Germany: The Canary for Renewables
It’s difficult to evaluate the effect of renewables on electricity rates in the United States, in the abstract. People opposing wind and solar predict that rates will increase substantially, while proponents reject these assertions.
That’s why Germany can be useful in demonstrating the actual effects of renewables on electricity rates.
The motivation behind Germany’s drive for increasing renewables is the elimination of CO2 emissions.
Germany’s goal is to have 80% of its electricity from renewables by 2050.
Whether Germany is succeeding in cutting CO2 emissions is an interesting debate, since it’s increasing the use of coal so as to replace the electricity being lost due to the closing of nuclear power plants.
What is clear is that Germany is currently producing around 22% of its electricity from renewables, which is a far cry from its 80% goal, while having considerable difficulty in integrating renewables into the grid. For example, Germany must build transmission lines to bring electricity generated by wind in the north, to southern Germany. There is considerable backlash against building these transmission lines through forests, etc.
Nearly 3,000 miles of new transmission lines will have to be built.
DC transmission is a must due to the distances, yet people are objecting to the expensive converter stations required at each end of a DC transmission line.
One report said, “More than 700 citizens’ initiatives have been founded in Germany to campaign against what they describe as ‘forests of masts’, ‘visual emissions’ and the ‘widespread devastation of our highland summits.”
To a large degree, opposition to transmission lines is also a problem in the United States as efforts are made to bring electricity from wind farms and solar power plants to where it can be used.
Germany’s 2008 Renewable Energy Act (EEG), referred to as Energiewende, provides the legal basis for levies on consumers, businesses and industry to support renewables.
It’s been reported that these levies will increase again in 2014 to around $0.80 per kWh for residential customers, which is a 20% increase from 2013. In total, it’s been reported that this amounts to approximately $32 billion being drained from the economy.
Residential rates for electricity have doubled since 2000.
It should be noted that the renewable levy for residential and business customers is about 25% higher than for industrial customers.
This is because the government fears industry will leave Germany because of the high cost of energy.
Eni SpA (ENI) Chief Executive Officer Paolo Scaroni said, “In the EU, companies pay three times the price of gas in America, and twice the price of power.”
At least one German chemical company has said it will expand in the United States rather than in Germany.
It’s clear that renewables in Germany are having an impact on people and industry, and that residential electricity rates, already three to four times higher than in the United States, will increase further as the levies behind these rates increase, and that electricity rates for industries will also increase.
Policies in the United States, such as net metering, are similar to those in Germany, and are forcing the further adoption of wind and solar. Why should the effect on electricity rates be any different than in Germany?
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