Study on the Current Debate about Costs and Benefits of Expanding the Use of Renewable Energies in Electricity Generation

  • Duration 09/2010 - 10/2010

Critics of the support of renewable energies and specifically of the German Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz, EEG) argue that the costs associated with the expanded use of renewable energies are too high. Some advocate a significant reduction or even a complete stop of their financial support. This brief analysis gives an overview of the costs and benefits of the EEG, the German instrument for promoting electricity from renewable sources. One of the study's chapters focuses on the additional costs accruing to German electricity consumers through the EEG apportionment. It looks at how and why these additional costs have risen over the past years and how they might evolve until 2030. Furthermore, the study critically examines some of the most often heard general arguments against the EEG. Finally it is examined if calculations regarding the total costs of German support for photovoltaics through the EEG are correct and how such calculations should be interpreted.

Some of the main conclusions of the brief analysis are as follows:

  • Despite the expected increase in 2011, the EEG apportionment will not exceed 15 % of household electricity prices. An average German household will have to spend only about 0.3 % of its net income on the support for renewable electricity.
  • Many of the arguments often put forward against the support of renewable energies through the EEG are not in line with theoretical and empirical findings.
  • An assessment of calculations made by the German economic research institute RWI about the costs to consumers of promoting photovoltaics shows that these costs are overestimated by at least 6 % and up to 42 %. Implausible assumptions and the non-consideration of some aspects and interrelationships lead to these wrong results.
  • An appropriate assessment of the expansion of renewable energies is only possible if the costs associated with this expansion are communicated in an objective and generally understandable way and if furthermore the multifaceted and long-term benefits are not masked.
  • Expanding the use of renewable energy technologies reduces the negative external effects associated with fossil and nuclear power plants. Investing in these technologies is also the main driver for reducing the specific costs of these technologies and thus increases the chances of successful climate protection in Germany as well as abroad.

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