The Great Subsidy Pile-On! German Consumers Should Expect More Massive Rising Costs For Renewable Energy

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As it becomes more and more evident that renewable energies such as solar and wind are turning out to be far costlier than ever anticipated, and will do nothing to the climate, the masterminds behind them don’t want to hear it. Now they are going to do whatever it takes to make them work – no matter the cost.

In Germany, BARD company, located in the northern seaport of Emden, has just announced it will lay off its 100 employees at its windmill rotor blade factory. The reason? Lack of demand. Offshore wind companies are hesitating to invest in offshore windparks due the high risks surrounding the technical challenges.
Hat-tip  EIKE, which writes:

Offshore company BARD is closing its rotor blade production in East Friesian Emden. ‘100 employees are impacted,’ said the Chairman of Management Bernd Ranneberg in Emden on Monday.”

So how do you encourage companies to invest in high risk renewable energy projects? Simple – you eliminate their risk. This is what a working group now advises the German government to do: It is the lowly consumers who should pick up the risks and costs for the adventurous business of offshore windparks. The companies investing in them won’t have to worry, and so can dive right in.

Germany daily Die Welt yesterday writes:

To bring the stalled offshore wind power back into gear, the State and power consumers will overtake the risks from the investors. This is the only way of assuring the construction of wind turbines needed for meeting the objectives of the country. The main point is the takeover of the liability risks of the power grid operating companies, which have been the main cause of delay.”

Socializing the risks and costs. Die Welt quotes:

‘To the extent that possible damages cannot be insured despite technical and organisational measures, the compensation for damage is to be socialized,’ says a paper produced by a working group that is represented by power grid companies, windpark operators, and suppliers such as Siemens, as well as the Ministry of Economics. Possible would be an intervention by the federal government, or rolling over all the power grid costs and fees onto the power customers.”

Astronomical costs ahead. As Die Welt writes, there are other costs:

Other possible cost drivers in connection with the energy transformation, such as high buying prices for power from the construction of new power plants, or the rising payments for renewable energies, are not included in the calculation. A study by the Technical University of Berlin summed up the direct and indirect costs of the Renewable Energy Feed-In Act until 2030 and pegged them at € 335 billion.”

Poor Germany. Finally, EIKE writes that the German Federal Power Grid Agency warns that power consumers need to expect “massive power price  hikes.” The German news agency DPA writes:

The reason the necessary expansion of the power grid for alternative energies…the investment range is from about 30 to 47.5 billion euros.”

High prices normally would drive companies out of Germany. But no problem here, too. Large power consumers like industries are exempt from paying high power prices. The entire costs will be borne by the lowly little consumers. The government saw to that last summer. The DPA writes:

Higher costs for consumers were assured by a law called the Power Grid Charge Regulation passed during the summer of 2011, where large power consumers can apply for a discount…more than 1600 applications have poured into the Federal Agency up to now. The discounts or full exemptions have a volume 400 million euros annually – money that will have to be paid by the remaining power consumers.”

Clearly huge costs are in the pipeline for German consumers. Call it fuel for social anger.

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18 responses to “The Great Subsidy Pile-On! German Consumers Should Expect More Massive Rising Costs For Renewable Energy”

  1. Marcus

    Hi,

    I thought the following stats in an article on Matt Ridley’s fascinating:

    1. Estimated reduction in CO2 output due to wind energy: less than 1%! (Caveat: UK, EU,world? – context not explicit).

    2. Estimated reduction in US CO2 output due to switching from coal to the now cheaper shale gas: 7%!

    The mindboggling injustice of it: You get a 7-fold better CO2 reduction by spending LESS overall!

    Link: http://www.rationaloptimist.com/blog/the-beginning-of-the-end-of-wind.aspx

    With best regards,

    Marcus

    1. Bruce of Newcastle

      I think a 1% saving is probably wildly optimistic. The inefficiency forced onto the backup gas and coal power plants is probably causing more net CO2 emissions than if the wind turbines were simply turned off.

      Pumped storage or an interconnect with hydropower would correct this, as occurs in Denmark…which has the highest electricity prices in Europe.

  2. R. de Haan

    “As it becomes more and more evident that renewable energies such as solar and wind are turning out to be far costlier than ever anticipated, and will do nothing to the climate…” AND DON’T DELIVER!!!!!!!!!!

    http://wattsupwiththat.com/2012/03/21/study-it-takes-10-units-of-alternative-electricity-sources-to-offset-a-unit-of-fossil-fuel-generated-power/

    Let’s face the fact.
    This is the equivalent of throwing money out of the window.

    At least you know the money is gone when thrown out of the window.

    With wind and solar we’re only creating expensive heaps of scrap. Period.

