€175 Billion Bombshell: Germany’s Green Energy Policy To Hit Households Hard

[FBaggins]

A new study suggests that the green energy transition will make electricity significantly more expensive. By 2020, electricity consumers will have to forfeit 21.5 billion Euros in costs caused by the transition to renewable energies. This has been calculated by the energy experts at McKinsey in a recent study. That is 60 percent more than the 13.5 billion Euros consumers had to pay for renewables last year.

McKinsey has also calculated what effect the transition to renewable energy sources will have on the electricity prices. The costs include the difference between the high prices, which are paid for electricity generated by wind and solar power plants based on the Renewable Energy Sources Act (EEG), and the price of electricity at the power exchange. Factored in too are the higher network charges which will finance the additional power lines required. Overall, the renewables cost totals 175 billion Euros between 2011 and 2020, according to the study.

...snip...

The new study also reveals that despite its best efforts, Germany will be unable to achieve its ambitious climate change targets. According to the German government, CO2 emissions should be reduced by 40 percent by 2020 compared to 1990. However the consultants maintain that even under the most optimistic scenario, a reduction of 31 percent max is realistic - which would make Germany still the world leader. Unlike the Federal Government, McKinsey thinks a decline in electricity demand is unrealistic. The consultants even predict that the demand will increase by 0.3 to 0.4 percent per year.

http://thegwpf.org/international-news/5613-175-billion-bombshell-germanys-green-energy-policy-to-hit-households-hard.html

What's the over/under on how long it will take McKinsey to drop from "one of the most respected economic analysis firms in the world." to "Poor little fellers haven't got a clue" ?

"The financial burden due to the energy revolution is enormous," says McKinsey expert Thomas Vahlenkamp, "the main burden will be borne by households." For them, the electricity price per kilowatt-hour is forecast to climb from 25.9 cents in 2011 to 29.0 cent in 2020. [...]

29 cents? I think I pay eight or nine now. And since the article doesn't convert Euros to dollars, it's reasonable to assume that they're talking about euro-cents and this price is actually $0.38/kWh.

[intaglio]

1. Let's start with the site to which you link

Global Warming Policy Foundation a leading denialist site whose only aim is to "to challenge "extremely damaging and harmful policies" envisaged by governments to mitigate anthropogenic global warming" It keeps it's donor secret perhaps because those donors have links to the Oil industry, but not - unless Dr Peiser is issuing lies - to "energy companies". The GWPF has refused freedom of information requests for details of its funding.

Dr Benny Peiser is a Social Anthropologist with no qualifications in meteorology, atmospheric physics or climatology. He claims to be founder and publisher if CCNet an organisation which has made no mark on Google and whose link in GWPFs page is disabled.

Trustees include Lord Lawson (former Tory Chancellor of the Exchequer and long time supporter of the oil industry) and The Bishop of Chester.

The GWPF's "Academic Advisory Council" includes such luminaries as Sir Samuel Britain (an economist and columnist for the "Financial Times&quot ; David Henderson (another economist); Phillip Stott (a biogeographer). More noteworthy are Richard Linzen (who is at least a climatologist) who had his proposed negative feedback mechanism (the infrared iris effect) was rapidly proven to be wrong and whose critcism of climate models has also been shown to be laughably idiosyncratic; and Freeman Dyson who agrees that Athropogenic Global Warming exists but thinks the effects might be mitigated by planting millions of trees (and ignoring the subsequent methane burden).

Now to the McKinsey report, shame you don't link to the original Handelsblatt article:

The relevant passage appears to translate to:
"The financial burden of the energy revolution are enormous," says McKinsey expert Thomas Vahlenkamp, ​​"the main burden will bear the household." For them, the current price per kilowatt-hour forecast to 25.9 cents in 2011 to 29.0 cent in 2020 to climb. The proportion of the cost of the energy transition will increase from 4.2 to 6.3 cents. The industry in 2020 will be 14.7 (12.7) must pay a cent per kilowatt hour. Of these, 4.9 (3.5) cents of the cost of the energy transition.

Or to parse it correctly over 8 years at current prices for renewables the price of electricity will rise by 12% due to the transition. Of course that assumes that the German government does not provide extra support, that the energy companies are not forced to reduce their profits a bit to help cover the costs and if the price of renewables does not drop - which, guess what? is what has been happening.

Oh, nuclear is right out the window, that would be even more expensive than renewables, even at current levels of Government subsidy - which is why Seimens and others have got out of the nuclear plant building business.

Ho - Ho - Ho

[RobertEarl]

2. Nuclear is more expensive?

No its not because we are passing the costs of nuclear onto people who come after us. It hardly costs us anything, today, when the true cost is taken into account.

"Too cheap to meter" just for today, but tomorrow you suckers are gonna pay.

It is simply amazing to me how nukes got away with the lies for so long, eh?

