Essay by Eric Worrall
The plan is to continue the subsidy, until investment in renewables brings energy prices down.
Germany considers electricity price cap to support industry
05/05/2023May 5, 2023
Economy Minister Robert Habeck wants to support German industry for years to come with lower electricity prices. His electricity price cap proposal is intended to ensure that energy-intensive companies remain in Germany.
Germany’s Economy Minister Robert Habeck on Friday unveiled plans to cap electricity prices for energy-intensive industries to protect the sector from sharp cost increases.
According to the plan, the upper limit of €0.06 (roughly $0.07) per kilowatt hour (KWh) should apply until 2030.
It should cover at least 80% of the electricity consumption of a clearly defined group of German companies from energy-intensive industries such as chemicals, steel and glass manufacturing.
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Habeck, who represents the Greens in the government, is perhaps counterintuitively recommending that the taxpayer subsidize some of Germany’s biggest polluters. He described the proposal as a necessary long-term “bridge” solution until renewable capacity is expanded and prices fall. Otherwise, the government argues, there’s a risk that the major employers and sometimes systemically important industries relocate from the country.
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The idea was “economically unwise”, said Lindner, whose party the FDP has championed Germany’s balanced-budget orthodoxy.
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Read more: https://www.dw.com/en/germany-considers-electricity-price-cap-to-support-industry/a-65531798
I had high hopes for Habeck, the green leader who admitted coal is required to solve Germany’s energy crisis. I thought, maybe it is possible a green finally came to his senses.
I guess I was wrong.
This latest plan is economic insanity. Renewables will not produce a sustained fall in energy prices. Even if renewables were theoretically capable of delivering a sustained fall in energy prices, Germany is too far North. German solar panels barely work in Summer. In winter at best Germany sees a few hours sunlight per day, and the skies are frequently overcast.
What about wind power?
If you think wind power will be enough, think again. Europe experienced a prolonged wind drought in 2021, prompting fears of “global stilling”, a global warming driven reduction in wind speed. The wind drought which engulfed Europe in 2021 will happen again.
Lets hope German leaders regain their senses, before they run out of money.
American greens will point to the price of seven Euro cents and claim the Energiewende is working.
I wonder how anybody ever finds WUWT these Days. Before all the search engine censorship, WUWT was the world’s most widely read website on climate change because it included all sides in highly scientific, yet readable form. Today, try any search engine on “climate change” or “global warming.” If the engine claims to have more than or or 5 pages of results on ANYTHING, even pancakes or other noncontroversial subject, you wil see that results pages are all the same 1 or 2 pages after the first few pages. And WUWT and other quality skeptic sites never appear.
Some, such as Brave Bowser’s search engine, claim to be unbiased, but results are similar, no WUWT, no positive info on Trump except his own website.
Apparently, Brave uses its own database, but it would seem that that database gets its results from where Brave users go–when they can’t go to sites they’ve never heard of.
Anybody have any ideas for fixing this deadly serious search engine skewing?
Not surprised. I can rarely be bothered to read WUWT these days. I would not bother recommending it to someone who needs educating about climate. It is certainly a long cry from what it was a decade ago when Mr. Watts was running it.
How dare those peons talk about things that don’t interest me.
That’s what it sounds like.
Bother a bit less.
Anyone with a modicum of common sense can see that government price controls and/or price subsidies are a disaster. A ‘pure’ price cap takes efficient sources off the market, while subsidies spur investment in inefficient sources. A subsidized cap gives rise to the worst effects of both.
Total verruckt.
“I had high hopes for Habeck, the green leader who admitted coal is required to solve Germany’s energy crisis. I thought, maybe it is possible a green finally came to his senses.”
He has the sense to recognize that he had to do something to keep the scheme from collapsing sooner than later … that without business, peoples options & govt taxes are reduced.
It may be that he has the sense, but he doesn’t have the guts to do anything about it.
