Germany's Uncertain Energy Policy

October 28, 2013

The lack of clarity on Germany's energy policy is creating the most volatile power prices in seven months, boosting costs for industry in Europe's largest economy, says BusinessWeek.

  • Prices are being victimized because Chancellor Angela Merkel, reelected almost a month ago, has yet to give details on her pledge to amend the nation's $750 billion solar and wind power program.
  • Price swings in Europe's biggest power market, exacerbated by plunging fuel and carbon costs, are making it harder for industrial users to plan purchases.
  • The volatility is boosting total costs and hindering investment in the $3.4 trillion economy, according to Maik Neubauer, a management consultant specializing in utilities and commodity markets and the former chief operating officer of the European Energy Exchange AG.

Merkel has said changing the renewable-energy law will be her first priority after securing a third term. Her plan to source at least 35 percent of the nation's power from mainly solar and wind by 2020, compared with 23 percent now, has pushed residential bills to more than twice the amount that utilities pay to deliver the electricity, as taxes and charges that subsidize the plan inflate prices, according to BDEW, a Berlin-based lobby group.

Source: Rachel Morison and Julia Mengewein, "German Power-Price Swings Threaten Growth Engine: Energy Markets," BusinessWeek, October 16, 2013.

 

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