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Report: Germany’s ‘Green’ Revolution Is Running Out Of Money

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Michael Bastasch Energy Editor
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It wasn’t long ago that President Barack Obama was pointing to Germany as an example of how the U.S. should develop green energy, but that was before news that Europe’s biggest economy might be running out of money for its green energy revolution.

Germany’s $412 billion plan to power itself with green energy may be running low on cash, according to a new report by financial consultants, as consumer energy prices skyrocket and traditional power plants require more subsidies to stay in business.

“The necessary equity funds for the expansion of the network infrastructure and offshore wind can probably be provided only with the participation of alternative and international investors,” warns a report by consultants with Roland Berger and the World Energy Council.

“High risks however make it questionable whether the investment needs can be met at a sufficient capacity and speed,” reads the unpublished study obtained by the Frankfurter Allgemeine Zeitung, a German newspaper.

For years, Germany has been trying to force more wind and solar energy onto its electrical grid, but what started as a well-intended effort to fight global warming devolved into an expensive labyrinth of subsidies and special interest politics.

The idea was that once the grid was transformed to power more green energy, costs would go down as new technologies and efficiencies came onto market. But the report by Roland Berger and the World Energy Council cautions that at least 280 billion euros will be needed in the next 15 years to meet Germany’s green goals. And that’s with “sustained political support,” the report warns — without it, the transformation could get even more costly.

That’s only the tip of the cost-berg, the report warns. The report also warns that funding for offshore wind farms faces “high risk and market entry barriers” and a “significantly tighter situation.” Germany and other Europeans countries are increasingly relying on offshore wind farms for electricity, especially as nuclear power plants are phased out.

“The high risk of investing in offshore wind farms, however, contradicts the risk profile of institutional investors,” the report warns.

And don’t forget money needed for the transmissions systems required to bring such localized and dispersed electricity production to the homes and businesses which need it. The German Energy Agency estimates these systems will cost the country 28 to 43 billion euros by 2040.

One thing that’s often overlooked by green energy supporters is that people need energy while new sources are being built. Germany’s energy transition, however, is causing traditional power plants — which still supply most of the country’s power — to go into the red financially and require an ever increasing amount of state subsidies to survive.

“Many traditional utilities, which previously financed investments in the electricity sector, mainly through their shareholders’ equity, are today with their backs to the wall,” Uwe Franke, president of the German wing of the World Energy Council, told the Frankfurter Allgemeine Zeitung.

Franke told the paper that “new investors would have to be found to ensure ‘the energy transition and the security of supply.’”

[H/T The Global Warming Policy Forum]

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