How “Green” Energy is Working out for Germany

We’re getting an empirical lesson in the effectiveness of an economy whose energy is intended to come entirely from “green” sources.  The Obama administration would do well to observe closely the in-progress German demonstration.

Germany’s electricity prices have risen 10% in the last few years, since the beginning of the German push to rely exclusively on these sources and to walk away from coal, which Germany has in abundance.  That might not seem like much of an increase, but it hurts.

The Federation of German Consumer Organizations estimates that roughly 10% of German households are having trouble paying for their energy.  Some have been pushed over the threshold and can no longer pay—and their electricity is being turned off altogether: nearly 200,000 recipients of Hartz IV, a German benefits program for long-term unemployed, had their power cut off in 2011 because of unpaid bills.  There’s more: the Economy Ministry has estimated that prices will increase an additional 3-5 euro cents per kilowatt hour in the next year, just to finance renewable energy subsidies and grid expansion.  Those increases amount to an additional €105-€175 ($130-$220) for a family of three.

There are more cost increases to come.  The Federal Network Agency, a wide-ranging regulatory agency with its fingers in electricity, gas, telecommunications, post and railway markets, will announce this fall that rates will increase by 30%-50% above current levels.  Consumer “contributions” to renewable energy subsidies will rise by more than FGCO’s estimate of 3-5 cents; the FNA says the rise will be closer to 4.7-5.3 euro cents per kilowatt hour—plus VAT, they remind us.  Hartz recipients, and potentially programs like Hartz, will be hard-pressed to meet these increases.

We don’t need these headaches in the US.

Leave a Reply

Your email address will not be published. Required fields are marked *