11.082017

Germany: sky-high prices will not slow the energy transition down

Energiewende“: this is the German word which literally means energy transition. But it is not just a word, Energiewende is also a German program which designed to reach ambitious goals in terms of renewable energy production.


Germany has always been one of the most “green” European countries, at least in terms of fiscal incentives and subsidies for green energy production. Thus, the share of electricity produced from clean sources over the total production in Germany has always been high compared to other EU countries. With Energiewende program the German Government aims at fostering this trend, by fixing two ambitious goals to be achieved in the long run: 45% of electricity produced from renewable sources by 2030, and 100% by 2050.


Because of a tight room for manoeuvre, the mechanism selected to achieve these goals is not direct subsidies, but renewable energy requirements imposed on its public utilities, which must produce a certain amount of renewable energy. This is why in the first 2017 semester Germany has produced 35% of its power from renewable sources, with a peak on the day of Sunday April 30th when the share of renewable energy over the total production reached 85%.


But these requirements imply higher operative costs for the power producers, and these higher costs are eventually transferred to the final consumers. In fact, from a rapid glance at the Eurostat statistics about the energy price in the EU countries, it is evident German has the second highest electricity price for the households segments. For the industrial segment the effect is not so evident, thanks to discounted prices for heavy consumers such as German automobile plants.

This means that the Energiewende program price is almost totally borne by the households, who are charged with high prices in their electricity bills. German households pay more for their electricity than in any other European country except Denmark, where power costs €0.308 per kilowatt hour to Germany’s €0.298. This data ere shown in the picture below, where are shown the total €/kWh price (comprising all the components: energy, network costs and transportation) for the 2500-5000 kWh/year consumers.




But there is one important thing not shown by the data, which is the German citizens’ attitude.

In fact Germans are almost all in favor of expanding the use of renewable energy , according to a study conducted for the country’s Renewable Energies Agency (AEE). The recent surveys show Germans are not complaining about the high electricity prices due to the governmental program.

In particular, this study reports that 95% of Germans see the expansion of renewables as an important or extremely important issue for the country. In addition, recent surveys show that 48% of Germans see the electricity prices reasonable if justifies by the ambitious goals set by the Energy Transition Program, 37% say that they are too high while 8% said they were willing to pay even more.


These statistics are really representative of how much German people do care about environmental issues.

However, as fortune.com reports, Berlin’s crusading attitude on climate change is undermined by the fact that the country still uses lignite, or brown coal, to produce around a quarter of its electricity. Lignite is the most polluting fossil fuel still used in power generation, but is seen as a vital source of employment in the formerly communist eastern states of Germany.


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