Germany’s Wind Power Disaster: the Perfect Lesson on How to Simultaneously Wreck an Economy & the Environment

The Germans went into wind power harder and faster than anyone else – and the cost of doing so is catching up with a vengeance. The subsidies have been colossal, the impacts on the electricity market chaotic and – contrary to the environmental purpose of the policy – CO2 emissions are rising fast: if “saving” the planet is – as we are repeatedly told – all about reducing man-made emissions of an odourless, colourless, naturally occurring trace gas, essential for all life on earth – then German energy/environmental policy has manifestly failed (see our post here).

Some 800,000 German homes have been disconnected from the grid – victims of what is euphemistically called “fuel poverty”. In response, Germans have picked up their axes and have headed to their forests in order to improve their sense of energy security – although foresters apparently take the view that this self-help measure is nothing more than blatant timber theft (see our post here).

German manufacturers – and other energy intensive industries – faced with escalating power bills are packing up and heading to the USA – where power prices are 1/3 of Germany’s (see our posts here and here and here). And the “green” dream of creating thousands of jobs in the wind industry has turned out to be just that: a dream (see our post here).

Those in charge of Germany’s power grid have stepped up calls for an end to the lunacy of trying to absorb a wholly weather dependent generation source into what was never designed to deal with the chaos presented on a daily basis:

Germany’s Wind Power Debacle Escalates: Nation’s Grid on the Brink of Collapse

And the economics are so bizarre, that you’d think its “Energiewende” policy had been put together by the GDR’s ‘brains trust’, before the Berlin Wall took its tumble in 1989.

In Germany, around €100 billion has already been burnt on renewable subsidies; currently the green energy levy costs €56 million every day. And, the level of subsidy for wind and solar sees Germans paying €20 billion a year for power that gets sold on the power exchange for around €2 billion.

Squandering €18 billion on power – which Germans have in abundance from meaningful sources – has them asking the fair and reasonable question: just how much power are they getting for the €billions that they’ve thrown – and continue to throw at wind and solar? The answer – at a piddling 3.3% – is: NOT MUCH.

HG Wells couldn’t have imagined a more dismal future.

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Now, in a further lesson in how to squander €billions with nothing to show for it – save destroying their bucolic homeland, their health and millions of birds and bats, Germans are about to be belted with another power price hike, the magnitude of which depends on … wait for it … the WEATHER.

German 2016 green power surcharge at 6.354 cents/kWh – grid firms
Reuters
Vera Eckert
15 October 2015

* Fee for green energy expansion goes up 3 pct

* Households likely to face higher bills next year

* Government reforms had aimed at lowering fee

FRANKFURT, Oct 15 (Reuters) – A surcharge levied on German consumers to support renewable power will rise 3 percent next year, despite government efforts to scale back support for green power, a statement from the country’s network operators (TSOs) showed on Thursday.

The surcharge under the renewable energy act (EEG) will be 6.354 euro cents per kilowatt hour (kWh), up from 6.170 cents this year, it said.

Sources told Reuters last week that the fee, which is added to consumers’ bills, would rise by this amount and a leading green energy group had also anticipated higher costs.

It had fallen this year for the first time since it was introduced in 2000.

The fee represents the biggest single item to finance Germany’s “Energiewende” policy, amounting to a total 22.3 billion euros ($25.49 billion) in 2014, according to the TSOs.

Its growing size has created concern, leading to reforms to the system of rewarding green energy with above-market payments last year. These curbed incentives and set caps on green energy expansion, also mandating that it must be better integrated into the wholesale electricity market.

The TSOs, which are supervised by the energy regulator, the Bundesnetzagentur, cited the following factors:

Germany is adding more wind power capacity both offshore and onshore as well as biomass, which means more money is paid out under the EEG act.

Also, the gap between guaranteed EEG prices and wholesale market prices obtained by mainly thermal power plants on energy bourse EEX has risen because prices have fallen sharply amid a fuels markets slump. They are currently at 12-year lows.

The EEG provides for the difference between EEG support and market prices to help young technologies such as wind turbines and solar panels compete with conventional energy.

The real eventual cost of the surcharge depends on weather patterns — which rule how much renewable energy is produced and entitled to support from the EEG account only once it is fed into the grid.

A household using 3,500 kWh per year would have to pay 222.39 euros towards the EEG alone in 2016, 3 percent more than this year, retail portal Toptarif said.

The four high voltage network operators are utility EnBW’s TransnetBW as well as 50Hertz, the former grid unit of Vattenfall Europe, TenneT, formerly belonging to E.ON , and Amprion, where former full owner RWE maintains a minority stake.
Reuters

The wind industry, its parasites and spruikers keep telling us that they’re delivering a product, that customers can’t get enough of (at prices starting somewhere near “free” – and getting cheaper all the time). But, somehow, their dreams continue fall just a little short of the reality. No doubt, much to the horror of German households and businesses: a ‘minor’ matter of economics in action, picked up in the next piece.

Germany’s Green Energy Surcharges Spiral Upwards
The American Interest
15 October 2015

German households and businesses will be paying more for their electricity next year as providers are set to hike the green surcharge levied on customers’ power bills.

As part of the country’s Energiewende, Germany has rapidly increased its wind and solar energy industries by guaranteeing producers long-term, above-market rates. But those feed-in tariffs, as they’re called, have come at great expense, and the costs ultimately trickle down to consumers in the form of a green surcharge, which next year will rise by 6.354 euro cents per kilowatt.

Germany already pays some of the highest electricity costs in Europe, making this rate hike especially painful. This increase will be felt most keenly by the poor, whose energy bills make up a larger percentage of their overall budget.

Businesses will also be eying this news askance. Cheap power is a basic economic interest across most industries, and rising rates could have some German companies asking whether they might be better served relocating outside the country. It’s difficult to stay competitive in a global market when those rates keep rising.

Moreover, while the Energiewende has boosted Germany’s green “cred” by stimulating renewables, it has also dramatically increased coal consumption as a result of the country’s decision to shift away from nuclear power production.

As John Gapper points out in an FT column, this rise in coal consumption means that the country’s emissions are actually climbing. “The perversity of the Energiewende,” he writes, “is that Germany is on a path to achieving the hard task while flunking what should be the simple one — reducing its coal production.”

Germany is fully exploring one of those mythical policy sour spots that, against all odds, seems to make less sense with every new angle from which it’s viewed. From a cost perspective, this has been disastrous, and efforts to curtail those green power bill surcharges are clearly failing. But it’s also failing on its eco-merits, too, as, again, it’s had to burn record amounts of an especially dirty variety of coal to replace zero-emissions nuclear plants.

Greens tend to see economic growth and green achievements as mutually exclusive, that progress on one front must necessarily come at the expense of the other.

That’s a self-defeating argument, and the most compelling environmental policies seek to capitalize on the confluence of environmental and economic interests. But the flip side of that, apparently, is that there are policy configurations that are neither growth-friendly nor environmentally desirable.

In that sense, Germany’s Energiewende has taught the world a valuable lesson, though no doubt it’s not the sort of example it hoped it would set.
The American Interest

The principles of economics tend to operate, no
matter what the weather dishes up.