Energy Revolution Interruptus Germany Stalled on the Expressway to a Green Future

Germany's energy revolution has hardly begun, but it's already running out of steam. There is a lack of political decisiveness and companies are complaining of a dearth of incentives to invest billions in necessary infrastructure. Progress or no progress, taxpayers continue footing the bill.


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German Chancellor Angela Merkel, the leader of the center-right Christian Democratic Union (CDU), will see federal diversity on display this Wednesday when she hosts Germany's governors for an energy summit in Berlin. She can expect to see 16 governors and hear 16 different opinions -- at the very least.

Each delegation has a different notion of what Germany's energy revolution should look like. The delegation from the northwestern state of Lower Saxony wants to promote offshore wind farms, while the representatives of the southwestern state of Baden-Württemberg favor projects that make more sense farther inland. The Bavarians are calling for new gas-fired power plants in the south, while politicians from the northeastern state of Brandenburg are championing the unfettered expansion of the solar industry, which is ailing in the east.

The cacophony reflects the current state of affairs. Things are all over the place in the energy turnaround at the moment, and nothing seems to be working. The key project of the coalition government of Merkel's CDU, its Bavarian sister party, the Christian Social Union (CSU), and the pro-business Free Democratic Party (FDP) is stalling before it has truly begun.

A year ago, the chancellor was still able to fire people's imaginations with her energy plans. "We can be the world's first industrialized country to successfully navigate the transition to the electricity of the future," Merkel said at the time. When she summarily fired Environment Minister Norbert Röttgen last Wednesday, she had returned to the harsh light of reality. In a considerable understatement, Merkel admitted that "the implementation of the energy turnaround still requires substantial efforts."

Brandenburg Governor Matthias Platzeck, a member of the center-left Social Democratic Party (SPD), deplores the "intolerable jumble of authority" the federal government is creating during the energy turnaround. His fellow Social Democrat Matthias Machnig, economics minister of the eastern state of Thuringia, compares the "biggest infrastructure project of the postwar era" to a marathon, adding that Germany is "only 50 centimeters past the starting line." And that, says Kurt Beck, the SPD governor of the southwestern state of Rhineland-Palatinate, is the federal government's fault. "To this day, there is no clear policy in Berlin," he says.

Divided Leadership

In Berlin, there is even strife within the ranks of the CDU and CSU. On the Friday before last, Stanislaw Tillich, the CDU governor of the eastern state of Saxony, allowed an amendment to the Renewable Energy Sources Act (EEG) to fail because he didn't like the cuts in subsidies for solar electricity it included.

The divisions reach deep into the federal government. While the Federal Ministry of Economics and Technology is trying to relax environmental restrictions in order to rapidly expand power lines, the Federal Ministry for the Environment is opposing its efforts and campaigning on behalf of threatened harbor porpoises and barbastelle bats.

There is no recognizable strategy, no grand design upon which to organize the transition into the age of renewable energy. The only thing clear is that installing more solar panels and wind turbines won't be enough. The other task -- and the more challenging and costly one -- is to adapt the rest of the energy system to new conditions.

Germany lacks the power lines it needs to bring electricity from the north to the more industrialized south. It lacks the technologies needed to store renewable energy. And, finally, it lacks power plants to satisfy demand for electricity when the wind isn't blowing and the sun isn't shining. The estimated costs of the necessary infrastructure expansions range between €154 billion ($195 billion) in the next 10 years, according to the market research firm Trendresearch, to €335 billion by 2030, according to Bavaria's VBW industry association. Other forecasts are even higher.

Passing On Risks and Costs to Customers

So, who is supposed to pay for this? So far, politicians have succumbed to the illusion that the energy turnaround will basically pay for itself. But potential financiers have shown little interest in investing their capital in projects promising only slim returns.

Due to the lack of investment incentives, consideration is now being given to an alternative source of funding so that the necessary power plants, grids and energy-storage facilities can be built after all: passing the costs of the energy revolution on to electricity consumers.

This model has been already applied to solar energy for years. The EEG grants the operators of solar power plants fixed feed-in tariffs for more than 20 years, while electricity consumers foot the bill.

Although rates have gone down in recent years, several hundred billion euros have accumulated so far -- money critics refer to as "solar debts" that are being passed on from one generation to the next.

The excessive subsidies have made solar power by far the most expensive source of green energy. It is now emerging that the other components of the energy turnaround are also being artificially propped up with government help to make them profitable: offshore wind power, the power grid, energy-storage systems and gas-fired power plants.

Last week, for example, it was revealed that the German government plans to support offshore projects by taking on a share of the operators' economic risk. The companies are currently responsible for the financial consequences when the rotors have to be shut down due to technical problems and are consequently unable to feed electricity into the grid. Under the government's plan, the industry would be able to pass on some of the costs to its customers. The only contested aspect of the program relates to how the price hike will be identified on electricity bills.


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