[FBaggins]

3. I'm sure that "attack the messenger" looked like your best bet.

Attacking the facts certainly wouldn't work.

I know nothing about the GWPF and am happy to take your word for it. But since we aren't relying on them for any of the real content, does it really matter? If Fox news reports that a Gallup poll shows the President trailing by two points... does it matter that the articles was on Faux? Or is it Gallup's reliability that counts?

Or to parse it correctly over 8 years at current prices for renewables

You've stretched "parse" beyond recognition. They nowhere say that they've assumed that renewables prices will remain unchanged. You're seriously assuming that "one of the most respected economic analysis firms in the world" would leave off any actual analysis?

Of course that assumes that the German government does not provide extra support

Oh... right. I forgot that the German government has a supply of funds that don't come from Germans. A cost isn't actually a cost if the government pays it?

Oh, nuclear is right out the window, that would be even more expensive than renewables,

Seems you've forgotten that we're talking about Germany here. There is no way to stretch the truth far enough to pretend that nuclear power would not provide the cheapest generating option to fill that gap (with only reduced demand being cheaper).

[intaglio]

4. Oh dear, You remain blind

What is it about the words "Lets start with" that confuses you? The site you have quoted seems to be an astroturf group for the usual suspects of big industries such as oil and gas, has no expertise in any aspect of power generation and will willingly rubbish any and all aspects of the renewable industry. Let me repeat that so you cannot deny seeing it;

The site you have quoted seems to be an astroturf group for the usual suspects of big industries such as oil and gas, has no expertise in any aspect of power generation and will willingly rubbish any and all aspects of the renewable industry.

The fact you were happy to take my word for it merely means you did not bother to do your own research. There is also the fact that the quotations used were limited, which is deceit by omission

What was it about linking to the actual article that confused you? The facts? or just your misuse of them? The price rise quoted was 12% over 8 years, which is not a great deal given the recent price rises endured (in Europe) due to the restricted supply of oil and natural gas. McKinsey will be using current prices because it cannot predict future prices it has to go with best current estimate. Additionally the excess cost quoted has a lot to do with new infrastructure such as power networks, something I missed and something which would be needed whatever the generation method. It also seems to include early decommissioning costs for the radioactive tea kettles that Germany no longer wants. In any event the solution peddled by GWPF or their bankers is the increased use of gas generation because, in their view, AGW is not happening.

Now into the nitty gritty. Part of the price rises quoted for the consumers could be ameliorated by an increase in subsidy, a subsidy already given to the nuclear industry by every country that uses these uneconomic dinosaurs. Yes, that would come from taxes and other state resources but, as noted, what's new about that? Additionally the power companies could be required (quel horreur!) to meet part of the costs from their profits.

Now your idea that nuclear would be the cheapest option has a germ of truth; problem is that it is only cheaper if you keep out of date, superannuated plants on line, ignore the extra risks and ignore the subsidy they already receive. The existing plant are, from what I hear, all on the verge of decommission and would need gross deformities in the safety regulations to allow them to continue. Those are risks the Germans are not willing to take.

Why not new plants? Well to begin at the beginning it would be 15 years before a new plant could come on line and that is a conservative estimate. Siting, planning, geological studies, plant design, infrastructure planning, environmental approvals, construction, fueling, commissioning, safety audits, evacuation plans all take time. Let us add in then the decommissioning costs, the loss of land, security costs, the (as yet) unconstructed and unproven reprocessing technologies that would allow the high level waste to be buried and the extensive and unproven construction of safe burial sites for such reprocessed waste. Nuclear was never cheaper and will never be cheaper and that is why Seimens, my employer, is getting out of nuclear.

[FBaggins]

10. You're making it up out of whole cloth yet I'm the one that's "blind"?

What is it about the words "Lets start with" that confuses you?

??? Did you miss that I dealt with the rest of the post as well?

Repeating poor arguments doesn't strengthen them. You attack the messenger all you like, but it isn't the astroturf organization that's coming up with the cost estimates... they're just reporting them. I'm satisfied that you've correctly identified their leanings. But since there isn't any evidence (apart from your imagination) that any of what they reported was incorrect. The only link you provided was merely the german original for which this is the english translation. Can you point to anything in the astroturf article that is their own opinion rather than a translation of the original article?


What was it about linking to the actual article that confused you? The facts?

You haven't linked to any "facts" so far. You've imagined that the analysts used current prices, or that the extra costs are for infrastructure that needed to be built anyway, but you just made that up.
Additionally the excess cost quoted has a lot to do with new infrastructure such as power networks, something I missed and something which would be needed whatever the generation method

Sorry... that's incorrect. The additional transmission costs are seperate from general infrastructure requirements. You may have missed it, but Germany does not have a homogeneoud mix of renewables throughout the country. The transmission costs involve getting offshore wind power to the mainland, solar power from the south to the north and wind power from the north to the south... as well as additional exchange with neighbors to take excess power when there's a glut and deliver needed power when there's a shortfall.

