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Page added on February 15, 2013
Germany, Spain Set To Pull The Plug On Green Energy
Over ten years ago, when Europe was a bright and shining example of experimental monetarist “brilliance”, and when the money was flowing, the continent decided to do the ethical thing and actively promote the pursuit and development of renewable energy through countless government subsidies. As a result, Germany and Spain became the undisputed leaders in the race for a green future, and both created similar laws to encourage the development of renewable energy. There were two problems: i) green energy, while noble in theory, is about the worst idea possible when it comes to profitability and capital self-sustainability and constantly needs governmental subsidies, and ii) it was the end consumers who would pay for the government’s generosity, in the form of a surcharge on electric bills. In Germany, for example, as the industry grew (in size, and thus in losses) demand for the subsidy increased, driving the surcharge higher. In January, the surcharge, which amounts to about 14% of electricity prices, nearly doubled to 5.28 euro cents per kilowatt hour.
And, as the WSJ so deftly explains, “that means ordinary consumers shoulder the lion’s share of the costs for what the German government calls its “energy revolution.” And here is where a third problem comes into play, because while German and Spanish consumers were happy to pay a surcharge in the golden days of a Dr. Jekyll Europe when everything was great, soon Europe become a doomed Mr. Hyde-ian Frankenstein monster, with imploding economies, 60%+ youth unemployment and resurgent neo-nazi powers. In short: the German and Spanish consumers have had it with funding an infinite money drain (even bigger than Greece), when cash flow is scarce and getting worse, and have just said “Basta” and “Nein“, respectively.
Which means it is now a political issue in Spain, where the scandal ridden Rajoy has never been more unpopular, and certainly in Germany where Merkel faces an election in September and can’t allow the public opinion to shift against her. As a result “with Spain in the grips of recession, the government wants to lower consumers’ light bills. In Germany, Chancellor Angela Merkel faces an election in September and hopes to win points with voters by putting a stop to rising electricity bills.” Specifically, “Ms. Merkel’s government on Thursday proposed putting a cap on the green-energy surcharge until the end of 2014 and then restricting any rise in the surcharge after that to no more than 2.5% a year. The government also plans to tighten exemptions, which would force more companies to pay, and achieve a cut in green subsidies of €1.8 billion ($2.42 billion). The plan is a quick fix pending comprehensive reform after the election, government officials said.”
Spain is not far behind:
The Spanish parliament took a similar step on Thursday, passing a law that aims to curb rising household electricity costs by cutting aid to the renewable-energy industry.
Renewable-energy producers “are going to receive less revenue, but these measures are better for consumers” said Energy Minister José Manuel Soria.
Among the changes in the Spanish system, the new law indexes certain subsidies and compensation to an inflation estimate that strips out the effects of energy, food commodities, and tax changes.
Naturally the response from the subsidized industries has been swift and damning:
Renewable-energy companies said that the government was backing away from previous promises that it would ensure them a reasonable return on their investments.
“Spain’s government is trying to smash the renewable-energy sector through legislative modifications,” said José Miguel Villarig, chairman of the country´s Association of Renewable-Energy Producers.
Actually all the Spanish government is thing to do is stay in power, and in order to do so, it must stop demanding that its people pay for the development of financial black hole industries.
The immediate result of these steps will be a widespread collapse in the alternative energy space in Europe, which is barely sustainable on an “as is” basis (see Solyndra) with ongoing government funding, and will melt as fast as a snowball in the Iceland thermal when the money is even modestly cut off.
Because like all truly money losing government ventures, one can’t mothball a project that by definition has to lose money in hope one day it will be a new money-winning paradigm, especially since the imminent deleveraging wave which will hit the world once Chinese inflation wakes from its slumber, will mean conventional energy costs will once again have no choice but to drop (see: “On This Day In History…. Gas Prices Have Never Been Higher“).
Yet all this means is that the government will merely have to find other, more creative ways to lose money, now that the alternative energy fad is virtually dead. Luckily, spending money with absolutely nothing to show for it is one thing that every government in the current insolvent global regime, has a peculiar knack for. It also means that thousands of former government workers with no real marketable skills are about to hit the streets demanding more handouts from the nanny state, and lead to yet another wave of civil unrest as the ‘other people’s money’ is about to run out.
14 Comments on "Germany, Spain Set To Pull The Plug On Green Energy"
BillT on Fri, 15th Feb 2013 12:35 pm
Green energy cannot compete with green money in a recession/depression economy. The time for ‘Green’ was 30 years ago when there was still cheap plentiful energy and money was easier. We had a President that told us that and we laughed him pout of office. Now, he is the one laughing.
sparky on Fri, 15th Feb 2013 2:01 pm
.
Jimmy Carter is way too much a good patriot and nice guy all around
to even smile at this disaster
He had been an atomic sub officer under the hysterically perfectionist Hyman Rickover ,
Rickover was quite a character ,as a Jew he was refused trice the grade of Admiral , one rejection is the end of one carreer , he didn’t care
czar of nuclear propulsion subs , which he pretty much invented ,developed and led for like forever
He interviewed each sea going officer personally in what was a terrifying experience of pointed questioning and was on board of every new sub going for their first dive
he once said that he loved his son , and wanted to be sure that anyone son was safe in “HIS” hands on board “HIS” subs.
Reagan sacked him for loosing a fight against military contractors
Rickover refused to accept newly build subs saying the American taxpayer was being ripped off , he wanted them scrapped and rebuild , the contractors wanted to give them the technical equivalent of a coat of paint
He also was among the first to mention Peak Energy back in the golden sixties
mike on Fri, 15th Feb 2013 3:44 pm
I think anyone with any brains at all knew this was coming. Renewable are probably still going to be less efficient that oil when oil is riding $300 a barrel. I’ve been studying this problem for 10 years and I have found 1 solution. That of forest gardens.
