Wind Power in Germany: the Perfect Example of an Energy Fiasco

It’s an ‘example’, but an example of what?

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STT followers may wonder at our recent focus on Germany. The reason we pick on Deutschland is simply that – in making any point – it’s best done with examples. Readily identifiable examples. But that doesn’t mean the scenario in question is one worth following. Oh no.

There are plenty of bad examples, used as a warning to the foolhardy who might, through youthful inexperience or inherent stupidity, be trundling along the same pathway to disaster.

Germany, as a country that has spent more than €200 billion on its Energiewende and, thereby, sent its power prices through the roof and its meaningful industries packing, provides just such an example.

New York’s Wall Street Journal has run the ‘wind is free’ line long enough to tar it with the wind-cult brush. However, in this piece it appears to have finally woken up to the wholesale energy fiasco that led to German behemoth, BASF “choosing the US for its largest single investment ever, a $1 billion propylene factory in Freeport, Texas, to take advantage of low energy costs” and “BMW and SGL Carbon, which produces carbon fibers for BMW’s lightweight E-series electric cars, built their latest $300 million carbon fiber plant in Moses Lake, Washington, because of competitive energy costs”.

And which has China salivating at the prospect of exporting affordable hydro, nuclear and coal-fired power to power-starved Germans over ultra-high voltage transmission lines.

Winded in Germany
Wall Street Journal
13 April 2016

Berlin’s renewable energy fiasco is about to get even worse.

Germany has spent some €200 billion ($228.09 billion) since 2000 transforming its energy industry into a green dream, and now Berlin wants to spend more. Witness its latest attempt to discourage investment in wind power, which happens to be the only renewable energy generation that makes even vague sense for Germany.

A review now under way of the 2014 renewable-energy law could change the way Berlin chooses new generating capacity. The current system of subsidies and feed-in tariffs (requirements that utilities buy renewable electricity at above-market prices) has led to a bonanza of solar- and wind-farm construction.

The renewables never seem to fall in price the way boosters promise, and with costs skyrocketing Berlin needs a cheaper way to boost renewable capacity to its self-imposed goal of 45% of electricity generation by 2025.

The proposed solution is a bidding system in which renewable producers would compete for the right to produce a share of the planned new green capacity based on who can offer the lowest price.

An auction process is supposed to make green energy more affordable. But Berlin wants to exclude new wind producers from this auction, at least as long as other producers such as solar are available. This despite – or perhaps because of – the fact that wind is the cheapest form of green power in Germany.

It makes you wonder if there’s any form of energy-price signal that governments won’t ignore.

Germany’s 16-year-old Energiewende, or energy transformation, already has wrecked the country’s energy market in its quest to wean the economy off fossil fuels and nuclear power.

Traditional power plants, including those that burn cleaner gas, have been closing left and right while soaring electricity prices push industries overseas and bankrupt households. Job losses run to the tens of thousands.

Now the effort to suppress additional wind-power development threatens to make matters worse. By favoring solar, Berlin would be picking the power source that most exacerbates the problems with the energy transformation.

It’s the most expensive, requiring the greatest subsidies – at least €116 billion in today’s prices over the lifetime of the solar capacity built between 2000 and 2014. Germany has a climate and geography with about as much sunshine as Alaska, so solar is also the least reliable renewable.

The market distortions caused by over-reliance on expensive but undependable power already have pushed German utilities to rely more on cheap coal-fired power plants to make up the shortfall when renewable sources can’t meet demand.

There are no heros here, least of all the wind industry currently bemoaning its bad political luck at potentially missing the subsidy- and feed-in tariff boat.

Even if Berlin allows wind generators to bid for their share of new capacity, taxpayers and power consumers still will be on the hook for major new expenses. One problem with wind, which helps explain why it’s falling out of favor, is that someone would need to build expensive and unsightly new transmission lines from the windy north of Germany to the industrial south.

All of this – the job losses, the unreliable power supply, the astonishing amounts of spending that could top €1 trillion over the coming decades, and the rising coal emissions to boot – amounts to one of the more monumental blunders of modern governance.

Berlin likes to think of itself as a green-energy example to the rest of the world. It sure is.
Wall Street Journal