Successive German governments have paid out generous subsidies to develop wind, solar and biomass power generation capacity. This has guaranteed producers fixed prices and given green power priority access on transmission grids.
As a result, German renewable power generation capacity from wind, solar, biomass and small-scale hydro plants has more than doubled in the past four years.
It has risen to more than 80 gigawatts (GW) from less than 40 GW in 2008, in theory enough to cover Germany’s maximum demand of 82 GW.
Spurred by subsidies, the problem is that Germany now suffers from overcapacity which is pulling down wholesale prices while gas and coal needed for electricity production in thermal power stations have remained expensive.
“The current prices have dire consequences for utilities. As such, we believe the outlook for European utilities remains gloomy,” said Michael Bret, head of thematic research at AXA Investment Managers.
For consumers, the surge of renewables has driven up costs, as their energy bills include fees used to help cover the green energy subsidies.
Germany’s government has risked the economic future of its people on the intermittent unreliable green energy chimera. And since Germany occupies the key, central position in the European power grid, the German government is in effect risking the economic futures of all the peoples of Europe.
Germany’s ongoing, slow-motion self-destruction has important implications for other countries following the green energy path — such as the UK, the US, and Australia.
What is the future of America if the renewable mandate regime expands under state or federal programs? That future is now on display in Germany, a trailblazer in applying subsidies and preferential access to the grid to support the adoption of solar and wind power. The country has not only restricted the construction of new coal and nuclear power units, but also limited the operations of natural gas fueled generation by providing preferential prices and access to the grid for renewables. To be fair, the Germans are also groaning under the cost of imported natural gas supplies, primarily from Russia.
Unfortunately, as a result Germany does not have adequate load following capacity to absorb the ups and downs of renewable power generation. The result is grid instability. These policies are creating potential dangers for an economy heavily dependent on power intensive manufactured exports. Already German petrochemical manufacturers, such as BASF and Bayer, have warned that the country faces grave threats to its manufacturing base due to lower cost competition in the natural gas-rich US. Volkswagen has been equally blunt about their need to manufacture car parts outside of Germany. Remember that Germany’s job pool has roughly 24% of the work force engaged in export focused activity.
Germany’s neighbors complain that the country is exporting the grid instability associated with its “green” policies. It’s gotten so bad that the country, which loathes nuclear power, is actually expanding the use of coal fired generation. In essence, coal fired generation is growing in Germany at the expense of higher cost natural gas generation. (The silver lining is that the U.S. is supplying the extra low cost coal required). Naturally, Germany’s CO2 and particulate targets are not being met, while the equivalent US targets are being met ahead of schedule.
Not surprisingly, the German government is now back tracking because their economy cannot support, from a technical or economic perspective, the current level of installed renewables. Angela Merkel has recently called for a more balanced approach to power generation. That will probably mean a policy of diverting subsidies and preferential treatment from solar and wind to natural gas and hydro. __New Geography
Germany’s green energy policies promise to provide a sobering cautionary tale for other nations whose governments are currently top-heavy with green ideologue functionaries.
As the fortunes of Germany, Spain, and other excessively ideological and insufficiently pragmatic governments continue to fall, the citizens of other advanced countries will be given a chance to see their own futures — if they fail to wake up to the energy realities which are operating barely below the surface.
For while the news and information medias of the western world are surely biased in favour of the intermittent unreliable green energy (and climate) delusions, the underlying realities will win out eventually — every time.