Germany calls time out in race towards renewable future

Thank goodness its the Germans who are trying to convert a major industrial infrastructure to renewable power because there are going to major problems.  But they seem to have the political will and sophistication, and the problem solving skills to see this through.

08/28/2012

Germany Hits Brakes on Race to Renewable Energy Future

Germany's switch to renewables has hit some snags.
The share of renewable energies in Germany's power mix has shot up so high that the electricity grid and the subsidy framework has been unable to keep up. Now, the government wants to slow down the process. German commentators say that the current chaos endangers the entire project.

Many scoffed at the initial target that Chancellor Angela Merkel set last June, when she announced that Germany was turning away from nuclear power and toward renewable energies. Her government decided that by 2020 renewables would make up a 35 percent share of the energy mix. It was, said many experts at the time, an impossible goal.

In the 14 months since then, however, the situation has changed dramatically. In the first half of 2012, the country generated fully 25 percent of its electricity needs via wind, solar and other alternative power sources. Doubts as to whether the 35 percent target is attainable have virtually vanished.

Now a new set of problems have cropped up, and quickly. The fast pace into the renewables future has meant that German consumers are faced with skyrocketing electricity bills and that the country's energy grid has suddenly become outdated. Indeed, Environment Minister Peter Altmaier now finds himself in the awkward position of having to put the brakes on the country's energy revolution.

At issue is the German Renewable Energy Act, which requires power companies to buy wind and solar energy from producers at fixed prices, which are much higher than electricity produced by traditional methods such as coal- and natural gas-fired power plants. At the same time, power-hungry industries receive generous subsidies -- the country's largest industrial consumers use some 18 percent of the electricity produced but pay only 0.3 percent of the extra costs generated by the mandated feed-in tariffs. German consumers have to cough up the difference.

In addition, Germany's power grid hasn't kept up with the explosion of new alternative energy sources -- particularly the offshore windparks being built in the Baltic Sea and the North Sea off the country's north coast. Many of those projects are at a standstill, with no way to deliver the power they generate to the mainland. On Wednesday Merkel's cabinet hopes to agree on a stop-gap measure to compensate power companies for losses accrued as a result of the delays, but again it will be German consumers who will ultimately suffer.

Finally, the Renewable Energy Act, while it provides excellent incentives to build wind turbines, does not provide incentives to build the natural gas-fired power plants the country needs to fill the holes with the sun isn't shining and the wind isn't blowing. Changes, in short, are necessary.

On Tuesday, Altmaier will join Economy Minister Philipp Rösler in the Chancellery for a meeting with industry and union representatives to discuss the rising costs for consumers. In the run up to that meeting, which will be led by Merkel's Chief of Staff Ronald Pofalla, Altmaier indicated that he hopes to adjust the Renewable Energy Act so as to put the brakes on the current rush toward renewables. more