I was talking with an engineer for a multinational chemical company who had recently returned from a trip to some of his employer's European facilities. The workers there were concerned about losing their jobs. He told them that their plants were not competitive because of energy costs, so they had to find some way to add enough value to compensate for their utility costs. Otherwise, the facilities would be shut down.
It turns out that a primary factor in the rising energy costs in Europe is the switch to "sustainable" energy, especially in Germany.
Here's a chart from the Wall St. Journal, dated August 26, 2014:
It turns out that a primary factor in the rising energy costs in Europe is the switch to "sustainable" energy, especially in Germany.
Here's a chart from the Wall St. Journal, dated August 26, 2014:
According to the Wall St. Journal:
To encourage the expansion of green power production, the government guaranteed prices for electricity fed into the grid from renewable sources, such as wind turbines or solar panels. The price guarantees, which vary depending on when the system was installed and its generating capacity, are binding for 20 years.
The government passes the subsidy cost on to consumers in a surcharge. While the flood of new energy sources has lowered market prices for electricity, consumer prices have actually increased as the surcharge has risen to make up the difference between the market and government-guaranteed prices. On the spot market, a kilowatt-hour of electricity costs 3.2 cents, half what it did in 2011. The average guaranteed price under the government's price fixing regime is 17 cents. The renewable energy surcharge levied on German households and businesses has nearly tripled since 2010 and now accounts for about 18% of a German household's electric bill. All told, the subsidies amount to about €24 billion a year, according to Germany's economics ministry.
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