Subsidy Reductions

Germany Slows Renewable Energy Push

Wind power mills power lines tower source Reuters 33216299
Germany's energy landscape keeps changing.
  • Why it matters

    Why it matters

    The subsidy changes could give more time to traditional utilities E.ON, RWE and others to adapt to the transformation of the country’s electricity market.

  • Facts


    • Germany is shutting down nuclear power by 2022 and shifting to 80 percent renewable energy production by 2050.
    • Government subsidies, funded by a levy on consumer electricity bills, have risen to €24 billion last year, stressing individuals and companies that use a lot of electricity.
    • The transition has led to a concentration of new wind power parks in northern Germany but a bottleneck in the south, where wealthy states like Bavaria have blocked the construction of necessary transmission cables.
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In Germany’s transition to renewable energy, it’s too much of a good thing. That’s a big reason why the German government on Wednesday voted to slow the nation’s massive build-out of wind, solar and bio-gas power installations to limit costs and, ironically, limit the waste of billions of euros in unused green energy.

State subsidies to companies that produce electricity from wind, solar and bio waste have led to an unbridled growth in alternative energy installations across the German countryside.

The massive energy transition project, begun after Japan’s Fukushima nuclear disaster in 2011, currently costs German taxpayers about €25 billion ($28.5 billion) per year, a dramatic increase from only €883 million in 2000, shortly after the government began subsidizing alternative producers.

The massive infusion of government subsidies has flooded the German market with a glut of electricity, and thrown its conventional power companies, E.ON and RWE, into existential crises as they cope with dramatically lower revenue and a government mandate to retire their nuclear power plants by 2022.

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