    1. DirkH

      I wouldn’t rely on that paper. It’s by a sociologist. No knowledge about energy in there. Someone in the comment thread links to this video by Richard Feynman about social sciences…
      http://www.youtube.com/watch?feature=player_embedded&v=IaO69CF5mbY

  3. Bernd Felsche

    Of course people are entitled to subsidies so that they can become eligible to receive further subsidies to produce nothing that somebody wants to buy at the regulated price. Isn’t that how you run a productive, successful economy?

  4. Casper
  5. R. de Haan

    In the mean time Global Ice Extent according to the same people who told the world Arctic Ice extent was in a “Death Spiral” tell us it has arrived ABOVE NORMAL.
    http://rarereaders.seablogger.com/2012/03/the-real-world-from-another-view/

    Time to mark 2018 in your calendars.
    http://chiefio.wordpress.com/2012/03/16/2018-mark-your-calendars/

  6. R. de Haan

    DirkH
    21. März 2012 at 18:07 | Permalink | Reply

    Dirk, I am watching from my window at a wind farm and as I speak non of the mills is producing a single milli watt of power.

    Build more, build bigger, same result under these conditions.

    Wind power is for the scrap heap. Period.

    1. DirkH

      Sure; but the paper cited by Watts is junk anyhow. Nobody knows what that guy did there with his statistical models; but it seems to come to the predetermined conclusion that we will all need to use much less energy if we are to save the planet. And other crazy conclusions, like the need for coercion.

  7. Paddy

    Electricity from wind and solar sources are variable and intermittent. Backup sources for about 80% of the rated capacity of wind and solar is essential in order for them to contribute to the base load of the grid. My question is simple, why build wind and solar generators in the first place? The backup gas plants is all that is needed to add to the base load of the grid, and it can be built, operate and produce electricity for a fraction of the direct and subsidized costs of wind and solar generators.

    I am amazed that rate payers throughout Europe are not in the streets demonstrating against the high cost of electricity.

  8. Barghumer

    I lived in Germany and paid the taxes. I did the recycling with the yellow bag collection, the white bags, and even paid to recycle fallen leaves once (until I learned that Germans dump them on public land at night). Germans may not have a very open society, but they show the way with their industry and have open cheque books. No one else in Europe has the cash to be able to prop up fraudulent financial systems of fellow EU nations and gamble with making a breakthrough in green energy at the same time. Only Germany could do this “sink or swim” green project and not be sure of sinking if they fail to realise the free energy dream.

    Good for the Germans – I hope they succeed, and thanks for trying. I am just glad I don’t have to pay the taxes anymore, and I wonder, will the other EU nations be able and willing to bale out the Germans if the project fails?

  9. Chris Frey

    Hi there,

    Barghumer,

    your last question is the one I am thinking of since quite some time. I have a guess, and you may guess what guess I have.

    It is worse, because it is hidden everywhere: federal Finance Minister Schäuble yesterday announced to have a balanced budget by 2016. No mention of subsidies for wind power. Apparently this has not be taken into account.
    Which leads to another question: who is going to pay?

    Not the industries, not the wealthy (fed by EEG), not the state – see budget planning… just who? Any guess?

    Chris Frey

    1. DirkH

      Wind and solar subsidies are not part of the budget because it’s money taken from the ratepayers. Technically, not a tax. It is, by the way, a price fixing measure and in clear violation of the free trading of goods that the EU guarantees; the High Court of the EU has decided that this price fixing is a justified excemption from the Free Market principles due to the threat of CAGW… This is also the reason why the solar and wind industry NEEDS, absolutely NEEDS the threat of CAGW to survive…

  10. Barghumer

    @DirkH

    If this industry absolutely NEEDs the threat of CAGW, and the price fixing has been justified by the EU, how come these industries are failing?

    Is it just that there is not enough money going in, so there will have to be higher contributions required from users of electricity, or is there some acknowledgment that this baloon is holed, and no matter how much hot air is pumped into it, it will never rise again?

    1. DirkH

      Merkel needs to deflate it to curb public unrest about rising electricity cost, and even more importantly, she needs to limit it so that it can’t destabilize the national grid. She tried to be the “climate chancellor” but the theme climate is poisoned since COP15, 2009, and she has since avoided the issue like the plague. Since she rules without the SPD, she has deflated the subsidies two times a year IIRC; average 30% total a year.

      There is no open admission of failure. She tries to weasel out of the affair.

      The Solar companies grew up in a “seller market” – people would pay ANY price for panels, so high was the subsidy. The companies had a typical dotcom mentality – expensive offices etc. They have not grown up to become fighters in a crowded market. No tough cost controlling until it was too late.

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