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€175 Billion Bombshell: Germany’s Green Energy Policy To Hit Households Hard

The switch to renewable energy could require more financial sacrifices than previously thought. According to a new study, the green energy transition could cost German consumers up to 60 percent more by 2020 compared to 2011. Overall, the renewables costs may total 175 billion Euros by 2020.

A new study suggests that the green energy transition will make electricity significantly more expensive. By 2020, electricity consumers will have to forfeit 21.5 billion Euros in costs caused by the transition to renewable energies. This has been calculated by the energy experts at McKinsey in a recent study. That is 60 percent more than the 13.5 billion Euros consumers had to pay for renewables last year.

McKinsey has also calculated what effect the transition to renewable energy sources will have on the electricity prices. The costs include the difference between the high prices, which are paid for electricity generated by wind and solar power plants based on the Renewable Energy Sources Act (EEG), and the price of electricity at the power exchange. Factored in too are the higher network charges which will finance the additional power lines required. Overall, the renewables cost totals 175 billion Euros between 2011 and 2020, according to the study.

“The financial burden due to the energy revolution is enormous,” says McKinsey expert Thomas Vahlenkamp, “the main burden will be borne by households.” For them, the electricity price per kilowatt-hour is forecast to climb from 25.9 cents in 2011 to 29.0 cent in 2020. […]

The new study also reveals that despite its best efforts, Germany will be unable to achieve its ambitious climate change targets. According to the German government, CO2 emissions should be reduced by 40 percent by 2020 compared to 1990. However the consultants maintain that even under the most optimistic scenario, a reduction of 31 percent max is realistic – which would make Germany still the world leader. Unlike the Federal Government, McKinsey thinks a decline in electricity demand is unrealistic. The consultants even predict that the demand will increase by 0.3 to 0.4 percent per year.

Translation Philipp Mueller

Handelsblatt, 1 May 2012