The Global Warming Policy Foundation

CCNet –  16 October 2012
The Climate Policy Network

 

Man-Made Energy Crisis

800.000 German Households Can No Longer Pay Their Energy Bills
 
 

The Germans are facing the biggest electricity price increase in a decade. And that is just the beginning. By 2030, they will have spent more than 300 billion Euros on green electricity. --Welt am Sonntag, 14 October 2012
 
 
 
Germany’s consumers are facing record price rises for green energy. Especially for small household budgets – with real incomes more or less stagnant for many years – energy costs are becoming increasingly intolerable. In 2009, Germans spent about 100 billion Euros for energy – an average of 2,500 Euros per household. Social campaigners and consumer groups complain that up to 800 000 households in Germany can no longer pay their electric bills. If the rise in energy prices continues, this “second rent” could soon exceed the main rent in some parts of Germany. --Focus Magazin, 15 October 2012
 
 
 
While social organisations warn about “fuel poverty” rising in Germany, the industry complains about deteriorating competitiveness. According to a recent survey by the Association of Industrial Power Industry, Germany already occupies the fourth place on the list of highest industrial electricity prices in the world. In many Asian and European countries, electricity is more than 30 percent cheaper for companies, in the U.S. or Russia it is cheaper by more than 50 percent. Investment decisions, the industry association warns, therefore, increasingly threaten to go against Germany. --Welt am Sonntag, 14 October 2012
 
 
 
 
The head of Germany's powerful employers' lobby group is criticizing the government for failing to keep the costs of phasing out nuclear power in check. German Employers Association chairman Dieter Hundt said Tuesday the government must end "the madness of subsidies" for renewable energies, saying they threaten the nation's competitiveness. --Associated Press, 16 October 2012
 
 
 
 
Germany’s switch to renewable energies is driving up electricity bills across the country, with a green technology surcharge set to rise by nearly 50 percent next year. With frustration over the high price tag, it promises to become a key issue in next year’s election campaign.  Voters may start to withdraw their support for the green energy transition. --Spiegel Online, 16 October 2012
 
 
 
Renewable energy is the future, say environmentalists. But for green and ethical investors it has turned into a nightmare, with makers of wind and solar power systems among the worst-performing stocks in recent years. -- Patrick Collinson, The Guardian, 12 October 2012 
 
 
1) 800.000 German Households Can No Longer Pay Their Energy Bills - Focus Magazin, 15 October 2012

2) Electricity Price Explosion: Germans Face €300 Billion Green Energy Bill - Welt am Sonntag, 14 October 2012

3) Germany Facing Power Blackouts - The Daily Telegraph, 16 October 2012

4) German Voters May Kill Green Energy Transition - Spiegel Online, 16 October 2012

5) German employers slam cost of energy switchover - Associated Press, 16 October 2012

6) Renewable Energy: A Nightmare For Green Investors - The Guardian, 12 October 2012 
 
 
 
1) 800.000 German Households Can No Longer Pay Their Energy Bills
Focus Magazin, 15 October 2012

Germany’s consumers are facing record price rises for green energy. Social campaigners and consumer groups complain that up to 800 000 households in Germany can no longer pay their energy bills.

Over the last few days, it has become obvious that the Green Energy Levy will rise to record levels next year. The first thing Peter Altmaier, Germany’s federal environment minister, would say is this: consumers should save electricity. After a meeting with local authorities, the energy industry, consumer advocates and charities he announced that to achieve this he wants to send free energy consultants to all households in Germany.

His proposal, however, was met by massive criticism: the chief executive of the Joint Welfare Association, Ulrich Schneider, said: “It would be naive to think that growing poverty caused by rising energy costs can be solved by free energy-saving advice.” The environment minister of Lower Saxony pointed out that energy advice was already available. What was needed now was an immediate response to the rising cost of electricity.

A few days later, Altmeier finally said that he wanted to shake up the Renewable Energy Act and thus get any further expansion of the renewable energy under control.

Electricity and heating costs overwhelm German households

The fact remains that as of next year electricity will be more expensive for Germans than ever before. This is all the more frustrating as they have to pay increasingly more for other things too. Yet energy costs are turning into a so-called ‘second rent’, making life for Germans ever more expensive.

