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  • bluecheese4u bluecheese4u Sep 3, 2013 9:25 AM Flag

    Renewable Reducing Electricity Prices In Germany

    Renewable Reducing Electricity Prices In Germany

    I just mailed my absentee ballot from Japan for the next German election. Living in Japan, I needed to fill out some forms and send them in to my last place of residence in Germany, but I thought this election is important enough to jump through those hoops.

    Of course I voted for the Green Party.

    One of the topics in this election season is the price of electricity. There is a lot of confusion around. Many people don’t understand that the renewable revolution caused by the German feed-in tariff model has lowered prices.

    This is also a season to discuss the surcharge, which will be fixed for next year on October 15. Spiegel has an article on the topic, and Craig Morris has discussed that article here.

    Morris links to an interesting study done by Brainpool (PDF) for the German Green Party, which looks at the next surcharge decision in some detail.

    We learn (page 1) that German wholesale electricity prices are down from 5.115 cents estimated in 2012 to around 3.9 cents. Let’s just note that renewable energy has reduced wholesale prices by 1.2 cents per kWh. Multiply that by the 482 TWh they expect Germany to consume next year (page 21) , and we see that renewable energy will reduce wholesale prices by EUR 5.784 billion next year.

    Of course these lower prices will lead to a higher surcharge next year, since the surcharge is calculated by the difference between the feed-in tariff and the wholesale price. But that’s only a temporary effect. It will be gone after a decade or two.

    In contrast, the lower prices from a higher renewable share are here to stay. Those solar panels are not going anywhere.

    Even if renewable energy did not reduce prices, as it already does, it would add to Germany’s price stability as a hedge against higher fossil fuel prices in the future. But it does. Renewable energy reduces electricity prices in Germany. And this is still only the beginning. Over the next couple of decades, electricit

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    • Germany unlike the US I believe makes their own renewable energy equipment. That is a good thing. The US mandates renewables and 95% of the equipment is built overseas. With massive government subsidies it of course should lower electric costs. Of course he German economy and per capita income can't match the US but they don't have the heavy defense spending, since they are barred due to their starting of world war II. So they can use this money for environmental subsidies. They still need to back up their renewables with spinning reserve from coal or gas fired units that can produce power on demand. In the first half of 2013 Germany produced over 50% of the power from coal and at least 17% by nuclear. These are extremely cheap power sources. I work at a coal fired plant and we are producing power for less then 3 cents/kw-hr total. (our incremental are less then 2.0 cents/kw-hr. Renewables in an open market (without mandates and subsidies) can't even get close to completing with coal and nuclear which despite misconceptions are clean energy. Renewables require massive amounts of land and transmission facilities. Plus renewable only supply energy if the sun is shining or the wind is blowing, lol. Wind and solar capacity factors are in a good year 25%. Renewable are very disruptive to grid operation also. I guess it is better though for Germany to spend their extra money on renewables instead of military equipment.

      Sentiment: Sell

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