Friday, October 23, 2009

Germany burns money to get "renewable" power

But as I keep saying, this is green economics in a nutshell - getting less for more!

An aggressive policy of generously subsidizing and effectively mandating "renewable" electricity generation in Germany has led to a doubling of the renewable contribution to electricity generation in recent years.

This preference came primarily in the form of a subsidy policy based on feed-in tariffs, established in 1991 by the Electricity Feed-in Law, requiring utilities to accept and remunerate the feed-in of "green" electricity at 90 percent of the retail rate of electricity, considerably exceeding the cost of conventional electricity generation.

A subsequent law passed in 2000 guaranteed continued support for 20 years. This requires utilities to accept the delivery of power from independent producers of renewable electricity into their own grid, paying technology-specific feed-in tariffs far above their production cost of ¢2.9-10.2 per kilowatt hour (kWh).

With a feed-in tariff of ¢59 per kWh in 2009, solar electricity generated from photovoltaics (PV) is guaranteed by far the largest financial support among all renewable energy technologies.

Currently, the feed-in tariff for PV is more than eight times higher than the wholesale electricity price at the power exchange and more than four times the feed-in tariff paid for electricity produced by on-shore wind turbines.

Even on-shore wind, widely regarded as a mature technology, requires feed-in tariffs that exceed the per-kWh cost of conventional electricity by up to 300% to remain competitive.

By 2008 this had led to Germany having the second-largest installed wind capacity in the world, behind the United States, and largest installed PV capacity in the world, ahead of Spain. This explains the claims that Germany's feed-in tariff is a great success.

Installed capacity is not the same as production or contribution, however, and by 2008 the estimated share of wind power in Germany's electricity production was 6.3%, followed by biomass-based electricity generation (3.6%) and water power (3.1%). The amount of electricity produced through solar photovoltaics was a negligible 0.6% despite being the most subsidized renewable energy, with a net cost of about $12.4 billion for 2008.

The total net cost of subsidizing electricity production by PV modules is estimated to reach US $73.2 billion for those modules installed between 2000 and 2010. While the promotion rules for wind power are more subtle than those for PV, we estimate that the wind power subsidies may total US $28.1 billion for wind converters installed between 2000 and 2010.


Posted via email from Garth's posterous

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