In Germany, The Green Energy Transition Is Only Getting Worse

Plenty of virtuous places (New York, California, UK, Australia) want to compete for the mantle of “climate leader.” But let’s face it, at least among places with a significant population, nobody can top Germany. [emphasis, links added]

In Germany, they got started on a massive build-out of wind and solar electricity generation way back in the early 1990s.

By year-end 2023, they had total wind and solar nameplate electricity generation capacity of 148 GW, which is about 2.5 times the average demand (of about 60 GW) and about 1.5 times the peak demand (of about 100 GW). So surely, the days of fossil fuels in Germany must be numbered?

Time for another update on Germany’s progress toward energy nirvana. The bottom line is that, like the Red Queen, Germany is running faster and faster to stay in place. In the meantime, it is destroying its economy.

My last update from Germany was on June 15, covering the then-latest data for 2023. The news was that Germany had finally surpassed the benchmark of getting more than 50% of its electricity from “renewables.”

That news had been excitedly announced by multiple news outlets, including Reuters, which had the headline “Renewable energy’s share on German power grids reaches 55% in 2023.” Did you get fooled by that headline into thinking that the 55% was from wind and solar?

As I noted in the June 15 post, of the 55%, 8.4% came from “biomass” (i.e., wood chips imported mostly from the U.S.), and 3% from “hydro” and “other,” leaving only 43.6% from the wind and solar.

The capacity of the biomass and hydro-generation facilities, by the way, was only 12.9 GW, meaning that they produced about 25% as much electricity as the wind and solar facilities with less than 10% of the capacity. No surprise there.

Well, new figures are out for Germany for the first half of 2024; plus other related economic news continues to pour in. Let’s check in for an update.

Clean Energy Wire on July 18 has first-half 2024 electricity consumption data sourced from Germany’s UBA (Federal Environmental Agency). The percentage from “renewables” has gone up again, now to 57%!

Renewable power sources covered around 57 percent of Germany’s gross electricity consumption in the first half of 2024, preliminary figures published by the Federal Environment Agency (UBA) have shown. Generation from renewable sources reached 147 terawatt hours (TWh), rising by nine percent compared to the same period of the previous year.

Once again, of course, they have mixed “biomass” and hydro in with the “renewables.” Should we back those out?

In the first six months of 2024, wind power accounted for the largest share of renewable electricity generation (around 51%), followed by PV (24%), biomass (15%) and hydropower (8%).

So biomass and hydro came to 23% of the 57% or 13.1%. That leaves at most 43.9% that came from wind and solar, up from the 43.6% for 2023. The percentage from wind and solar was up by a rounding error.

The problem is that in the meantime, Germany had added greatly to wind and solar generation capacity.

According to a chart on this page, also from Clean Energy Wire and sourced to the UBA, Germany’s solar generation capacity went from 67.6 GW at year-end 2022 to 79.2 GW at year-end 2023 — an increase of more than 17%; and its wind generation capacity went from 66.1 GW to 68.8 GW, an increase of over 4%.

That’s rather an enormous amount of additional capital invested in wind and solar to achieve an additional 0.3% market share in electricity generation.

And now let’s look at the big economic picture for Germany. First, how do its electricity prices compare to other places?

Here is a very useful chart from the Energy Policy Research Foundation, comparing second-half 2023 consumer electricity prices among EU countries and U.S. states:

There’s Germany way at the top of the list, over 38 cents per kWh, well over double the U.S. average.

Next, here’s data on German GDP from the St. Louis Fed. The peak was in Q3 2022 at $770.6 billion, with small declines since then. Some might call it a recession, and a rather long one.

The most recent quarterly figure (Q2 2024) was $766.4 billion. This is serious stagnation. By contrast, the U.S. GDP in the mediocre Biden-Harris economy has been growing in the range of 2-3% annually. If Germany’s economy had grown just 2% for the last two years it would now be around $800 billion per quarter, rather than the $766 billion reported.

Let’s say that high energy prices may not be good for an economy known for its large manufacturing sector. You may have seen the recent news about Volkswagen. From Reuters, September 2:

Volkswagen … is considering closing factories in Germany for the first time, in a move that shows the mounting price pressure Europe’s top carmaker faces from Asian rivals. … VW considers one large vehicle plant and one component factory in Germany to be obsolete, said its works council as it vowed “fierce resistance” to the executive board’s plans.

In related news, a German-speaking friend sends along an English translation of this August 12 piece from Die Welt. The headline is “Germany’s Electrical Fallacy.” Excerpt:

Clean and cheap electricity was the great promise of the energy transition. It was said for years that there would be a “job miracle” for free. But now demand is collapsing. . . . [In the first half of 2024], the Central Association of the German Motor Vehicle Industry reports a decline of 47 percent in orders for electric cars. A drop of 54 percent in sales of heat pumps, reports the Federal Association of the German Heating Industry. What, on the other hand, is increasing: the demand for combustion cars and oil heaters.

“Will the energy transition now be cheap? Yes. Period,” promised Patrick Graichen, later the federal government’s chief planner and head of the Agora Energy Transition think tank, in an interview with WELT in 2017: “The harvest years of the energy transition are now in sight.” Fossil fuels would soon become unaffordable, while green electricity is becoming cheaper and cheaper. . . . But the narrative that has been circulating for many years is increasingly met with skepticism – and not just by consumers. . . . “The supposed certainties of older forecasts, according to which electrification of the industrial, transport and building sectors are economically preferable and that a constant increase in renewable energies would drive down end customer prices, are now fragile,” says Constantin H. Alsheimer, Chairman of the Board of Directors of Thüga Public company.

“Fragile”? I would say that those old “certainties” have been completely shattered. But maybe that’s just an issue of the translation.

Let me end with the message from Dirk Messner, head of the UBA, as quoted in the July 18 Clean Energy Wire piece (emphasis added):

“It is a success that the share of renewables in electricity production continues to grow,” UBA head Dirk Messner said. However, Germany still needs to accelerate renewable expansion capacity to meet its climate and energy targets, especially in the solar photovoltaics (PV) sector, he warned. Messner called for planning security and for the careful further development of subsidy mechanisms, as well as for a way to keep grid fees in check-in areas of high renewable expansion.

Build more and more wind and solar, increase the subsidies yet again, and drive Germany over the economic cliff. It will continue until the voters finally wake up. I have no idea when that will be.

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