These green leaders are evergreens 😉
Bills to pay
So, the German idea is to throw more Bad Money after already I’ll spent Bad Money on energy generation types that increase energy costs to the public expecting it to lowers costs? Isn’t the definition of Insanity “Doing the Same Thing the Same Way Every Time and expecting different results”?
For “progressives” to pivot to rationality would involve them admitting that their green ideology is dumb.
Never gonna happen.
The way it is likely to work is that, since most people have such a short memory of what the experienced when constantly bombarded with fantasy, in not too many years the greens will be able to easily sell the lie that costs have obviously gone down, that they were much higher not too many years ago.
Regarding your last sentence, Eric;
Unlikely, any time soon.
Most definitely…If Germany were truly interested in fixing their power situation and reduce CO2 output in the process, they would be throwing Good Money into Nuclear until their generation fleet is about 70% nuclear
WHY in the heck is not Germany following the nuclear lead of France? Seems crazy!
Somewhere in France, President Macron and his buddies at Electricite de France must be greedily rubbing their hands with dreams of riches, as they export nuclear power at 0.06 Euros per kWh.
Not long ago, owners of gas-fired power plants in the USA could make a profit selling power at $0.10 per kWh.
While that might not be possible in Germany while buying Russian gas, producers using natural gas would receive the smallest subsidies under this price-cap plan, even though they are using the cleanest and most efficient fossil fuel, while dirtier coal-fired plants would receive larger subsidies.
The honorable Minister Habeck is unwittingly incentivizing coal-fired plants (which emit more CO2 and other pollutants per MWh) over cleaner, more efficient natural-gas-fired plants.
The Law of Unintended Consequences strikes again!
CO2 is not a pollutant, stevez56
Exactly. That should read:
“which emit more CO2 as well as pollutants”
Emitting more CO2 is good, because it helps the greening of the world.
The pollutants of wood and coal burning are toxic.
Almost all of it is sub-micron particles that cannot be removed with commercial air pollution control systems
These particles are absorbed into your blood, via your lungs, and stay in your body tissues forever.
Long-term exposure eventually causes cancers
It seems that Germany now realise that CO2 is not more dangerous than nuclear waste and since they do not have a solution to every growing amounts of nuclear waste they decided to go with plant food.
Usually benefits the second-phase movers. First pay for innovation and last pay for lifetime buy errors.
This is the smart thing to do, if you start with the dual premises that a manufacturing, export-driven economy like Germany’s must maintain its heavy industry, while saving the world from dangerous trace gases.
The amazing thing is that the rest of the country is willing to accept it.
The question is, how long will the country be willing to accept if for?
That depends on the amount of indoctrination going on in their school system
How long have pesants in past societies put up with their lot?
“willing to accept it” and pay for it
So electric subscribers are going to pay the electric companies just 20% of their bill and then pay the remaining 80% through higher taxes???
It’s either that or the central banks fabricate trillions in fresh new currency out of thin air.
James, that’s what the USA has done, $32 trillion of National Debt plus $2 trillion per year more. We’ve given our energy intensive industry to China; Germany is just lagging behind a little. We’re both on an equivalent path with the same inevitable result. Less than wise.
Increasing the price of energy is the single most regressive cost burden on the poor.
There are no “luxury” electrons or hydrocarbon molecules.
Do all of the powerful Lefties around the world not understand basic economics, or do they just want to punish poor people?
Embrace the word “and”. The Left doesn’t understand economics -and- they want to punish everyone not in The Party.
A membership card will be of no benefit to the overwhelming majority.
do they just want to punish poor people?
Maybe not, but if that happens, it’s a cost that Nick et al are willing to pay.
do they just want to punish poor people
They want to control people. This is just one step.
Yes
“The plan is to continue the subsidy, until investment in renewables brings energy prices down.”
This is analogous to: “The beatings will continue until morale improves.”
Think Germany’s Economy Minister is insane? Just wait till you see the Irish minister Eamon Ryan.