Some years ago the tariffs for water, sewage, refuse collection and street cleaning were regarded as a nuisance, but looming price increases for energy are focusing Germans’ attention, says the Association of German Tenants in Berlin. “The disproportionate rise in electricity and heating costs makes living costs a growing problem for many households,” said DMB director Lukas Siebenkotten.

On average 34 percent of net household income are spent on rent and energy. That is more than ever. And it is only partly because housing rents are rising: The Association of House and Apartment Owners has found that energy prices have increased far more than rents in the past 15 years. According to the Association of Energy Consumers, heating and hot water costs now comprise 41 percent of bills on average - and rising.

Hundreds of thousands cannot pay their bills

Especially for small household budgets – with real incomes more or less stagnant for many years – energy costs are becoming increasingly intolerable. In 2009, Germans spent about 100 billion Euros for energy – an average of 2,500 Euros per household. Social campaigners and consumer groups complain that up to 800 000 households in Germany can no longer pay their electric bills. If the rise in energy prices continues, this “second rent” could soon exceed the main rent in some parts of Germany.


Energiewende, Erneuerbare Energien, Strompreis
European electricity prices in comparison

Translation Philipp Mueller
 

2) Electricity Price Explosion: Germans Face €300 Billion Green Energy Bill
Welt am Sonntag, 14 October 2012

The Germans are facing the biggest electricity price increase in a decade. And that is just the beginning. By 2030, they will have spent more than 300 billion Euros on green electricity.

Electricity consumers have to increasingly pay more and more for the nuclear phase-out and the green energy transition. Next year electricity prices could rise at a magnitude not seen for ten years: by more than ten percent. According to the “Welt am Sonntag”, the growing cost burden on the public is far from over.

On Monday, Germany’s grid operators published their forecast for the development of the levy which is part of the Renewable Energy Sources Act (EEG) to subsidize green energy: they expect it to increase by about 50 percent to more than 5.3 cents per kilowatt hour. The reason for the unusually large increase is the uncontrolled expansion of renewable energy, which German consumers must finance through their energy bills.

Only an intermediate step

However, the increase in price by an average of six Euros per month and household is only an intermediate step according to the estimate of the Federal Government. Economy Minister Philipp Rösler (Free Democrats, FDP) told the “Welt am Sonntag” that he expects a significant increase in the EEG levy in the coming years. “The pain threshold has been reached for many,” said Rösler. “We need a radical change of the Renewable Energy Sources Act towards more market and efficiency as quickly as possible.”

Recent proposals by Environment Minister Peter Altmaier (Christian Democrats, CDU) for the reform of the EEG do not go far enough. Above all, the implementation takes too long: “Now again, we should have discussions first and an advisory committee should be established. Until the resubmission in May next year, already seven months of electricity bills will have to be paid. The people and businesses cannot and do not want to wait that long”, criticized Rösler.

Since the introduction of the EEG in 2000, the electricity bill of consumers has climbed much faster than inflation. A three-person household paid on average 40.60 Euros a month for electricity in 2000, nowadays it is 75.08 Euros. That is an increase of about 85 percent.

Organisations warn of “fuel poverty”

While social organisations warn about “fuel poverty” rising in Germany, the industry complains about deteriorating competitiveness. According to a recent survey by the Association of Industrial Power Industry (ViK), Germany already occupies the fourth place on the list of highest industrial electricity prices in the world.

In many Asian and European countries, electricity is more than 30 percent cheaper for companies, in the U.S. or Russia it is cheaper by more than 50 percent. Investment decisions, the industry association warns, therefore, increasingly threaten to go against Germany.
Consumer advocates welcomed Altmaier’s course of an EEG reform but demanded an immediate reduction in the extremely expensive expansion plans for offshore wind energy. Holger Krawinkel, energy expert at the Federation of German Consumer Association, told the “Welt am Sonntag”, depending on the expansion of offshore wind power and photovoltaics, electricity prices could “still rise another 30 to 50 percent” in the next ten years.

Researchers are pessimistic

The consumer advocates criticise that the Federal Government subsidises those forms of green energy that are most expensive the most. Next year, consumers will subsidise renewable energy to the tune of around 20 billion Euros.

