10.09.2012
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The cost of renewables

Renewables payback 7 billion euros in 2011

This fall could be a hot season for renewables in Germany, with the country's entire Renewable Energy Act at stake. In the lead-up to the discussion, organizations are putting what seems to be a high price tag into perspective.

On Friday, Germany's Renewable Energy Agency (AEE) published the update of its annual cost-benefit analysis, which shows that the approximately 14 billion euros invested in renewables in the country last year offset an estimated 21 billion euros in costs, broken down as follows:

  • avoided environmental damage: 8.0 billion euros
  • local added value: 7.5 billion euros
  • merit-order effect (for 2010): 2.8 billion euros
  • offset energy imports (electricity): 2.9 billion euros

In comparison, the cost of renewables breaks down as follows:

  • extra cost of renewable power relative to conventional power: 13.5 billion euros
  • backup power: 0.16 billion euros
  • grid expansion: 0.13 billion euros

In total, 21.2 billion euros in costs were offset by 13.8 billion euros in renewables, putting the macroeconomic payback at around 50 percent. It is worth noting, however, that this estimate even includes grid expansion and backup power, which are normally not included in discussions of the cost of coal or nuclear power – even though the grid was originally built for such plants, and they definitely also require reserve capacity.

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AEE

Furthermore, the estimate does not include expenses for the recovery of disused open-face coal mines, which cost Germany roughly 1 billion euros from 2008 to 2012 -- roughly 0.2 billion euros per year and more than the country needed to spend last year on backup power for renewables or on grid expansion.

Going forward, the AEE adds, the amount invested in renewables will actually decrease because photovoltaics in particular has become so much less expensive, and the price is expected to continue to drop. (Craig Morris)

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