Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

16 October 2012

Germans Face Skyrocketing Electricity Bills

Let us recall that Obama has promised us skyrocketing electricity bills.  He wants to do to us what is already happening to the German people.  Electricity costs are even worse in Denmark.

The German government is aiming to have 80% of German energy produced by renewable sources by 2050.  It has also decided to close down all nuclear power plants by 2022.  Older fossil fuel plants are being shut down already.  Solar, wind, and biomass energy now are a quarter of the country's electricity supply.  The levy subsidizing the green energy electricity sources instituted with the Renewable Energy Sources Act (EEG), has caused electricity costs to skyrocket.  Electricity now costs about 85% more than in 2000, when EEG was passed.  The EEG is to be increased by 47% next year to a toll of 5.3 cents per kilowatt hour.  Already, electricity is less expensive in many European and Asian countries by 30%.  It is 50% less expensive in the U.S. and Russia.  This will cost Germany jobs.

The subsidy next year for renewable energy to be paid by German consumers is about 20 billion Euros.  The Technical University of Berlin just issued a study that predicts that the subsidies crushing German consumers will be more than 300 billion Euros by 2030, which is unsustainable.  Already, as many as 800,000 German households are unable to pay their electric bills.  In 2009, German households spent an average of 2,500 Euros a year for energy.  At the 2009 average monthly exchange rate to dollars, this was the equivalent of $3,474 a year.  German households are now paying about 41% of their total bills for heating and hot water costs.  After the electricity rate increases already scheduled for next year, further increases from 30 to 50% are expected over the next ten years.

Costs are not the only major problem.  A very cold period in February 2011, was more than the electric grid could handle.  A number of heavy industry plants in the Hamburg area were forced to shut-down.  There is reason for concern that further shut-downs will be needed this winter and next winter.

The story for investors has been bleak.  Wind and solar power system manufacturers are among the worst -performing stocks in the last few years.  Vestas, the Danish wind turbine manufacturer, had a fantastic 20 times increase in stock value from 2003 to 2008.  The value of the stock has now returned to the 2003 value.  In 2012, Vestas is losing money and has had to reduce its workforce around the world by 3,735.  Vestas America has cut jobs this year, hurting Obama's claim of creating many green jobs.

Solar panel makers have had a similarly hard time.  SunTech of China is the largest photovoltaic panel manufacturer.  Its private equity investors, including Goldman Sachs, made 10 times their original investment.  When SunTech shares were initially launched on the stock market, they went from $20 to $79 in late 2007.  The stock has crashed since to $0.92!  Similarly, First Solar was at $308 in April 2008 and now is about $23.  Falling prices due to a surplus of manufacturing capacity and sinking government subsidies have caused the solar industry to become unprofitable.

Yet, Obama still thinks he is going to create millions of green jobs in America.  If he uses subsidies to do so, they will have to be huge.  Huge subsidies will kill other jobs in greater numbers than those created in the green industries.  The green industries have very brown thumbs.

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