What subsidies and government meddling in the free market could not accomplish, will probably soon be attempted by a government takeover.
Flagship daily the Frankfurter Allgemeine Zeitung (FAZ) here writes that there are 4 main obstacles in Germany’s energy transformation:
1. Wind supply is unpredictable.
2. There’s no good way to store electricity.
3. Increasing energy efficiency to reduce consumption by 10% by 2020 and 25% by 2050 appear unrealistic.
4. Expansion of the national power distribution grid is stuck.
One problem is that Germany is made up of 16 different states, which are all pulling in different directions, thus leading to disharmony in the country’s effort to convert over to renewable energy. While the rural northern regions are installing hundreds of wind parks, the populated markets to the south who need the power are blockading the expansion of the power transmission network. How does one coordinate sixteen different plans to produce and consume electricity, with most of them ignoring market principles? Right now in Germany it’s chaos.
The FAZ is hardly optimistic and reminds us that there will not be any grid expansion before next year’s national elections. There’s not a major power company out there that is willing to invest amid such uncertainty.
The FAZ writes:
The biggest setback for the energy transformation came at the beginning of the year: The state-run Dutch grid operator Tennet, without whom nothing will function at the German north coast, announced that it did not have the money – 15 billion euros – for connecting to the offshore windparks . Thus not only are Lower Saxony’s wonderful energy plans finished with a single blow, but so are those of the entire Federal Republic along with them.”
To come up with the money, Tennet requested state support. But Tennet competitors cried foul and claimed the Tennet proposal was a “socialization attempt.” But as FAZ writes, it’s probably going to come to that anyway. The City of Hamburg has already taken the step, calling their 25.1% takeover a “remunicipalization” of the energy supply. Already Germany’s northern state of Lower Saxony, soon to be home to dozens of huge offshore wind parks, is thinking along the same lines. The FAZ writes:
At the state government in Hannover, where it is not the socialists and green central planners who have the say, it’s the conservative and free democrats, and they are on the verge of breaking a taboo. To rescue Germany’s energy transformation, perhaps the only thing left to do is to pull the emergency brakes: a rapid takeover of the power distribution grid by the state.”
As the Germans like to day: “Socialize the hardships, privatize the benefits.” It’ll be interesting to see if the Free Democrats will go along with that plan.