It also seems to include early decommissioning costs

Seemed? "What was it about linking to the actual article that confused you? The facts?"

Now into the nitty gritty. Part of the price rises quoted for the consumers could be ameliorated by an increase in subsidy, a subsidy already given to the nuclear industry by every country that uses these uneconomic dinosaurs.

Repeating the claim with different words doesn't deal with the fact that the argument is already well rebutted. A government subsidy doesn't "ameliorate" costs. It shifts them from consumers to taxpayers. And you may have missed the recent news that not only are European governments struggling (and therefore don't have extra cash), but Germany has been cutting subsidies, not increasing them (that, in fact, they are increasing part of the offset to those subsidies that consumers have to pay).

Now your idea that nuclear would be the cheapest option has a germ of truth

It isn't a "germ" of truth. It's 100% fact. The plants already exist and were retired well before their lifespan ended.

Why not new plants?

Why even talk about new plants? Germany had no plans to build new reactors. That wasn't the change.

[Fledermaus]

5. From "The Global Warming Policy Foundation"

The BBC And Climate Change: A Triple Betrayal
http://thegwpf.org/gwpf-reports.html

[oldhippie]

6. My friends in Munich tell me they are paying ...

... about US$ 0.39 per KwH in their apartments. Over 4 times what I pay here in Texas. That's got to hurt.

[kristopher]

7. It looks to me like electricity is in line with the overall cost of living

The cost Germany:
http://www.numbeo.com/cost-of-living/country_result.jsp?country=Germany

Munich:
http://www.numbeo.com/cost-of-living/city_result.jsp?country=Germany&city=Munich

Tokyo:
http://www.numbeo.com/cost-of-living/city_result.jsp?country=Japan&city=Tokyo

USA:
http://www.numbeo.com/cost-of-living/country_result.jsp?country=United+States

New York:
http://www.numbeo.com/cost-of-living/city_result.jsp?country=United+States&city=New+York%2C+NY

Austin TX:
http://www.numbeo.com/cost-of-living/city_result.jsp?country=United+States&city=Austin%2C+TX

[oldhippie]

8. You must be using fuzzy math .....

Austin CPI 81.28
Munich CPI 100.17

Munich's CPI is 23% higher than Austin.

Electricity (kWhrs) is four times (400%) higher.

Doesn't look in line with general cost of living to me.

[kristopher]

9. You are not making the proper comparison.

The cost per kwh is one way of measuring energy cost but it has to be related to the energy intensity of living conditions. Part of the money that is included in the cost of energy is what is spent on energy efficiency and conservation.

2010 German per capita electric consumption = 7,149kwh/year

Texas per capita electric consumption = 14,179kwh/year

In order to get your most accurate picture for purposes of comparison it is also helpful to look at the total energy bill, not just the electric portion. Things like public transportation can have a very large impact on your total annual energy bill. When you are living in a place with a high cost of living that includes high energy prices the lifestyle and the infrastructure are geared to making it work. I mean seriously, you are sitting in one of the throne rooms of the carbon emissions empire acting shocked about energy prices in Germany? Something about that doesn't compute.

The real story here is that the energy costs in Germany are being greatly exaggerated by a dangerous obsolete industry that is being crushed by a new and, in all ways better, set of emerging technologies. The nuclear industry fights just as hard and uses tactics every bit as ugly as the fossil fuel industry.

Brace for an electric shock
Published 11:16 AM, 23 Feb 2012
Matthew Wright

Germany's 37 million households will soon be paying half as much on their annual electricity bills as Australian households. An average German household pays just $1060, or about $88 a month, for electricity to run their computers, lights and other household appliances, while an Australian household in 2013 will be paying a whopping $2117, or $176 a month, according to the Australian Energy Market Commission (AEMC).

Australian retail electricity prices will rise 37 per cent from 2010-2014 (AEMC), widening the chasm between German and Australian bills and bringing hardship to Australian families already doing it tough from the high dollar and the financial crisis. And it’s going to get worse. As our electricity bills soar, Germany's electricity bills will rise minimally. According to the German energy agency (DENA), bills will rise just 20 per cent by 2020. For most families this will be offset by the legislated German-wide 20 per cent energy efficiency target, which will result in a further reduction of electricity consumption in German homes, reducing bills even more.

This may be contrary to what you've read in the popular press and understand about relative electricity costs between our two countries. Germans and Australians are basically paying the same amount for each retail unit of electricity at the meter, with Germans paying 0.31 Australian cents today which Australians will match next year (0.31 cents in 2013/14). The difference is the volume purchased, as highlighted above. Germany has a comprehensive climate and energy security policy suite that drives renewable growth and energy efficiency across the economy, which has led to average households that use half as much electricity as Australian households.