Ryan’s much-heralded wind energy would be world’s most expensive at first auction
Eamon Ryan, leader of the Green Party who serves as Minister for the Environment, Climate and Communications and Minister for Transport in a coalition takes the cake.
https://gript.ie/ryans-much-heralded-wind-energy-would-be-worlds-most-expensive-at-first-auction/
If we allow ministers like this to get into government we deserve to see our country crash and burn.
Guess who will pay the the high industrial energy bills ?
More green insanity. It’s better for the politicians to bleed the taxpayer before Armageddon and the green wall comes and to retain their jobs a bit longer than to face the consequences now. No honesty, no responsibility today.
Technically, the cost of electricity INEVITABLY increases when the renewable penetration escalates in any grid, despite of any reduction in its capital cost. If other costs of a regulatory-political nature are added to this increase, such as capacity payments and cancel or curtailment orders, the cost skyrockets, all thanks to renewables.
This is enough to ruin the grid, the industry and the economy of any country but, if on top of all that, a price cap is imposed —a measure typical of Marxist governments—, then the thermal sources will prefer to put their plants under maintenance instead of GENERATING electricity because they lose money in doing so.
And this would be the end of an already dying Germany.
What is it about the Germans that every few generations, they make a head-on, lemming-like rush towards self-punishment based upon misguided hopes of achieving some sort of societal superiority?
In this instance, at least, should we not be thanking them for setting such a wonderful example? The sooner they are seen to be experiencing disastrous power prices, the less likelihood there is that others will follow. Surely!
That concept has not worked an iota so far, at lest in western societies.
Douglas, it’s not at all complicated, the result is inevitable, only the rate varies, and all driven by wind and solar. Once these so-called renewables penetration reaches their capacity factor things happen quickly. Germany’s inflation and debt crisis should be expected to accelerate significantly.
“The plan is to continue the subsidy, until investment in renewables brings energy prices down.”
plus
“Renewables will not produce a sustained fall in energy prices.”
equals
Maybe the subsidy program’s actual objectives don’t match the assumed objective (cleaner energy, lower rates?).
Subsidies are not the solution they are the problem. If the government hadn’t subsidized renewables we wouldn’t be in this mess. Renewables can not stand on their own.
OK – it’s a response to Brandon’s InflationCreationAction
fair enough, somebody had to do something – the all consuming Chinese dragon needs a balanced diet as much as any AllConsumingDragon
But doesn’t this ‘cap’ count as an (unfair) subsidy for German manufacturers, allowing them to dump cheap tat onto their neighbours in Europe and on folks around the world?
Good grief, see how much flak the Chinese get for doing anything remotely similar
On top of that, it’s only going to make a lot of Cronies extremely rich and embed high energy (and everything else of course) prices for ever more.
There’s not a single Good Thing about this at all
“But doesn’t this ‘cap’ count as an (unfair) subsidy for German manufacturers, allowing them to dump cheap tat onto their neighbours in Europe and on folks around the world?”
Yeah, the next thing we know, the other European nations will be subsidizing their heavy industries, too.
Higher taxes = Slower economy.
The US has been trying to bring down the cost of defense, college education and healthcare by throwing billions to trillions of dollars at these sectors year after year. Unfortunately, the more money thrown at them, the more expensive they get. Does anyone really expect green energy, even in Germany, will be any different?
The only thing that will stop these Marxists from taking Germany down the rabbit hole is total economic failure. Hold my beer.
Germany is in a bind. If it doesn’t subsidize industrial electricity, industry leaves and the economy collapses fast. If it does, government debt rises, they have to print money to support the subsidy debt, inflation rises, vital exports get more expensive, and the economy collapses slow. They put themselves in a situation thanks to green electricity where they now have no good choices.
Can anyone say, Wiemar Republic?
The current situation is due to them being ordered to abandon the fruitful relationship they had with Russia. RF was supplying cheap plentiful energy and market for German industrial output.
Some one on another continent decided to destroy that partnership, ordered them to sanction themselves in economic oblivion and just in case they had any idea of going back criminally destroyed their energy infrastructure.
The so-called renewables, while stupid IMO, is not the key energy problem Europe is facing.
Victoria Nuland famously said “F*** the EU”. That is now official US policy.