1) They provide food with a much higher net energy output than any other system whilst providing comparable yields per arce of traditional food systems
2) The create habitats for animals endangered or otherwise
3) They capture carbon and store it in the earth
4) They are far more resilient to climate change
5) they are fricking chill places to be
6) Even a dumbass can plant a tree
🙂
DC on Fri, 15th Feb 2013 3:47 pm
What a hatchet piece. Opinion masquerading as fact. Clearly this was submitted by one of the small army of oil shills the industry keeps the payroll. Germany is not about to pull the ‘plug’ on its clean energy program. The centralized FF cartel in Europe really really hates distributed solar and wind. Why? It drives down the price of Coal\Gas\Nuclear derived electricity in Germany. Not as sure as the effect on FF electricity prices in Spain. Of course, if Spain has a problem, its related to its housing bubble exploding, not its solar or wind programs.
Kenz300 on Fri, 15th Feb 2013 4:02 pm
The oil and coal industries continue to attack renewables in order to protect their monopolies and PROFITS.
Wind and Solar energy production are now cost comparable with fossil fuels in many parts of the world. The cost of oil, coal and nuclear keeps rising while the cost of wind and solar are dropping every year.
Investments in alternative energy sources are growing around the world. The fossil fuel industry wants to protect its profits and stop any competition from taking hold.
Climate Change is real…. we can deal with the cost of converting to safe, clean alternative energy sources or we will deal with the cost of droughts, floods, tornados and rising seas from Climate Change.
Arthur on Fri, 15th Feb 2013 4:13 pm
“soon Europe become a doomed Mr. Hyde-ian Frankenstein monster, with imploding economies, 60%+ youth unemployment and resurgent neo-nazi powers.”
‘Tyler Durden’, a nick for a Bulgarian jew with a criminal record behind this one man operation ZeroHedge, is talking rubbish. He is extending indeed extremely high Spanish youth unemployment figures over entire Europe, which is plain wrong. Germany in 2012 posted yet another export record; keep imploding Germany, weiter so! There had been a temporary halt on some renewable energy projects indeed… because too much energy was produced and the grid threatened to collapse. Temporarily subsidies has shifted towards local storage, so less wind/solar is fed into the grid and more is consumed locally. Germany remains committed to the renewable energy transition, that is carried wholehartedly by the majority of the population, who perfectly know what is at stake here.
Kenz300 on Fri, 15th Feb 2013 4:57 pm
Another perspective……..
Wind and solar energy production are growing every year and continue to improve the technology and lower the cost.
http://www.renewableenergyworld.com/rea/news/article/2013/02/onshore-wind-drives-germanys-renewables-revolution-but-is-it-too-much-of-a-good-thing
rollin on Fri, 15th Feb 2013 5:02 pm
I can’t figure out if this is a pro-coal attack or pro-nuclear energy attack on solar energy.
Not only have all fossil energy companies been subsidized in the US but the consumer and taxpayer has paid for all development of those energy industries. Just the way it works. So why should Germans and Spanish citizens expect anything different.
A round of applause to Germany and Spain for taking the better course while the big nations argue about which end of the egg to crack.
mike on Fri, 15th Feb 2013 5:18 pm
Personally I think the growth in renewables will actually be the final nail in the coffin. Business’ pushing renewable energy are just as much a racket as the oil and gas giants. The world is such a tard circus
Plantagenet on Fri, 15th Feb 2013 5:57 pm
Europe is in a depression. When times are hard some thought has to go into how the government spends money. Should money go to help the poor, or should government money go into the pockets of the wealthy fatcats in the solar industry?
Its no different here in the USA. Obama channelled billions into the pockets of his cronies at Solyndra and A123 batteries and other green scams, and the wealthy fatcats at Solyndra and the other scams took the money and declared bankrupcy as soon as they could.
Arthur on Fri, 15th Feb 2013 6:13 pm
Greece is in a real depression, Spain and Ireland somewhat, but the rest of Europe is absolutely not, but balancing around zero growth or mild recession instead. No beggars, no tent cities, no endless lines for soup kitchens as social security net still works. Every government has austerity measures in place, first of all health care, indeed, housing market, at least in Holland is flat on its face. But Amsterdam airport has yet another alltime high passenger number. A lousy depression so far.
doug nicodemus on Fri, 15th Feb 2013 8:19 pm
we poisoned their economies with bad bonds based on our housing mortgages and now we lie about their remarkable strides in energy…last year as reported here the germans powered their economy for a whole day on renewables and solar is now the cheapest form of energy in australia..zerohedge and billt as usual are full of cow droppings…
GregT on Fri, 15th Feb 2013 9:09 pm
As economies continue to slowly power down, both governments and businesses need to cut back somewhere. Unfortunately, the first things to be cut back on are rarely the things that should be. Expect more and more “austerity” measures to be implemented in the future. It should be clear by now that the “economy” will be propped up as long as possible, at the expense of all else.
BillT on Sat, 16th Feb 2013 12:20 am
Be patient Arthur, the Depression is coming to Denmark soon. The contagion is spreading and the picture you paint is not the one I see from other sources. Yes, I read Zero Hedge also. I read both sides of issues to get a better central picture. Europe is a basket case. ALL of Europe because you tied yourselves together when you went for the EU and the Euro. Enjoy it while it lasts.