Germany’s Energiewende: A Tale of Increasing Costs and Decreasing Willingness-To-Pay
In recent years, the political economy of electricity provision in Germany has been strongly influenced by two factors. The first is the country’s ongoing commitment to increase the share of renewable energy technologies, with green electricity production amounting to almost 33% of gross consumption by the end of 2015 (BDEW, 2016:11). The second factor is the nuclear catastrophe at Japan’s Fukushima in 2011. This event had a profound impact in exacerbating a longstanding skepticism in Germany on the merits of nuclear power, and led to the legal stipulation of its phase-out in the same year. Both factors are the most salient pillars of Germany’s so-called Energiewende (energy transition), which advances the most ambitious subsidization program in the nation’s history, with costs that may approach those of German re-unification. Summarizing the paper of Andor, Frondel, Vance (2017), which will be published in a forthcoming Special Issue of The Energy Journal, we present evidence that the accumulating costs of Germany’s Energiewende are butting up against consumers’ willingness-to-pay (WTP) for it. We begin with a descriptive overview of the growth of renewable energy technologies in Germany since the introduction of the Renewable Energy Act in 2000, focusing on increases in both capacity and the associated costs. Thereafter, we turn attention to the public’s acceptance of these costs, which have to be born by electricity consumers via a surcharge on their bill.
Andor, M., M. Frondel und C. Vance Ph.D. (2017), Germany’s Energiewende: A Tale of Increasing Costs and Decreasing Willingness-To-Pay. IAEE Energy Forum, 4, 15-18