German Environment Minister Altmaier is getting some attention for his statement estimating cost of the feed-in tariff system at EUR 1 trillion if his “electricity price brake” (Strompreisbremse) proposals don’t get enacted as law.
I think that this statement is not founded in reality, but rather intended for fighting the election coming up later this year.
But if Germany was to spend ONE TRILLION EURO on renewable, my reaction would be “Great idea!”
After all, this comes closer to the minimum level of investment needed to deal with global warming, which is two percent of GDP. As explained yesterday, it would amount to about 1.45% of 2012 German GDP on average over the 28 years remaining.
So what would ONE TRILLION EURO buy in solar and wind electricity over those 28 years?
Let’s try a very rough estimate.
I will start with arbitrarily setting solar at 8 cent Euro per kWh on average. It will probably be much lower, since we are already at around 11 for the largest scale, but let’s stick with a very conservative number.
I will set wind also arbitrarily at 6 cents. That’s based on the fact that the basic tariff in Article 29 of the Law on Priority for Renewable Energy is set at 4.87 cents, and the starting tariff in the same Article at 8.93 cents right now.
I assume exactly identical amounts of wind and solar until 2040, so I can get an average of 7 cents.
Next I assume zero wholesale price and zero extra cost for net infrastructure. The former assumption increases cost, the latter reduces them, and I just have those two cancel each other out.
There we go. How much electricity does ONE TRILLION EURO buy at 7 cents a kWh?
7 cents a kWh means EUR 70 million per TWh. That means EUR 70 billion buys 1,000 TWh at that rate.
Which leaves us with around 14,285 TWh for our ONE TRILLION EURO.
At 500 TWh a year consumption on average (assuming a slight reduction of consumption over the years), that would be enough to completely power Germany for 28 years.
I would certainly like that to happen. But I recall that the plan is to get to 65% renewable until 2040. Altmaier’s ONE TRILLION EURO would get us 100% immediately, and for the full period of 28 years.
Again, I would rather like that to happen. But with the much more modest goals Germany has right now, the results above probably mean that Altmaier’s estimate is off by a rather large factor.