Wednesday, August 27, 2014

Germany's Poorly Calculated Gamble on Renewable Energy

The Wall Street Journal has an article today (subscription) which reminded me of an article I'd read last week.
I've altered the WSJ article because I'm a poor gambler who knows some good ones - meaning people who know what facts they can, study the game, control their emotions and play the odds/stats.
Germany didn't gamble like that.

Germany's Expensive Gamble on Renewable Energy: Companies Worry Cost of Plan to Trim Nuclear, Fossil Fuels Will Undermine Competitiveness | Wall Street Journal (subscription)
...many companies, economists and even Germany's neighbors worry that the enormous cost to replace a currently working system will undermine the country's industrial base and weigh on the entire European economy. Germany's second-quarter GDP decline of 0.6%, reported earlier this month, put a damper on overall euro-zone growth, leaving it flat for the quarter.
Average electricity prices for companies have jumped 60% over the past five years because of costs passed along as part of government subsidies of renewable energy producers. Prices are now more than double those in the U.S.
"German industry is going to gradually lose its competitiveness if this course isn't reversed soon," said Kurt Bock, chief executive of BASF SE, BAS.XE -0.50% the world's largest chemical maker.
If you can access the article it's a worthwhile read.

Now ... to the quality of the gambling.

German government criticised for energy transition |
A recent report published by the German Court of Auditors scrutinizes the government's “Energiewende” renewable transition project, calling the campaign expensive, disorganised and inconsistent.
To this day, the Merkel government does not have a clear overview of the financial effects of the Energiewende, the S├╝ddeutsche Zeitung quotes the auditors as writing. 
...According to the report, the extra burden on the budget is in double-digit billions annually. One of the reasons for this, the authors claim, is that responsibilities are not delegated clearly enough.
"As a result federal ministries implement measures that are often uncoordinated, inconsistent and sometimes redundant"
One claim sometimes made about wind and solar is that they increase energy security. A German Energy blog post reports "Germany’s energy import dependence was 61.1%" in 2012 according to a report from the German Federal Statistical Office (destatis), while "the Arbeitsgemeinschaft Energiebilanzen (Working Group Energy Balances – AGEB)" shows, for 2013, "The percentage of imported energy in AGEB’s calculation is 71%."

The difference?
"...eurostat treats nuclear energy as domestic (and therefore does not include in imported energy), whereas AGEB treats it as imported energy."

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