I think the EU is doing it to themselves, out of stupidity. No Grand Conspiracies required.
Maybe the Congressional Republicans will give us some insight into Biden’s dealings in Ukraine on Wednesday, this week, where they are going to inform the public of what they have learned about the Biden Crime Family so far. Representative Comer is talking about “criminal activity” on the part of some Biden family members, which may include Joe Biden and bribery involving Ukrainians.
Representative Comer told the Biden “Justice” Department not to charge Hunter Biden with anything *before* they hear what the House of Representatives has uncovered about Hunter Biden.
I can’t wait! 🙂
Perfectly good choice in fact. Restart the nukes, allow fracking, end the subsidies.
Energiewiederwende
Why is Germany having to consider such drastic ideas when just a couple of years ago industry was working fine and major companies were not looking to relocate overseas because of uneconomic energy costs?
OH, that’s right, they were told break off all links to their major energy supplier with whom they had spent decades builing up a solid, mutually beneficial relationship. Then some bunch of hippies hire sailing yacht and some snorkles, bought a ton of military C4 explosive at a boot sale and decided to sabotage their major gas pipe lines.
This has little to do with Energiegewende and all to do with externally imposed sanctions and terrorists attacks on infrastructure.
Sure they wasted billions of individual investments on residential PV but that is NOT reason business is collapsing so don’t pretend that is the cause of the current collapse of European industrial base.
Climategrog, Germany was suffering from high energy costs under energiewende for many years before the imposed sanctions. Assuming the Nord stream explosions were by terrorists: What were their objectives?
Who thinks climategrog is griff back from his self-imposed exile?
The plan is to continue the subsidy, until investment in renewables brings energy prices down.
Or:
The plan is to continue the beatings, until investment in renewables brings higher morale.
I believe the wind turbines are able to alter the weather rather than just responding to wind changes from other causes.
There is a lot of power in the wind. Up to 200,000W/m^2 at 250hPa. The troposphere extends up to about 14,000m so a lot of air and some moving at high speed. What we do not know is how long it has taken to accumulate all that wind energy.
Some time ago, I determined that the tropical heat engine that drives the global air circulations runs at a Carnot efficiency of just 11% (303K hot end and 270K clod end) and has a heat input of 200W/m^2. So it delivers around 22W/m^2 of work that ends up at 11W/m^2 in pumping up the atmosphere by around 900m at the tropics per attached. Now this only applies to the area of the oceans and land experiencing convective storms. So global average is just a few watts/m^2 being accumulated in convection that drives the advection.
The most important wind regarding climate is near ground level because that has greatest influences on atmospheric water. And that has a real impact on weather. I expect robbing wind power at ground level will have a large impact on local climate. And it will be much worse than just not getting power from wind turbines.
Obviously the worst place to rob wind energy is along coastlines because that is where most moisture enters the climate system over land.
Beware – Unintended Consequences Ahead!
“What if a small group of world leaders were to conclude that the principal risk to the Earth comes from the actions of the rich countries? And if the world is to survive, those rich countries would have to sign an agreement reducing their impact on the environment. Will they do it? The group’s conclusion is ‘no’. The rich countries won’t do it. They won’t change. So, in order to save the planet, the group decides: Isn’t the only hope for the planet that the industrialized civilizations collapse? Isn’t it our responsibility to bring that about?”
It would appear Maurice that a number of those rich countries are indeed willing lay the foundations for their own collapse. Protecting the environment is one thing, but bring about one’s own demise is something else.
But. but, but unreliables are already the cheapest
At least that’s what we’re constantly being told by the greens.
From the article: “Otherwise, the government argues, there’s a risk that the major employers and sometimes systemically important industries relocate from the country.”
I think they are already doing so:
https://www.reuters.com/business/autos-transportation/volkswagen-canada-battery-plant-targets-90-gwh-capacity-its-biggest-yet-2023-04-21/
April 21, 202311:49 PM UTC
Canada, Volkswagen to invest more than C$20 billion in EV battery gigafactory