With elections in Germany approaching at the end of this month, current chancellor Angela Merkel is facing a challenge to continue with her renewable energy strategy while keeping the industry and consumers satisfied.
Analysts argue that maintaining energy prices and a balanced budget, while meeting the set green targets will be the biggest political dilemma that the next government will have to cope with.
Probably one of the most successful and highly observed strategies of Merkel’s cabinet was to take Germany’s economy on the road to nuclear and fossil fuel-free energy production. The government offered generous subsidies, incentives and feed-in tariffs, which attracted not only major solar and wind power makers, but also smaller households and local businesses. This year, Germany set a world record in renewable energy generation, as we reported last month.
The strategy and targets met even greater public support following the nuclear disaster in Fukushima in 2011. Back then, Merkel decided to set even higher aims with having renewables contributing to 80% of the power mix by 2050.
It is no wonder that the current opposition from the Social Democrats cannot come up with a successful alternative strategy. But they do believe they can make a change. The Social Democrats were the party that first introduced incentives for renewable energy production more than 10 years ago, and now the only challenge they can propose to tackle is to keep consumers happy by cutting taxes.
Truth is, German households, the industry and exporters are now facing a raise in charges by 47% only in 2013, making power prices so high that they are no longer able to compete. In addition, many are even skeptical that this year’s huge increase in energy bills is the last they will see. But customers are now seeing putting investments into green energy as a fancy trend that everyone wants to follow.
The export-oriented industry is a sector, which is not entirely happy with the policies. With shale has being shunned, the high energy prices that are the second highest in Europe are far away from dropping.
But Merkel has a new strategy. If she is re-elected for a third time, she plans to adjust the incentive system, and make it more consumer-friendly, while still keeping up with renewable energy targets. All this, of course, will highly depend on her coalition partner.