September 15, 2013
Alberta, Opinions

Green energy forcing ratepayers into the red

By Gary Lamphier, Edmonton Journal | September 13, 2013 | www.edmontonjournal.com

EDMONTON – Apparently the path to a cleaner, greener planet isn’t quite as painless as many eco-altruists would have you believe.

From Germany to Spain and Ontario to British Columbia, taxpayers are waking up to the fact that their power bills are going straight up.

A major reason? Poorly thought out – some would say hopelessly naive – energy policies that encouraged an explosion of highly subsidized solar, wind, biomass and hydro projects, all in the name of saving the planet from evil fossil fuels.

Ironically, in some cases, these policies have led to an increase in carbon emissions. At the same time, the promised payoff of millions of new green manufacturing jobs has failed to live up to the hype, as Chinese firms undercut their Western rivals. In Germany, Chancellor Angela Merkel’s single-minded campaign to wean her country off nuclear energy in the wake of Japan’s Fukushima disaster has resulted in increased dependence on coal, the dirtiest of all fossil fuels. German consumers already pay the highest electricity prices in all of Europe. Now there’s talk in the German press that electricity is becoming a “luxury good” that some simply can’t afford.

The country’s former Green Party environment minister once boasted that the switch to renewables wouldn’t cost taxpayers more than one scoop of ice cream. Today his successor admits consumers are paying enough to “eat everything on the ice cream menu,” according to Der Spiegel, Germany’s largest news magazine.

“For society as a whole, the costs have reached levels comparable only to the eurozone bailouts. This year, German consumers will be forced to pay 20 billion euros ($26.6 billion US) for electricity from solar, wind and biogas plants – electricity with a market price of just over 3 billion euros.”

Even those figures may understate the full magnitude of the costs, Der Spiegel says, due to the often perverse, unintended effects of state subsidies.

“If there is too much power coming from the grid, wind turbines have to be shut down. Nevertheless, consumers are still paying for the ‘phantom electricity’ the turbines are theoretically generating,” the magazine notes. “Occasionally, Germany has to pay fees to dump already subsidized green energy, creating what experts refer to as ‘negative electricity prices.’”

On the flip side, when the wind doesn’t blow, coal power plants are fired up to fill the gap. That’s why Germany’s carbon emissions actually rose last year while emissions in the U.S. hit a 20-year low, thanks to surging supplies of shale gas, which is slowly displacing coal.

Even more bizarre, many of Germany’s offshore wind turbines aren’t even tied into the electrical grid. To keep them from rusting, they’re running on diesel fuel.

All of the pain might have been worth it if Germany had won the global race to dominate new green energy technologies. But that goal looks increasingly dubious, now that China has the lead.

“Chinese firms gouged the German home market with the aid of cheap labour, a cheap yuan, cheap state credit and a global trade system that let them get away with it,” reports London’s Daily Telegraph newspaper.

“The German solar industry has been smashed. QCells, Conergy, Solon and Solarworld have all gone bust or faced debt restructuring. The subsidies for feed-in tariffs have been leaked abroad. Eight of the world’s 10 biggest solar firms are now Chinese.”

Recession-racked Spain, whose massive state subsidies fueled a boom in solar power installations, faces its own woes. In a bid to wrestle down the deficit, the government has cut subsidies and hiked power bills.

Since total power capacity now exceeds demand by 60 per cent, Spain is trying to stop consumers from generating their own rooftop solar power, by imposing a levy that makes it more costly than simply buying electricity from the grid.

Canada hasn’t been immune to the economic inanities of the so-called green energy revolution, of course. Just look at Ontario, where former Liberal Premier Dalton McGuinty’s Green Energy Act was supposed to transform the province into a renewable energy powerhouse, helping to offset the loss of a quarter million auto manufacturing jobs over the past decade.

It hasn’t worked out so well. Like the experience in Germany, Ontario’s fat government subsidies have triggered a boom in additional wind and solar power capacity, enriching private power producers. But it’s the taxpayers who got stuck with the bill, and it’s going to be a whopper.

“Ontarians have only begun to pay for the the green energy ‘vision’ of Mr. McGuinty and (former Ontario energy minister George) Smitherman,” wrote Globe and Mail columnist Konrad Yakabuski, earlier this summer.

“Electricity rates are forecast to rise by nearly 50 per cent as the government moves toward its target of adding 10,700 Megawatts of renewable power to the grid. Renewable energy is not the only reason Ontario is set to become the highest-cost major electricity jurisdiction in North America by next year, but it remains one of the biggest. As a result, the province faces further contraction in its manufacturing base unless it subsidizes big electricity consumers.”

And just what are the benefits to Ontario taxpayers? A cleaner environment? Lots of new green energy jobs? First-mover advantage in the race to develop new alternative energy technologies?

“Sadly, none of the above,” wrote Yakabuski. “With the bulk of Ontario’s baseload electricity capacity coming from emissions-free nuclear power, commissioning massive amounts of wind and solar energy at guaranteed sky-high rates was a dubious idea from the get-go.”