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Renewables, Germany, and What the Headlines Exclude Scott Bean November 3, 2017 Yet another article was recently published about how Germany on a random day did or will produce gobs of cheap and/or negatively priced renewable energy, with the usual wave of greens praising the news as, among other things, the way to fight climate change. Given the confidence many have that renewables are the all-inclusive answer to our climate and energy problems, it is worth examining how negatively priced, intermittent renewable energy affects consumers, grid economics and stability, and how effective they really are at mitigating climate change. After all, the ultimate objective is to reduce GHG emissions as much and as quickly as possible while ensuring economic growth and prosperity, not to install infinite capacities of one source of energy over another without regard for the end objective. Negative Prices Germany has now installed more solar and wind capacity than it requires, even at peak times of electricity consumption. Thus, under conditions ideal for wind and solar, there is a surplus of output that German grid administrators are forced to dump onto other countries at prices so low that they can be negative, thus defying any and all competition and drastically disrupting the electricity market. Thanks to feed-in tariffs and regulations, however, renewables producers are guaranteed that whatever output they have will be duly remunerated (as a rule at above-market prices), so they could not care less who is paying them for their output as long as they get paid. Since there is no such thing as a free lunch, it is German citizens and small businesses who end up footing the immense bill. Case in point, household electricity costs in Germany hit a record 291.6 ₏/MWh in 2017, easily the highest in Europe. Given the desire to fund the Energiewende and protect energy-intensive industries from the costs, consumers and small businesses are slapped with over 55% in tariffs. As a result, there is an ever-widening gap between the final sale price and production cost of electricity, creating the false and dangerous conviction amongst many that not only are renewables inexpensive, but also that very low, at times negative, prices are unequivocally a good thing for everyone no matter the circumstances. Output
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