Friday, February 15, 2013

WSJ: Germany and Spain Move to Curb Green-Energy Supports

This kind of news is definitely NOT what the anti-nuclear people (who are almost all pro-renewable energy) in Japan want to hear. My followers will most likely completely ignore my tweets on this, because to them, Spain and Germany are the role models on how renewable energy should be pushed by the national government - on the small rate payers, to save the earth.

From Wall Street Journal (2/14/2013; emphasis is mine):

Germany and Spain Move to Curb Green-Energy Supports

More than a decade ago, Germany and Spain created similar laws to aggressively promote the adoption of renewable energy. The two countries were again marching in step on Thursday—this time to fix a web of subsidies and compensations they created for green energy that had the unintended effect of driving up household electricity bills.

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. The independent steps have been welcomed by German consumer groups, but have been slammed by businesses as German and Spanish politicians move to finance cuts for consumers by passing on the costs to companies.

Germany subsidizes producers of renewable energy such as solar and wind power in part by imposing a surcharge on household electricity bills. As the industry has grown, 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. Large energy-intensive industries are exempted.

That means ordinary consumers shoulder the lion's share of the costs for what the German government calls its "energy revolution."

Fearing a voter backlash from anger over the lopsided financing of green energy, 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.

The proposal represents a compromise by the parties in Ms. Merkel's center-right coalition between taking small steps before the election and a more time-consuming comprehensive reform of the renewable energy law. The government now hopes to thrash out a bill with Germany's 16 states by the end of March, eliminating a potentially negative issue ahead of the election on September 22.

"We need a fundamental reform of the renewable energy law, but until we get there we don't want to make people wait and that is why there is this price cap on electricity," Economy Minister Philipp Rösler said Thursday after a meeting with representatives of the states.

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.

Until now, producers have been compensated using a full inflation estimate. The government said the law will cut the costs of the country's electrical system by €600 million to €800 million a year.

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.

Uh... The renewable-energy sector has been created and heavily subsidized by legislative modifications. But never mind that. Investors from the United States, Japan and the United Arab Emirates who have invested in renewable energy in Spain are already preparing to sue the Spanish government.


Anonymous said...

What is the cost burden to ratepayers for nuclear power generation there? How are renewables doing on providing power recently, costs and percentage of the grid there. Seems like a lot of information is missing besides enticements cost to change over to green.

wren said...

Fracking in the US has done more to help the environment than all the renewable stuff put together. Cheap and abundant natural gas lowers carbon emissions.

Maybe the US will sell the coal it doesn't need anymore to China.

Anonymous said...

Why should it be news people don't want to hear?

The reason for this adjustment (curbing subsidies) is the success of renewable programme i.e. proliferation of renewable power generation. The more green power is generated, the higher the subsidy, the higher the consumer burden. What's the problem?

As for suing the government, good luck. Subsidies and energy policy change so unless you have a contract or statement with the GOV that guaranteed no change for x years, it is a simple risk of investing into a mutable piece of legislation...

Anonymous said...

All energy sources are subsidized, though, and we would need to see a detailed break down of the electricity bill to see how much goes where. But yes, it would seem normal that, under the austerity-makes-you-free mentality, renewables are the first to go.

Anonymous said...

A long history of bad moves, from private investors up to the gov. Spain has a much better "place in the sun" than Germany - for solar power that is, but the craze was on tourists / second home business, flats at the sea-side that are now worthless or so. Solar energy remained very scarce, far from cold and clouded Germany.
The trend for solar energy was over subsidized, as no one ventured there, and now it is too costly in times of crisis - long term heavy investments.
Allways hard to get through a wrong move.

Anonymous said...

To get a complete picture one needs to account for ratepayer charges but also for subsidies to industry users (much cheaper rates than domestic), taxpayer subsidies (500bn yen to nuclear in Japan), caps to liabilities (including public disposal of nuclear waste), cost of rescuing bankrupt utilities, money spent by utilities into buying political favours, expensive purchasing fostered by legislation (in Japan), money channelled to yakuza etc.

There are plenty of news one would rather not hear about.


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