May 29 2013

Germany’s Energy Revolution

For the last two decades, Germany, with their feed-in tariffs, has been seen as a forerunner in the use of renewable and alternative energy technologies. However, after the tragic meltdown of the nuclear power plant Fukushima Daiichi in 2011, Germany has been under intense pressure to shut down their nuclear energy program within a decade and to use primarily renewable energy instead (Bhatti). What is the cost of this “Green” Revolution? Could their methods serve as a model for other countries looking to switch over to renewable energy technologies? Truthfully, the literature is divided on this issue but, along with technological developments, the path to renewables becomes smoother with every passing year.
German’s Energiewende is a big deal. It’s being talked about all over the world. Jabeen Bhatti, a writer for Time World, expressed in his article “The Cost of Green: Germany Tussles Over the Bill for Its Energy Revolution many of the concerns and questions many people throughout the world have as to the rising energy costs for both industry and the normal, every-day consumer (Bhatti). Essentially, the call is for the implementation of renewable energy but they want the government to “maintain a stable policy environment to reduce costs from the transition and distribute them more equitably while increasing investment…” Talk about wanting to have one’s cake and eating it, too.
The goal of the German government is to make it as cost effective as possible; however, there are upfront costs that must be paid. It was the same way in the United States and other countries when the first power plants were being built. There is no way to avoid these costs but perhaps, with the right policies, investors, public support, etc. there are going to be ways to minimize these costs as much as humanly possible.
It also does not help anything that prices paid for electricity in Germany are some of the highest in all of Europe. Furthermore, after approving the energy transition in 2011, aiming to have eighty percent of their electricity come from renewables, Germany has had to deal with technological and infrastructure concerns (Bhatti). Not only that, researchers predict that the federal elections that will be held in September could also slow the shift towards the implementation of renewable energy technologies. They worry voters will be swayed because of the price tag of their current plan.
An attorney named Matthias Lang who words for the law firm Bird & Bird in Düsseldorf and specializes in energy expressed more concern over the upcoming elections. He admits that they are in “uncharted territory” and that the elections can prevent the “necessary adjustments to keep the boat going in the right direction.” He compares elections to currents, a clever and relatable analogy (Bhatti). Currents are not necessarily bad but they can slow down the process or, from a different, more positive perspective, they could end up leading the boat in an even better direction.
On that note, a positive shift occurred in Germany with the passing of a law known as EEG, which helps officials figure out exactly how they are going to pay for the change to renewables. It is truly a complicated issue as with every year they see the need to impose more drastic changes. This revolution will change the German economy, businesses, etc. in ways that the world has never seen before. The common goal is to make the process as cheap as possible but, of course, each specialty has particular concerns and particular viewpoints. For example, environmentalists are worried that such strict restrictions will hurt the renewable energy industry and will serve as a major threat to the transition (Bhatti). These concerns are valid. However, in February of 2013 specialists warned that if the laws were not amended the cost of this transition to renewable energy could has as much as €1 trillion by the year 2040
(that’s 1,287,500,000,000 U.S. dollars).

Here’s a youtube video that could help one visualize just how much one trillion dollars is:

The other concern, other than the price of this implantation, is who exactly is going to pay for it? On January 31,st the German Association of Energy and Water Industries (BDEW) stated that private households pay as much as thirty-five percent of the subsidies for renewable energy, even though they only count for a quarter of energy consumption (Bhatti). Most companies are exempted from paying renewable energy subsidies in Germany. If this changes and prices increase, companies may decide to leave Germany and relocate to another country, which could potentially devastate the German economy. Between the environmentalists, the citizens, the critics (both good and bad), the policies, the economists, and the nay-sayers, this transition becomes one headache of a balancing act. Even though that’s true, it is better to make this transition happen the right way the first time instead of pushing forward with so many missing variables unaccounted for.
Germany is still working on their budgets and developments are being made every day to make renewables more affordable and more efficient. It will be a long, drawn-out process but worth the struggle in the long run. Thus far, in summary, Germany has (1) their goal, (2) many different plans for how it must be accomplished, (3) a price tag, and (4) multiple avenues to gain support from. They must figure a way to balance a budget that will ensure that they meet their goals at a sustainable price and, along with the growth of renewable energy technologies, they will surely meet their goal.

Bhatti, Jabeen. 2013. The Cost of Green: Germany Tussles Over the Bill for Its Energy Revolution. Time World. (date accessed: 28 May, 2013).

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