Germany Could Face Electricity Customer Revolt

Der Spiegel, Germany's leading weekly news magazine, reports this week thatGermany's aggressive renewables program "has come with a hefty price tag for consumers," especially the poor. Though no immediate action is expected before national elections in two weeks, there may be new initiatives soon after, as "government advisors are calling for a completely new start."

The article is notable not only for its length and depth, but also because Der Spiegel is generally characterized as left-liberal in its inclinations and, therefore, would not be expected to be so critical of a program advanced by its very readers—the socialists and Greens who adopted the program more than a decade ago.

But first let's accentuate the positive: The "feed-in tariff" put in place at the end of the 1990s has been a hugely powerful lever in driving development of renewable energy in a country that is itself one of the world's major markets and a top incubator of new technology. The law and its successors established schedules such that anybody installing any of several types of renewable generation can sell the electricity they generate into the national grid at prices guaranteed over time. The premium prices are covered out of a pool funded by an electricity surcharge levied on all German power consumers.

To a remarkable extent, Germans so far have been willing to pay those prices, for the sake of making the country a world leader in environment-friendly power technologies. But today, says Der Spiegel, the prices are beginning to look not just intolerably high and unsustainable, but in some ways unfair and perverse in their effects. The surcharge, already high at 5.3 euro-cents per kilowatt-hour, is slated to rise 20 percent to between 6.2 and 6.5 cents/kWh, according to the government. In large part because of the surcharge, Germany's electricity costs are among the highest in Europe and could soon be among the highest anywhere in the world.

Without a change in course, says the government, costs could rise to 40 cents/kWh by 2020. At present-day prices, the average German family of three pays about 90 euros per month for electricity, the equivalent of about US $135—about twice as much as in the year 2000.

The high rates have been affecting less-advantaged members of society disproportionately, argues Der Spiegel, . "…[R]enewable energy subsidies redistribute money from the poor to the more affluent., as when someone living in a small rental apartment subsidizes a homeowner's roof-mounted solar panels through his electricity bill."

There are other perverse effects. Though authoritative studies suggest that Germany's expansion of renewables will require as much as 30 billion kilowatt-hours of energy storage by 2050, in the short run, wind and solar installations have sometimes led to shutdowns of storage facilities. Der Spiegel provides examples of long-standing pumped hydro installations that may be taken offline because the growing amount of power being generated by solar plants means there is less demand for their output during daytime peaks.

A major steel mill near Hamburg sometimes has to suspend operations because energy from nearby intermittent sources fails to materialize as expected. Meanwhile a major offshore wind farm in the area is behind schedule getting its transmission link to the mainland completed (as reported here).

An additional and predictable development results from Germany's post-Fukushima nuclear phase-out: Old and dirty coal-fired plants like the one at Grosskotzenburg [photo, above] are being used more rather than less, leading for the first time in two decades to an increase in the country's greenhouse gas emissions.

To be sure, Germany's GHG emissions are 25 percent lower than in 1990, in contrast (for example) to those of the United States, which are 10 percent higher. But U.S. emissions have declined in the last five years, whereas Germany's experienced an uptick last year, by 2 percent. "This development cannot become a tendency," Germany's environment minister has said.

Der Spiegel proposes that the solution may be at least in part to adopt what it calls "the Swedish model" as a successor to the feed-in tariff. In Sweden, says the magazine, the government sets greenhouse gas reduction targets for each economic sector but leaves it to the players in each sector to decide how to make the cuts. But whether such a system could work in an economy the scale of Germany's remains to be seen. In the meantime, Germans are left with the environment minister's rather lame, band-aid suggestions: Don't preheat before cooking; keep lids on your stove-top pots; and turn down the brightness and contrast on your televisions.

Photo: Dmitry A. Mottl