Burden of Germany's shift to renewable energy falls on taxpayers, but energy rates are close to U.S. range

BERLIN -- The cold, dreary winters in Germany's capital are taxing, even to a lifelong Berliner like Boris Stanarius.

In 1997, he bought a second home in Fort Myers, Fla., along the Gulf Coast to get some warmth and sunshine in the months when they are scarce in Germany. "Berlin winters were not my cup of tea," he explained.

The move became a lifestyle decision, and he bought up more property in Florida, which he now manages and rents out. However, he felt some culture shock from seeing how Americans were so blasé about using energy.

He recalled people leaving their cars running in parking lots during a Starbucks run to ensure that their cabins remained cool in Floridia's heat. Escalators ran 24 hours a day even in desolate shopping malls and airports.

Among his American tenants, he found they liked to keep the air conditioning on full blast. During his stays in Fort Myers, he noticed his energy bills could be a quarter of his neighbors'.


"I am, by nature, just frugal," Stanarius said. "It upsets me to see this. It's so absurd."

Solar energy emerged as another stark difference. Rooftop solar has blossomed all over Germany, with 38 gigawatts of capacity in a country that gets roughly the same amount of sunlight as Alaska. Per capita, the Sunshine State has a paltry 11 watts of solar capacity per resident, while Germany has about 474 watts per person.

These differences are in large part due to energy prices and policy. Fuel, heat and electricity have long been expensive in Europe's largest economy, so Germans have a history of doing more with less in their homes, businesses and industry.

However, electricity prices are rising in the United States, as well, and with looming federal carbon restrictions, getting homeowners to use energy more efficiently through tighter houses, better appliances and abstemious behavior will be a big part of meeting climate change goals, and Germany could provide lessons on what works and what doesn't.

As its nuclear power sector winds down and renewables power up, Germany is aiming at some of the most ambitious energy targets in the industrialized world, part of its energy transition, or Energiewende: 35 percent renewable electricity by 2020, all nuclear reactors switched off by 2022 and 80 percent renewables by 2050. The country also aims to cut its primary energy consumption in half by 2050 over 2008 levels and bring emissions down more than 80 percent by 2050 compared to 1990 levels.

Ambitious targets, stiff price tag

But these lofty ambitions have a matching price tag, one that increasingly falls to households and small businesses, which now pay some of the highest electricity prices in Europe. Support for the renewable energy feed-in tariff comes from a surcharge on power bills, but more than 2,000 big energy users, like metal smelters and large factories, are exempt.

Eurostat, the European Union's statistics agency, reported that in the second half of 2013, German households paid 29.2 euro cents (37 U.S. cents) per kilowatt-hour, a price second only to that paid by Danish households in the European Union. German industry, meanwhile, paid an average of 14.4 euro cents per kWh.

In the United States, the Energy Information Administration reported, American households paid 12.5 cents per kWh for electricity on average this year.

However, several factors offset the electricity price in Germany compared to the United States.

The average American home used 10,837 kWh and paid a monthly bill of $107.28, averaging 2.7 percent of household income, in 2012, the year for which the most recent data are available from EIA.

The average German household consumed 3,500 kilowatt-hours per year, paying an average monthly bill of €85 ($108.81), about 2.5 percent of household income, in 2013. Roughly half of the bill goes to taxes and levies, including this year's 6.24-euro-cent-per-kWh renewable energy surcharge.

An average American home is almost twice as big as an average German home (201 square meters versus 109 square meters). Per capita, that's 77 square meters per person in the United States, compared to 55 square meters per person in Germany. In part due to climate differences, air conditioning has a penetration rate of less than 10 percent in Germany but surpasses 65 percent in the United States.

Earlier this year, the American Council for an Energy-Efficient Economy (ACEEE) ranked Germany first in energy efficiency in a comparison of the world's 16 largest economies, accounting for factors like average fuel economy for vehicles and energy used per unit of floor space (ClimateWire, July 18).

The report cited Germany's mandatory efficiency codes for commercial and residential buildings as a big part of the reason for its award. "When you are looking at a country with higher energy prices, the attitude is likely that they are going to do more energy efficiency to lower their bills," said Rachel Young, a research analyst at ACEEE and the lead author of the report.

Energy efficiency bridges the gap

As a result, despite a vast gulf in energy prices, households in both Germany and the United States spend a comparable amount on electricity. "Having double the cost of electricity but only half of the amount consumed equates to the same energy bill," said Patrick Graichen, executive director of Agora Energiewende, an energy think tank in Berlin. "That's essentially what we're seeing."

The Energiewende remains popular in Germany. In the 2013 federal election, political factions proposed changes and tweaks to Germany's energy policies, but no party proposed a complete repeal of renewable energy incentives or carbon targets.

A survey by the TNS Emnid research institute last year found that 84 percent of respondents favored a transition to 100 percent renewable energy as safely and as quickly as possible. However, 83 percent said costs should be distributed more fairly.

There is also plenty of room for increasing efficiency further, but projects run into the same obstacles in Germany as they do in the United States, particularly in urban areas. In dense apartment complexes, whether in Berlin or Miami, landlords are reluctant to upgrade insulation and install double-pane windows when the benefits accrue to tenants on their energy bills instead of the property owner.

It's a similar problem for solar, which is why photovoltaics are almost completely absent among the high-rises in central Berlin, but silicon-topped roofs crop up in the suburbs and the countryside.

"The incentives aren't there for a person owning the real estate," Stanarius said, adding that renters in both countries are often in the dark about their heat, water and electricity consumption -- they don't know how much they've used until they get their bill.

All the while, electricity prices are still rising, and many Germans are concerned about this trajectory. Lawmakers reformed aspects of Germany's renewable energy law earlier this year, shifting toward more market-based incentives, but whether this will slow rising prices is uncertain.

ACEEE suggested that developing new financing mechanisms for efficiency upgrades could encourage more property owners to invest in cutting energy use and noted that Germany should expand its research and development in efficiency.

To tackle a problem like climate change, other countries will have to make drastic changes to their energy systems, as well, but many are waiting to see how Germany's experiment plays out.

"There are huge disadvantages in doing it alone," Stanarius said. "The disadvantages are greater if nobody does it."

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