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Jakarta Management - German Renewable Energy Policy Will Change

Posted Jun 13 2013 8:19am

The German renewable energy policy will change as the country’s energy infrastructure is under huge strain.

The German Chancellor Angela Merkel announced her aim to curb the renewable energy subsidies so that it can afford to upgrade the power grid and lower the pressure on the rising electricity prices. According to the Associated Press, Merkel announced today a U turn in the German renewable energy policy as she announced that those installing new solar, wind or biomass power sources must “participate more in financing the cost of (electricity) grid expansion.”

At this point we should emphasise that in 2012, the power exports in Germany recorder the best four year performance in 2012, mainly due to the robust renewable energy industry. According to the German Federal Statistics Office (Destatis), Germany exported 66.6 terawatt hours (TWh) of electrical power. The success of the German renewable energy policy was challenged by the industry association for large corporate and industrial users in Germany, VIK.

The industry association had stressed that wind and solar utilities frequently generated electricity when there was no immediate demand and that eco-friendly power was pushing gas-driven plants out of the market, although these were still needed when there wasn't any wind or solar sources.

Today, Merkel announced that the expansion in renewable energy must be brought in line with that of the German grid, vowing to overhaul subsidies that total €18 billion annually after elections in September.

Apart from the energy grid problems, the German magazine Spiegel had reported that the German renewable energy policy didn’t foresee the upcoming cost explosion. It is well known, that solar and wind farms are a long way from being able to produce energy at prices similar to coal-fired or nuclear power plants.

Moreover, there are also high costs associated with grid expansion and electricity storage facilities as well as for backup power plants, which take up the slack when the sun isn't shining or the wind isn't blowing.

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