Germany's low electricity bills are saving families so that they can now spend on the important things in life, but that's not all that Germany's highly efficient electricity sector has achieved with its lower bills for consumers:
1. It has ...
2. Renewable energy is...
3. By reducing ...
4. Reducing the already ...
5. Lowering the cost of...
6. Helping all economies ...
7. Building a leading ...

....

More at: http://www.climatespectator.com.au/commentary/brace-electric-shock


See also:

Rising electricity prices have little to do with renewable energy
Published On Sat May 05 2012 Tim Weis

While spring in Ontario has yet to bring much rain, there’s been no shortage of mudslinging over rising electricity prices. But there’s more to it than critics of renewable energy would you have you believe: new data helps to clarify how prices are linked more to nuclear power than clean energy programs.

To start with, electricity prices are going to go up no matter what source of energy we choose to use. Half of the provincial electricity system’s generating capacity — including almost every nuclear reactor — needs to be replaced or rebuilt within the next 10 years and you simply cannot build power plants in 2012 at 1980s prices.

While it’s the only province so far to be phasing out coal, price increases are by no means exclusive to Ontario. In coal-powered Alberta, energy prices are forecast to rise by 50 per cent between 2010 and 2016. Between 2002 and 2010, rates in Nova Scotia rose by 37 per cent. In Saskatchewan they rose by 36 per cent. And B.C. Hydro forecasts a rate increase of 32 per cent between 2011 and 2014.

What seems to be unique to Ontario is the fear that renewable energy is the sole cause of the increase. Although Ontario’s ambitious clean energy development targets are being met by establishing contracts with renewable energy generators in the form of feed-in tariffs (FIT), the province has similar long-term contracts with both nuclear- and gas-powered plants.

The difference with renewable energy, however, is that FIT prices are fully disclosed, while the same cannot be said for nuclear...

http://www.thestar.com/opinion/editorialopinion/article/1173543--rising-electricity-prices-have-little-to-do-with-renewable-energy

[oldhippie]

11. Typical ......

Just change the subject and obfuscate the issue.

"The cost per kwh is one way of measuring energy cost(yes, that's what we were talking about) but it has to be related to the energy intensity of living conditions (no, it doesn't)."

I was making a simple comparison about the cost of electricity. You tried to say it was in line with the general cost of living. It's not.

I'll leave it to the judgment of others in the group to determine who was making the proper comparison and the veracity of your response.

[FBaggins]

12. The argument confuses cause and effect.

Is it no big deal that electricity costs four times as much because they use less of it... Or do they use less of it because it's so expensive?

As an example - Do Europeans use less electricity because they use clothes lines and drying racks instead of dryers... Or do they avoid dryers because electricity is so much more expensive?

[kristopher]

13. Coal and nuclear power drive consumption - true.

Last edited Tue May 8, 2012, 11:01 AM - Edit history (1)

Renewables drive efficiency and conservation - true.


This is a large part of why nuclear is part of the problem related to the transition away from fossil fuels.

Nuclear does not shut down coal power at all - it drives consumption instead and makes more solid the economics of coal.

There are two main components of how this works:
First the utilities overbuild with large plants because it is less expensive per unit of generation for them to build larger than they need. Since they have excess capacity they push consumers to use more whether they need it or not.

Second is the difference in awareness of the source of power. When electricity is a "black box" commodity with no price feedback people simply don't pay attention to how much they use. When they are closer to the source of generation such as they are with locally or individually owned distributed generation, they are far more aware of how they, personally, use power.

It is that awareness, in combination with electricity generation capacity matched more accurately to demand, that results in the drive towards efficiency and conservation.

Nuclear does not shut down coal power at all - it drives consumption instead and makes more solid the economics of coal.

[FBaggins]

14. Nope. Cost and availability drives consumption.

Along with the consumer's desire for whatever it is that is being purchased. That's the same for chocolate and movie tickets and electronics.

Renewables drive efficiency and conservation - true.

Only to the extent that a lack of cheap reliable power forces people to do without.

"Renewables can meet your needs" and "renewables will force you to learn to do without so that you 'need' less" are two very different arguments.

[AlecBGreen]

15. Oh no! *clutching pearls*

"For them, the electricity price per kilowatt-hour is forecast to climb from 25.9 cents in 2011 to 29.0 cent in 2020."

A 12% increase over 8 years!?

[FBaggins]

16. That's obviously in constant dollars

So yes, it's a big deal.

It's the equivelent of a US program costing a trillion dollars over the same period.

And FYI - I don't have the foggiest idea what the "clutching" comment refers to, but I can tell you that a number of people on DU have claimed that it's offensive. Probably would be kind to just edit that out.