Costs of electricity challenge a leader in renewable energy
A country eager to develop renewable energy can accommodate ambition to economics without abandoning its environmental principles. Sometimes, suggests a study by IHS, moderation is enough.
The study focuses on Germany, one of the world’s leaders in the production and use of energy from renewable sources. According to the US Energy Information Administration, Germany in 2011 led Europe in output of nonhydro renewable electricity, wind energy, and biofuels. It led the world in production of solar electricity. Since the Fukushima accident of 2011, it has been pursuing its renewable-energy growth targets while closing nuclear power plants.
In the past 12 months, IHS reports, electricity costs in Germany have jumped nearly 10%. They’ll climb further if the government stays aggressive about renewable energy. The costs hurt German goods and services, exports of which accounted for 52% of the country’s gross domestic product last year, in international trade.
The IHS study makes economic projections for two scenarios. A high-price case assumes rapid development of renewable energy and removal of statutory exemptions that partly shield energy-intensive industries from the costs. A competitive-energy case assumes more moderate development of renewables; greater use of thermal power generation, especially from natural gas; and retention of industrial exemptions.
Compared with high-price case projections for 2030, the competitive-energy scenario yields 6.2% higher GDP in 2030, personal income 6.3% higher, a chemical industry that grows at twice the speed and employs 40,000 more workers, €43 billion more output and 87,000 more jobs in the machinery industries, and €65 billion more output and 85,000 more jobs in the motor vehicle industry.
In the competitive-energy case, Germany meet its 2020 target of a 35% energy-market share for renewables but misses its 50% target for 2030 by 10 percentage points. Emissions of carbon dioxide from energy decline but miss targets.
Germans holding jobs threatened by the elevation of electricity costs might want to ask their government whether these near misses against official targets would have any effect at all on the environment.
(This item appeared first online at www.ogj.com on Oct. 11, 2013; author’s e-mail: [email protected])
Bob Tippee | Editor
Bob Tippee has been chief editor of Oil & Gas Journal since January 1999 and a member of the Journal staff since October 1977. Before joining the magazine, he worked as a reporter at the Tulsa World and served for four years as an officer in the US Air Force. A native of St. Louis, he holds a degree in journalism from the University of Tulsa.