In 2011, Germany began its “Energiewende”, energy transition, closing nuclear and coal plants and constructing wind and solar farms, while subsidizing them with residential fees that have escalated German residential electricity prices to three times that of U.S. residential electricity prices. According to a survey commissioned by the Joint Committee of German Trade and Industry, only one out of every two Germans are now willing to pay for climate protection because they doubt that climate protection and economic growth can occur together. A majority of the respondents (55 percent) indicated that climate protection should not cost consumers anything. Most Germans believe afforestation of lands is the best measure to promote climate protection, followed by research, home renovations, renewable energy expansion, bicycle paths and the phase-out of coal. At the end of the list of measures was higher prices for air travel and driving, and a ban on oil heaters.
For a decade, Germany added wind and solar capacity, which currently make up a large share of its power supply. But its renewable renaissance is not surging forward due to complaints from locals, a lack of space, stricter environmental standards and a longer permitting process. It now takes twice as long to build a wind farm in Germany than in the United States.
Germany also miscalculated the amount of renewable energy needed. The country is now realizing that power demand will probably increase more than official forecasts have indicated by the end of the decade. As a result, renewable technologies not only have to replace retiring nuclear and fossil units but also meet the new demand requirements.
Germany’s new goal is a 65 percent reduction of carbon dioxide emissions by the end of the decade. RWE, which operates coal plants in Germany and abroad, believes Germany may revise its plan to phase out lignite, which is currently to be phased out by 2038. If the phase-out is to be done earlier in the next decade, higher wind and solar output would be needed by 2030, as well as an expansion of the electric grid to carry the extra renewable power.
By 2023, however, the margin of supply over peak demand is expected to drop to 3 percent, or two gigawatts, from 26 percent before the coronavirus pandemic. This is very small margin of error in a national electrical system. And by 2026, output from coal plants could drop as much as 70 percent compared with levels prior to the pandemic. At the same time, power consumption is expected to return to pre-pandemic levels next year with demand increasing 4 percent by the end of the decade and as much as 25 percent by 2040.
A supply crunch would result in soaring electricity prices. Wholesale rates have increased almost 60 percent this year to their highest level since 2008. That increase will feed through to the nation’s 40 million homes already paying the highest bills in the European Union, partly because the residential sector subsidizes the energy transition to wind and solar power. Germany has thus far insulated its industrial users from most of those costs, fearing the loss of jobs and investments if electricity prices were raised significantly.
Germany, like California, may have to rely more on neighboring markets for imports. But the closure of fossil-fuel plants in other European nations means that supply availability could be limited, particularly during harsh winters, when the power is needed the most. California has had to resort to rolling blackouts because it could not get enough imports from neighboring states when temperatures soared and solar power waned at the end of the day.
In 2020, renewable power surged to 44 percent of the country’s electricity use. But fossil fuels, mostly coal, also supplied 40 percent of the country’s electricity supply last year. To get to net zero carbon use in the electric generating sector, wind and solar would need to replace the 40 percent supplied by fossil fuels and the 11 percent supplied by nuclear, which is being phased out, and meet the increase in electricity demand. Further, while renewables are making headway in the power sector, they did not make major strides in Germany’s transport or heating sectors, as they accounted for just 20 percent of total energy use.
Furthermore, a recent analysis of Germany’s ultimate quest for 100-percent renewable energy found that Germany would require investments in renewable energy generation of 130 percent of their annual load requirements and electricity storage equivalent to 61 days per year of German consumption of energy in order to assure adequate supplies of reliable electricity. Much of the generation of excess load would be required to generate emission-free hydrogen and store it to meet needs when intermittent wind and solar fail to produce sufficient electricity. Given the enormous costs of battery storage, the challenges of hydrogen and the volume of renewable energy necessary to guarantee Germany a reliable source of electricity, this is daunting in the extreme.
Conclusion
Many German households grapple with ever more expensive electricity prices, bearing the cost of shuttering nuclear power plants and constructing renewables and the backup power systems their intermittency requires. Many consumers do not see climate protection really advancing, despite paying a lot for Germany’s energy transition, and recent surveys indicate that the majority do not want to continue to pay for more green power. Retail customers feel they are bearing the brunt of the cost of the transformation, which is added to their power bills, while big industrial users see much lower electricity bills as Germany protects its industrial sector from the renewable fees in order to keep its economy booming.
Americans should worry that our fate will become similar to Germany’s as Biden incorporates policies to obtain a net zero carbon electric sector by 2035 and a net zero economy by 2050. Many think that because wind and solar power have no fuel cost that they are almost free. That is far from the case as their capital and maintenance costs must be paid. As in Germany, U.S. electricity prices have increased due to expansion of wind and solar power to the U.S. electric grid. But rather than have the residential sector pay for federal subsidies, U.S. taxpayers have paid the burden, while renewable mandates for utilities in many states have further driven costs upward.