“If we had invested that amount completely in the currently cheapest renewable energy source, onshore wind, we could have theoretically already successfully completed the energy transition with 100 percent renewable energy,” said Krawinkel. “This calculation shows that it could be done far more cost efficient.”

This pessimistic view of the development of electricity costs is shared by researchers. According to a recent study by the Technical University of Berlin, by 2030 consumers will have to pay more than 300 billion Euros subsidising renewable energy.

Translation Philipp Muller
 
 

3) Germany Facing Power Blackouts
The Daily Telegraph, 16 October 2012

Germany could be struck by power blackouts this winter as the country struggles with a shift to renewable energy the economy minister has warned. Another hard winter coupled with little sunshine and wind, thus making wind and solar power redundant, could lead to blackouts.

Philipp Rosler said Germany is faced with a repeat of the power shortages experienced last year that threatened to plunge parts of the country into darkness.

“Last winter we had a pretty tense situation, and this year we could see the same again, and perhaps even next year as well,” he said in an interview with the newspaper Passauer Neue Presse.

The move away from old forms of energy production has become one of Chancellor Angel Merkel’s key policies, and the government wants four fifths of German energy produced by renewable sources by 2050. To achieve this it has begun to take old fossil fuel power stations offline, and has also committed itself to phasing out nuclear energy by 2022.

Filling the void left by fossil fuels and nuclear power however has already placed a strain on existing capacity in the national grid. During a cold snap in February last year the pressure on electricity capacity in the Hamburg region pushed the grid to breaking point and forced some heavy industry plants to shut down.

Despite significant investment in wind and solar power Germany still faces an energy shortfall, and is also hamstrung by a lack of north-south power lines shifting electricity generated in North Sea wind farms to the industrial centres in the south.

Experts have warned that another hard winter coupled with little sunshine and wind, thus making wind and solar power redundant, could lead to blackouts.

The shift to renewable energy is also taking a toll on family budgets. On Monday Germany’s electrical grid operators announced that a special tax levied on consumers to finance subsidies for green energy would increase by almost 50 per cent.
 
 
4) German Voters May Kill Green Energy Transition
Spiegel Online, 16 October 2012

Germany’s switch to renewable energies is driving up electricity bills across the country, with a green technology surcharge set to rise by nearly 50 percent next year. With frustration over the high price tag, it promises to become a key issue in next year’s election campaign.  Voters may start to withdraw their support for the green energy transition.

Germany’s four leading electrical grid operators — RWE, E.ON, Vattenfall and EnBW — announced on Monday that they would be hiking by 47 percent the charge to consumers that goes into financing subsidies for producers of renewable energy. For the time being, solar, wind and biomass power make up a quarter of the country’s electricity supply but are set to account for 80 percent by 2050.

Germany’s status as a global leader in clean energy technology has often been attributed to the population’s willingness to pay a surcharge on power bills.

But now that surcharge for renewable energy is to rise to 5.5 cents per kilowatt hour (kWh) in 2013 from 3.6 in 2012. For an average three-person household using 3,500 kWh a year, the 47 percent increase amounts to an extra €185 on the annual electricity bill.

Consumer Priorities

The steep rise in the surcharge is likely to trigger debate about the cost to consumers of Berlin’s energy revolution, a drastic energy policy reversal triggered by the 2011 Fukushima nuclear plant disaster in Japan.

Known as the Energiewende, the shift to a sustainable energy supply based on renewable energies and the phasing out of nuclear energy by 2022 has evolved into one of the top priorities of Chancellor Angela Merkel’s government.

With costs associated with that energy revolution now spiralling, however, it is likely to become a central issue ahead of next fall’s general elections. According to a recent poll conducted by Emnid, Germans are more interested in affordable electricity than in the nuclear phase-out. Now faced with the bill for the switchover, consumers may start to withdraw their support.

Sharing the Costs

“For many households, the increased surcharge is affordable,” energy expert Claudia Kemfert from the German Institute for Economic Research told AFP. “But the costs should not be carried solely by private households.”

