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Germany’s Energy Policy: Man-Made Crisis Now Costing Billions

The dramatic rise in renewable energy means some households now pay more for electricity than rent while 800,000 homes are without power.

Institute for Energy Research — October 30, 2012

The German people are “up in arms” about energy. Yes, energy—the commodity that affects us every day—our clothes, our food, our entertainment, our transportation, and even our medical treatments. For Germans, electricity prices are soaring as a result of phasing out nuclear power and mandating renewable energy. Consumers in Germany are facing the biggest electricity price increase in a decade and those price increases will continue. It is estimated that by 2030, Germany will have spent more than 300 billion Euros on green electricity. And consumer groups are complaining that about 800,000 German households can no longer pay for their energy bills.

If this rise in energy prices continues, household energy bills could exceed the rent Germans pay for housing in parts of the country. Because renewable technologies are not economic compared to traditional fossil fuel technologies, Germans have had and will continue to pay an additional increasing premium for their use. Because of this premium, electricity prices are expected to increase by over 10 percent next year—the largest increase in a decade. Americans should watch what is happening in Germany regarding the electricity rate base and in other parts of Europe, such as Spain, in their march to build renewable power.

The German government wants 80 percent of its energy to be produced by renewable sources by 2050; biomass, wind, and solar currently make up about 25 percent of the country’s electricity supply. The country has begun to take fossil fuel power stations offline and is planning to phase out nuclear energy by 2022. However, the cost of these changes has resulted in up to 800,000 households not being able to pay their bills and placed a strain on existing capacity in the electrical grid. Although Germany has made significant investment in wind and solar power, it faces an energy shortfall, partly because it has insufficient transmission lines to bring wind power from the North Sea to the industrial centers in the south and partly because the sun doesn’t always shine and the wind doesn’t always blow.(i)

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