Germany is facing rapidly climbing energy costs after turning away from nuclear power following the Fukushima disaster, instead relying increasingly on renewable energy. Meanwhile, its neighbors are building nuclear power stations on its doorstep.
After a simultaneous earthquake and tsunami off the Japanese coast caused a nuclear meltdown at the Fukushima power plant in March last year, in the worst accident since Chernobyl, Chancellor Angela Merkel did not hesitate.
With broad public support, she immediately ordered the closure of eight existing nuclear power plants, with the rest scheduled to be phased out by 2022, nearly fifteen years earlier than planned.
Instead, she promised to bolster the role of renewable energy – in which Germany was already a European leader – pledging that 35 percent of all power consumed in the country would be from green sources by 2020, a figure later upped to 40 percent.
The changes have been rapid. Nuclear power supplies 17 percent of the country’s energy needs, down from 23, while renewables have climbed from 20 to 25 percent in just months.
Now comes the time to pay for Germany’s green vision.
Despite technological advances, wind, solar, hydro and other green energy sources still remain an unprofitable investment in a fair market. The way to encourage their exploitation is through a set of feed-in tariffs, a policy where energy companies are forced to buy electricity from green generators at a price set by the government (which is usually legislated to remain the same for two decades).
The German government has passed the cost of the payment from the energy companies to the consumer. Every German on the grid pays something called Umlage, a special surcharge for supporting green fuels that covers all the green energy subsidies, however much energy is produced.
This week, energy companies announced that the charge would go up by 47 percent for next year. The average Germany household will now pay €250 a year to sponsor green energy producers, four times more than in 2009.
The overall value of the subsidy on green energy is likely to exceed €20 billion next year, about one percent of GDP.
At the same time, the government has relieved large exporting companies (who consume a fifth of Germany’s electricity) from paying Umlage, for fear of crippling them, thus leaving ordinary Germans to bear the burden.
That is on top of what are some of the highest electricity prices in Europe, which have already risen 44 percent since Merkel came to power seven years ago.
This is hardly the ceiling.
Faced with a scheme in which it seems almost impossible to lose money, German states, industrial giants and even enterprising individuals have all rushed to build wind turbines and solar panel farms.
Never mind 35 or 40 percent, at the current rate by 2020 more than half of Germany’s energy will be obtained from renewables – and all subsidized by the taxpayer.
“It’s out of control,” summed up Kurt J. Lauk, Economic Council president from Angela Merkel’s own Christian Democrats party.