But experts have pointed out that with many energy-intensive major industries either exempt from the tax or paying a reduced rate, the costs of the energy revolution are unfairly distributed.

Last week, Environment Minister Peter Altmaier unveiled a complex roadmap aimed at holding costs in check. But according to the German Federal Association for Energy and Water Management (BDEW), further expenses are still in store for consumers.

Meanwhile, the German Federal Association of Renewable Energies (BEE) maintains that not even half the surcharge goes into subsidies for green energy. “The rest is plowed into industry, compensating for falling prices on the stock markets and low revenue from the surcharge this year,” BEE President Dietmar Schütz told the influential weekly newspaper Die Zeit.

Coalition Differences

As election year looms, the surcharge is also causing tension between Merkel’s Christian Democrats and their junior partners, the Free Democrats.

Economics Minister Philipp Rösler called for a “rapid change to energy policy” in response to the network operators’ announcement. He stressed that the switch to renewable energies must be economically viable and described the new surcharge as “an alarming signal.”

Speaking to the Passauer Neue Presse at the weekend, he put the case for a reduced energy tax, only for the environment minister to reject the suggestion in an interview on Monday with public broadcaster ZDF. “I am not convinced by the idea,” said Altmaier emphatically.
 
5) German employers slam cost of energy switchover
Associated Press, 16 October 2012

BERLIN (AP) -- The head of Germany's powerful employers' lobby group is criticizing the government for failing to keep the costs of phasing out nuclear power in check.

German Employers Association chairman Dieter Hundt said Tuesday the government must end "the madness of subsidies" for renewable energies, saying they threaten the nation's competitiveness.

Grid operators on Monday said a surcharge on electricity prices that finances the expansion of renewables energies will increase by 47 percent on the year in January for most consumers. Large companies are exempt from the surcharge to safeguard their international competitiveness.

Germany has embarked on an ambitious plan to phase out nuclear power within a decade, boosting renewable energies' share in electricity production from the current 25 percent to 80 percent by 2050.
  
 
6) Renewable Energy: A Nightmare For Green Investors
The Guardian, 12 October 2012 

Patrick Collinson

Renewable energy is the future, say environmentalists. But for green and ethical investors it has turned into a nightmare, with makers of wind and solar power systems among the worst-performing stocks in recent years.

Take Vestas, the Danish wind turbine maker. Early investors enjoyed sparkling returns, with shares leaping from 34 Danish kroner in 2003 to 698 in 2008 – a 20-fold rise. But since then, beset by the loss of government subsidies, cost overruns, production delays and competition from China, the price has collapsed. Today it is trading at 35 kroner – so someone investing in 2008 will have lost nearly 95% of their money.

In August Vestas revealed it had slumped into losses and shed another 1,400 jobs, bringing total redundancies for the year to more than 3,700. It had planned to construct a plant at Sheerness docks in Kent to supply turbines for expected deep-water North Sea windfarms, but this was axed in June.

Solar panel manufacturers have also burnt a hole in investors' pockets. Look at SunTech, the world's biggest maker of PV (photovoltaic) panels, based in Wuxi, China. Its private equity backers (notably Goldman Sachs) made a fortune when it listed on the New York Stock Exchange in 2005, making well over 10 times their original investment. So did the people who bought at the initial share launch, with the shares shooting from $20 to $79 in late 2007. And today? They are changing hands at just 92 cents. First Solar, another one-time darling of Nasdaq, collapsed from $308 in April 2008 to $23 last week. Solar is an industry awash with overcapacity in China, falling prices and declining government subsidies.

Funds that specialise in renewable energy have fallen a long way short of expectations. Impax Environmental, an investment trust, has lost 20% over the past five years, while BlackRock New Energy investment trust has done even worse, falling 49.9% since 2007. It's a salutary reminder to avoid investment fads and bubbles.

Meanwhile, many "sin" stocks screened out by ethical investors have outperformed. At the turn of the century, in the midst of the "TMT" (technology, media and telecoms) stock market bubble, tobacco companies were the market's most unloved sector. Shares in British American Tobacco, makers of Dunhill, Kent, Lucky Strike and Pall Mall, were changing hands at 224p. Today they fetch £31.93.

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