German Shift from Nuclear to Renewable Energy Gets Expensive

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German Chancellor Angela Merkel is suggesting that renewable power producers pay more to support upgrades to the country’s electricity grid as Germany shuts down its nuclear energy generating plants in favor of cleaner natural gas and renewable energy power generation. The current law’s solutions appear to be just too costly.

Under Germany’s Renewable Energy Act (EEG), which was enacted in January of 2012, the government guarantees above-market rates for renewable energy generation for 20 years from the time of installation. A surcharge equal to the feed-in tariffs paid by utility companies for renewable minus the revenue from energy fed into the country’s grid is added to nearly all household and commercial electricity bills. As a result, German consumers and businesses pay a renewables surcharge of 5.277 eurocents, some 47% higher this year than it was a year ago.

Higher utility costs don’t win elections, and Merkel is well aware of that and the approaching September election. She is proposing that the EEG rules be amended to add wind turbines where appropriate and to force renewable power producers to pay more to support grid expansion and other changes better to integrate the country’s energy system. This would presumably reduce the surcharge that voters — er, consumers — now pay.

Merkel is also suggesting that more natural gas-fired plants be built to back up the solar and wind generation plants. She continues to support renewable feed-in tariffs and renewable energy generation in general. But she needs a painless way to pay for them. We wish her good luck with that.

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