Saturday, November 12, 2011

German Council of Economic Experts Criticism of Germany's Energy Policy

The first section of the annual report from the 'five wise men' of the German economy is now available in English.  Comments specifically geared to energy policy begin on page 13 of the German Council of Economic Experts – Annual Report 2011/12.

I highly recommend reading the full section if you have an interests in economics and energy policy, so I hesitated to pick out a particular section for reference, but ...
The main problem of the Renewable Energies Act is thus the costs associated with its (apparent) success. It has proved to be very effective in fostering extra capacity, but is at the same time extremely inefficient. In particular, the 20-year guaranteed minimum remuneration period at the prices valid at the time of constructing the renewables plant means that the renewables structure currently in place will continue to involve very high payment obligations for a lengthy period. Hence it would be impossible to lower the costs of the Renewable Energies Act in the foreseeable future even if the promotion of newly installed plant were to be ended immediately. This is because an immediate stop to the renewables expansion programme would merely reduce the volume of promotion over time only in so far as a plant that has been producing electricity for 20 years reaches the end of the promotion entitlement term. In this way additional costs had already been incurred by the year 2010 vis-à-vis expected future electricity prices amounting to a present value of over 80 billion euro.

No comments:

Post a Comment