Tuesday July 3rd 2012

The ‘Bleeding Heart’ Campaign To Help Big Energy In Germany

by Jürgen Trittin, Chairman of Parliamentary Group of Germany’s Alliance ’90/The Greens

This text was first published in Germany’s Frankfurter Allgemeine Zeitung on June 7, 2012. Translation by Craig Morris, Petite Planète.

We are witnessing a campaign. Germany’s four biggest power corporations, which still control 80 percent of power generation, are discovering their bleeding heart. They are suddenly concerned about the 200,000 welfare recipients who could not pay their power bills – the very people whose power they then cut off.

Rainer Brüderle is the leader of the Libertarian Liberal Democrats (FDP), who recently tried to make people believe that those who are now too poor to pay for energy are living high off the hog from welfare. Recently, Brüderle has supported the Big Four energy companies and called for an end to Germany’s Renewable Energy Act (EEG), which created the country’s feed-in tariffs. And this propaganda even seems to make sense to otherwise critical consumer advocates and charitable organizations. Astonishingly, none of them are asking why the price of electricity on the power exchange is dropping even as the retail rate reaches new heights – why renewables continue to get cheaper, but customers continue to have to pay more.

Fast growth at low prices

Obviously, the reason is not German feed-in tariffs, which have served as a role model for similar policies in more than 50 countries across the planet. After all, no system provides for such fast growth at such low prices. German President Joachim Gauck recently said that feed-in tariffs remind him of a “planned economy,” but his description fits the kind of quotas used in the UK better – and yet, that’s exactly what libertarian Brüderle wants. If we compare prices, we see that a kilowatt-hour of renewable power is more expensive in the UK than it is in Germany. That explains why RWE and Eon prefer to invest there; with German feed-in tariffs, you simply cannot get a 15 percent return.

That also explains why the renewables sector in Germany largely consists of midsize firms. And that’s exactly what bothers Brüderle. By attacking the EEG, he is trying to protect market shares for the oligopoly of the Big Four. The EEG made Germany a market leader. It led to the creation of more than 340,000 jobs, and it did so with less financial support than has been paid for either coal power or nuclear power. Since the EEG was adopted, feed-in tariffs have continually dropped. For wind, they are now below the cost of new coal plants; for solar, below the retail rate. Clever legislation made these tremendous cost reductions possible. It wasn’t just well intended – above all, it was well done.

Poorly done

The EEG became expensive when Economic Ministers Rainer Brüderle and Phillip Rösler passed new regulations that were neither well intended nor well done. A bonus was paid for a type of biomass – liquid manure – that mainly helps factory farms. A special “market bonus” was also introduced. It costs a lot of money – half a billion euros per year for consumers – and does no good. And the expected increase in the surcharge to cover the cost of renewables is also the result of exceptions that Brüderle’s party, the FDP, came up with – and which Justus Haucap, the chairman of Germany’s Antitrust Commission, says would lead to “tremendous windfall profits.” It’s almost as though they’re trying to break the law on purpose.

Yet, the industry and Germany are doing well. We have great supply security. Renewable energy has brought down prices on the power exchange considerably. In particular, energy-intensive industry benefits because it does not have to pay the surcharge for renewable power. But things are different in France, a bastion of nuclear power. Although the country imports power from Germany, the government had to call on the French to conserve electricity last winter. The price of power on the power market rose to more than a euro per kilowatt-hour; at the same time, it was below 10 cents in Germany. Photovoltaics in particular is putting a damper on Eon and Co.’s profits from their old coal plants. They used to be able to sell coal power at a hefty markup during times of peak demand. Unfortunately for them, the sun shines on numerous solar roofs now at midday, so a lot of solar power is generated then.

Well done

As we move our power supply towards renewable sources, we have to bid farewell to the idea of baseload power provided by inflexible central power plants. If we want to have safe, reliable electricity – especially for industry – we are going to need smart grids, more storage, and flexible capacity. Baseload power plants are anything but smart, so they are a bad investment now. Too bad the Big Four’s fleet of power plants consists almost entirely of that. In other words, renewables are a challenge to business models at RWE, Eon and Co. That’s what worries Brüderle, but it should make consumer advocates and charitable organizations happy. After all, it is the markets domination of the Big Four that drives up our bills while exchange prices drop. By weakening their stranglehold, we strengthen consumers.

Yes, the energy transition has a price tag. German firms are currently investing 20 billion euros in the energy transition each year. On the other hand, the price of a barrel of oil rose from 100 to 120 euros in 2011, which also cost Germany 20 billion euros. I would rather invest that 20 billion in affordable electricity than give it to multinational companies. If we not only have the best of intentions with our laws, but also get them right, everyone benefits.

This text was first published in Germany’s Frankfurter Allgemeine Zeitung on June 7, 2012. Translation by Craig Morris, Petite Planète.

This article was originally posted on Climate Progress