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Germany: The High Price Of Phasing Out Nuclear Power

Wind turbines near Berlin
Wind turbines near Berlin
Thibaut Madelin

BERLIN - After the initial euphoria, it’s back to earth for Germans. The decision to exit nuclear power was initially quite popular, but today many are having second thoughts. Their main issue with the decision is its resulting cost, which is paid for by households and small businesses but has spared big industrial consumers.

When she decided to quit the atom, just after the Fukushima disaster, Chancellor Angela Merkel had promised that electricity prices would stay affordable. A year later, there is a risk electricity bills will surge to the point where Peter Altmaier, the new environment and energy minister, is working on a project to reform energy financing and subsidies. He intends to present a first draft in the fall for a reform that will take place after the September 2013 elections.

"The implementation of this energy transition has to be reasonable from an economic perspective and acceptable from a financial one," said the minister last week. "In this context, energy prices in Germany cannot differ too strongly and durably from those applied in the countries of our main competitors."

The contrast is manifest between the two banks of the Rhine. A French household pays an average of 140 euros per megawatt-hour for its electricity, whereas a German family has to pay approximately 260 euros.

The problem is that even though electricity prices are set to increase in France, the curve is going to be much steeper in Germany, where there are many more solar or wind projects. By 2050, the country wants to depend on renewable energy by 80 percent for its electricity production. The administrators of the German network have to present the bill for 2013 in mid-October.

The industry is ready for a fight

This year, the bill adds up to 14 billion euros, financed by the Renewable Energy Act (EEG) contribution paid by consumers. This tax, which is the equivalent of the CSPE in France, is already at 3.6 euro cents per kilowatt-hour in 2012, nearly the double of 2010. According to estimations, it could jump by 40% to reach five cents by 2013.

"Today, a family of four people pays 150 euros per year for the energy transition," says Juri Horst, from the Institute for Energy Systems of the Future, adding that the Chancellor had promised prices wouldn't exceed 3.5 cents per kilowatt-hour. "At five cents, this amount would reach 210 euros." According to the researcher, the EEG surcharge still benefits from a large social consensus, even if it is currently being criticized by some companies and political parties.

The industry is already preparing for a fight. The federation of textile industry has just announced that it was thinking of referring the matter to the German Constitutional Court. From the industry's point of view, it isn't the job of small businesses or households to finance the energy transition, but the State's.

The textile industry is a big loser in the energy transition, because it does not benefit from exemptions like steel and aluminum producers do - at least not yet, as the number of beneficiaries is supposed to increase soon.

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The West Has An Answer To China's New Silk Road — With A Lift From The Gulf

The U.S. and Europe are seeking to rival China by launching a huge joint project. Saudi Arabia and the Gulf States will also play a key role – because the battle for world domination is not being fought on China’s doorstep, but in the Middle East.

Saudi Crown Prince Mohammed bin Salman, Indian Prime Minister Narendra and U.S. President Joe Biden shaking hands during PGII & India-Middle East-Europe Economics Corridor event at the G20 Summit on Sept. 9 in New Delhi

Saudi Crown Prince Mohammed bin Salman, Indian Prime Minister Narendra and U.S. President Joe Biden during PGII & India-Middle East-Europe Economics Corridor event at the G20 Summit on Sept. 9 in New Delhi

Daniel-Dylan Böhmer


BERLIN — When world leaders are so keen to emphasize the importance of a project, we may well be skeptical. “This is a big deal, a really big deal,” declared U.S. President Joe Biden earlier this month.

The "big deal" he's talking about is a new trade and infrastructure corridor planned to be built between India, the Middle East and Europe.

Indian Prime Minister Narendra Modi described the project as a “beacon of cooperation, innovation and shared progress,” while President of the European Commission Ursula von der Leyen called it a “green and digital bridge across continents and civilizations."

The corridor will consist of improved railway networks, shipping ports and submarine cables. It is not only India, the U.S. and Europe that are investing in it – they are also working together on the project with Saudi Arabia, Israel and the United Arab Emirates.

Saudi Arabia is planning to provide $20 billion in funding for the corridor, but aside from that, the sums involved are as yet unclear. The details will be hashed out over the next two months. But if the West and its allies truly want to compete with China's so-called New Silk Road, they will need a lot of money.

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