Germany’s legislature voted Friday to sharply cut back on subsidies and other financial incentives supporting green energy due to the strain wind and solar power placed on the country’s electricity grid.
Germany’s government plans to replace most of the subsidies for local green energy with a system of competitive auctions where the cheapest electricity wins. The average German pays 39 cents per kilowatt-hour for electricity due to intense fiscal support for green energy. The average American only spends 10.4 cents per kilowatt-hour.
Germany’s wind and solar power systems have provided too much power at unpredictable times, which damaged the power grid and made the system vulnerable to blackouts. Grid operators paid companies $548 million to shutter turbines to fix the problem, according to a survey by Wirtschaftswoche of Germany’s largest power companies.
The German government plans to cap the total amount of wind energy at 40 to 45 percent of national capacity, according to a report published earlier this month by the German newspaper Berliner Zeitung. Germany will get rid of 6,000 megawatts of wind power by 2019.
Despite the cut backs to wind power, the German government estimates that it will spend over $1.1 trillion financially supporting wind power, even though building wind turbines hasn’t achieved the government’s goal of actually reducing carbon dioxide (CO2) emissions to slow global warming.
The amount of money flowing into European green energy from governments and the private sector collapsed from $132 billion in 2011 to $58 billion last year, according to a May report by a British auditing firm. Green energy’s failure to meet reliability and cost goals were the primary reasons for declining investment. Europe has poured $1.2 trillion into the green energy industry to fight global warming, but its CO2 emissions and power bills just keep rising.
Small green energy operations will likely be the ones hardest hit by the policy changes. “In future, only the big corporations will be able to build wind farms,” Wilfried Roos, the mayor of the German town of Saerbeck, told The Financial Times Sunday. “For everyone else, the economic risks will be too high.”
Even major German companies might not be able to build green energy for much longer as the government’s plans have done enormous damage to utilities, destroying their main sources of profit and increasing the price of electricity throughout Germany.
The enormous German utility Rheinisch-Westfälisches Elektrizitätswerk (RWE) was forced by the government to shut down many of its profitable nuclear reactors and build expensive wind and solar power. The government’s mandate to replace nuclear reactors with wind or solar power cost over $1.1 trillion. The company has a 46 percent chance of going bankrupt within the next two years, according to investment groups.
The massive amount of money Germany poured into green energy is a direct result of the government’s decision to abandon nuclear energy after the Fukushima Daiichi nuclear disaster in Japan galvanized political opposition.
Nuclear power made up 29.5 percent of Germany’s energy in 2000. The share dropped down to 17 percent in 2015, and by 2022 the country intends to have every one of its nuclear plants shutdown. This shift caused Germany’s CO2 emissions to actually rise by 28 million tons each year after Germany’s nuclear policy changed.
Nuclear power’s decline has created an opening for coal power, according to a Voice of America article published in November. Coal now provides 44 percent of German electricity.
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