The wheels are falling off of Germany’s green energy revolution. In recent years Europe has attempted to position itself as a first mover and global leader in renewable energy, and Germany has led the way with ambitious domestic programs to boost solar and wind energy. But green hopes are giving way to economic realities: Europe is now considering walking back from some of its stated green goals, (rightly) concerned that the costs of renewable energy will make European industry less globally competitive. This is especially true in Germany, where some of Europe’s highest electricity prices have many companies considering jumping ship to cheaper locales like shale-rich America. The Economist has a must-read in-depth report on the failings of Germany’s energy revolution:
Businessmen say the Energiewende [Germany’s energy revolution] will kill German industry. Power experts worry about blackouts. Voters are furious about ever higher fuel bills. The chaos undermines Germany’s claim to efficiency, threatens its vaunted competitiveness and unnecessarily burdens households. It also demonstrates Germany’s curious refusal to think about Europe strategically.
And it’s not just German businesses that are suffering:
The cost of this mess is passed on to electricity users. Household fuel bills have gone up by a quarter over the past three years, to 40-50% above the EU average. And because the contracts guaranteeing renewables prices are set for 20 years, the problem will get worse as more such supplies come on stream. Thomas Vahlenkamp of McKinsey reckons that the cost of the Energiewende will double over the next decade. Rising electricity bills will dampen German consumers’ spending, exactly the opposite of what is needed to rebalance the economy.
The Economist does an excellent job painting the grim picture, but it draws the wrong conclusions, suggesting that Germany should push for “a European, rather than a national, vision for the Energiewende.” That could be disastrous for Europe, which is already struggling to find its footing in the wake of the recent debt crisis.
Instead, Germany—and Europe, for that matter—might consider developing domestic shale reserves, and start diverting government subsidies for wind and solar towards the research and development of the technologies underpinning these resources.
Germany’s struggles with green energy should be a warning to leaders and policymakers around the world. Renewable energy isn’t ready for primetime, and no amount of government subsidies or green pie-in-the-sky hopes are going to change that.
[Angela Merkel image courtesy of Wikimedia]