its first coal-fired power plant in eight years, which is now up and running. The German energy company Steag says its 725-megawatt coal plant is just the beginning of coal’s German comeback, as the country has actually approved a total of ten new hard-coal plants. These facilities are scheduled to come online in the next two years, boosting the country’s coal capacity by 33 percent.

Like many countries, once promising advances in nuclear technologies have suddenly taken a backseat after Fukushima. Unlike America, Europe has not been able to transition to natural gas, thereby leaving countries like Germany suddenly facing an enormous energy deficit, which experts and pundits alike suddenly agree cannot be replaced by renewables, such as wind or solar.

Environmentalists and renewables advocates have long-held Germany’s as an example to emulate. While there is little doubt that the ‘Energiewende’ has accelerated the pace of wind and solar innovation, it has clearly done so at enormous cost. Unlike environmentalists in America who seem driven to squash any further development of hydrocarbons, German have been far more practical, suggesting that ultimately environmental goals must take a backseat to the economy.

Perhaps America can learn from these mistakes before Germany’s Energiewende takes root here in this country.

Source: Forbes

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