Commentary

Sabrina Schulz on why the German energy revolution is only just beginning

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Earlier this week Sabrina Schulz (Head of E3G's Berlin office) appeared on Deutsche Welle's TV talk show Agenda to discuss the German renewable energy revolution (die Energiewende). Here's her take on the experience:

In a world of sound bites and snappy messages it is not easy to survive as a media newbie. If you say one sentence and don’t get a chance to say the following two sentences that would put the message right you end up being wrong.

So – it is unlikely that energy prices will ever be as low as they are now. It is very likely though; that there will be an adjustment of electricity bills once the German Renewable Energy Act (EEG) has been reviewed and reformed. The current system with massive exemptions for industry has allowed electricity prices in Germany spiral out of control. The difficulties when integrating renewables into the energy market have also played a major role: they drive the wholesale price for electricity down – but this does not lead to lower prices for consumers. On the contrary, low wholesale prices prevent the realisation of necessary investments, for instance in highly efficient gas-fired power plants. This is because investors in highly efficient gas-fired power plants need a high chance of earning significant profits in the markets, which is not the case at the moment. Moreover, low wholesale prices produce a massive gap between the guaranteed price for electricity from renewable sources and the actual price for electricity – this gap has to be paid for by consumers.

The overall message remains: even once these issues are tackled it is highly unlikely for energy prices to go down in the longer term. We need massive investments in energy infrastructure, especially if we are serious about electrifying transport. All these investments will be necessary to ensure that

  1. we keep emissions down and climate change in check,
  2. we wean ourselves off fossil fuels which will keep increasing in price anyway,
  3. we continue to transition to a low-carbon, sustainable economy which fuels innovation and generates new and new kinds of jobs.

However, only because prices for energy go up does not mean that energy bills have to go up. Germany has to be very proactive in driving through the energy efficiency agenda so we all – consumers and industry – use less electricity and can keep bills in check.

It’s all more complex than what can be said in a sound bite format.

The episode can be viewed here.

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