Assessing the Extent of Germany’s Energy Dilemma
By Alen Mattich
Will Germany’s seemingly irresistible export engine be undermined by the country’s energy policy?
Maybe not as much as some fear. Or hope.
In the wake of Japan’s 2011 Tsunami and subsequent Fukushima nuclear disaster, German public opinion pushed the government to wind down the country’s nuclear program in double quick time. About half of Germany’s nuclear power plants were switched off soon after while the rest are due to be shut down by 2022.
Germany, which had already shown a strong commitment to (non-nuclear) renewable energy, stepped up the pace. The government’s target is to generate some 40% of all the country’s electricity with wind, solar or wave power by 2025 and 60% a decade later. Ultimately 80% of the country’s electricity needs are to be filled with renewables.
The ambitions are certainly noble, but the transition is proving expensive. In 2006, nuclear power generated around a quarter of the country’s electricity. Renewables made up 12%. Because renewables are expensive, shifting from the former to the latter has been a costly proposition.
Germans pay the highest electricity prices in Europe. Residential electricity prices, including taxes, are 60% higher in Berlin than in London, and are 40% above the euro-zone average. Germany’s energy minister, Sigmar Gabriel, recently estimated that the push to renewables is costing Germans €24 billion euros per year in higher bills. Were this to continue, Germany risked facing a “dramatic deindustrialization,” he said.
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