In the wake of the Fukushima disaster in Japan, the German government made the much-heralded decision to close all the country’s nuclear reactors as part of its Energiewende, or “energy revolution.” The “revolution” also included government mandates and massive subsidies for renewable energy.
While Germans gleefully embraced the “Nuclear Power? No Thanks!” movement and global greens pointed to Germany as the future of the Green Economy, the sheen is starting to come off the German revolution. The last few months have been a slaughter for the German solar energy. Amid talk of a trade war with China over cheap imported solar panels, the giant German engineering firm Siemens shuttered its solar division after hemorrhaging more than a billion dollars in just two years.
Now Forbes reports that the rest of the German solar industry isn’t following far behind: two of the country’s biggest solar firms, Conenergy and Gehrlicher Solar, both filed for insolvency last week. Another engineering titan, Bosch, has also decided to get out of the solar market.
Meanwhile, the country’s other major green energy project—off-shore windfarms in the Baltic and North Sea—is also threatening to turn into a boondoggle. The massive projects off the northern coast of Germany are supposed to supply 9% of the country’s energy needs by 2023 and were a cornerstone of the government’s plan to abandon nuclear power. Yet engineering challenges, uncertainty around future energy prices and NIMBYs who object to overhead high-tension wires passing through their neighborhoods all threaten to make the project a dangerous white elephant. According to the Economist:
Investors have gone cool on building windmills in German waters because of their costs and doubts over future electricity rates. A study, commissioned from an independent consultant by TenneT, reckons that less than 6GW of the planned 14GW of turbines are likely to be built by 2023. If so, laments VZBV, a consumer body, Germans will end up paying heavily for a lot of useless transmission gear out at sea.
All of these developments have the German public and their elected representatives seriously reconsidering the wisdom of their “revolution.” German consumers haven’t been happy with their skyrocketing energy rates, while German industries have struggled to remain competitive while paying much more for electricity than overseas competition. As green jobs have been disappearing in Germany—employment in the solar sector fell to 87,000 in 2012 from 110,900 a year earlier—German leaders have slashed many of its flagship green programs. Now German Environment Minister Peter Altmaier, a member of Chancellor Merkel’s Christian Democratic party, is saying that the country will end solar subsidies by the year 2018.
The wheels are falling off of Germany’s green energy bandwagon. Many greens saw Berlin’s efforts as a sign of things to come; this reversal of momentum should be instructive.
[Wind turbine image courtesy of Shutterstock]