BMW Adds Wind Power to Sidestep Merkel’s Power Bill
From Bloomberg
By Stefan Nicola
Bayerische Motoren Werke AG will harness winds whipping across eastern Germany to secure power — and defend profits — as costs rise due to Germany’s 550 billion-euro ($740 billion) shift away from nuclear energy.
Four wind turbine towers will soon supply almost a quarter of the power used at BMW’s Leipzig plant, where the carmaker builds the X1 sport-utility vehicle and soon the i3, its first electric car.
Daimler AG is firing up a power plant at a truck factory and Volkswagen AG is mulling at least five new generators. The reason: The German auto industry is seeking to sidestep the effects of a plan by Chancellor Angela Merkel to shut nuclear reactors and boost renewable energy, which has led to higher taxes on power bought from commercial producers.
“Every second German industrial producer either generates its own power or is considering doing so because of Merkel’s energy switch,” said Sebastian Bolay, an energy policy analyst at DIHK, a manufacturers trade group in Berlin. “Generating your own power is not only cheaper in most cases, it could also protect you from grid failures.”
A 47 percent hike in a clean-energy surcharge this year could add as much as 254 million euros to the combined power bills of auto manufacturers and parts suppliers in Germany. Since 2006, the surcharge has risen sixfold.
BMW, VW and Mercedes-Benz parent Daimler are under pressure to control costs as auto demand in Europe heads for its sixth consecutive annual decline this year after 2012 sales dropped to their lowest level in almost two decades.
Worst January
Car sales in the region fell to the lowest level for a January since at least 1990, the ACEA trade group said today. Weak demand, which has spread from southern Europe to Germany and France, compounds the strain of high labor and energy rates.
Auto workers in Germany cost an average of 46.75 euros per hour, while in the neighboring Czech Republic, where Hyundai Motor Co. produces the i30 hatchback, carmakers pay just 11.85 euros, according to data from researcher Eurostat.
Power for large manufacturers in Germany averaged 10.4 euro cents per kilowatt-hour last year, according to the country’s Economy Ministry. That compares with 7.25 euro cents in France, where PSA Peugeot Citroen makes the DS line that challenges BMW, and 6.76 euro cents in Romania, the base of Renault SA’s budget Dacia brand.
In the U.S., a surge in domestic natural gas production has pushed industrial power prices to as low as 2 euro cents to 3 euro cents a kilowatt-hour, according to Michael Schmidt, chief executive officer of BP Plc’s European subsidiary.
Renewable Surcharge
Germany is paying for the shift from nuclear — which the government estimates will cost 550 billion euros for plants and grid upgrades — in part by raising taxes on power. A renewable- energy surcharge rose on Jan. 1 to 5.28 euro cents per kilowatt- hour from 3.59 euro cents last year and 0.88 euro cents in 2006.
The German auto industry purchases about 15 terawatt-hours, or 15 billion kilowatt-hours, of electricity annually, according to the trade group VDA. That means the surcharge alone will cost carmakers and suppliers as much as 792 million euros this year.
“While we’ve welcomed the energy switch, we also need competitive power prices and a stable supply,” said VDA spokesman Eckehart Rotter.
The shift risks creating shortages in Germany’s industrial south — home to Daimler and BMW — which has already lost about 5 gigawatts of reactor capacity, according to state-owned researcher Dena Energy Agency. Merkel in October backed a plan to prevent utilities such as EON SE and RWE AG from closing unprofitable conventional plants to guarantee supply.
