Brace for an electric shock

With Germans paying around half as much on their electricity bills as Australians, it is clear that we have a lot to learn on energy policy, particularly when it comes to renewables.

Germany's 37 million households will soon be paying half as much on their annual electricity bills as Australian households. An average German household pays just $1060, or about $88 a month, for electricity to run their computers, lights and other household appliances, while an Australian household in 2013 will be paying a whopping  $2117, or $176 a month, according to the Australian Energy Market  Commission (AEMC).

Australian retail electricity prices will rise 37 per cent from 2010-2014 (AEMC), widening the chasm between German and Australian bills and bringing hardship to Australian families already doing it tough from the high dollar and the financial crisis. And it’s going to get worse. As our electricity bills soar, Germany's electricity bills will rise minimally. According to the German energy agency (DENA), bills will rise just 20 per cent by 2020. For most families this will be offset by the legislated German-wide 20 per cent energy efficiency target, which will result in a further reduction of electricity consumption in German homes, reducing bills even more.

This may be contrary to what you've read in the popular press and understand about relative electricity costs between our two countries. Germans and Australians are basically paying the same amount for each retail unit of electricity at the meter, with Germans paying 0.31 Australian cents today which Australians will match next year (0.31 cents in 2013/14). The difference is the volume purchased, as highlighted above. Germany has a comprehensive climate and energy security policy suite that drives renewable growth and energy efficiency across the economy, which has led to average households that use half as much electricity as Australian households.

Germany's low electricity bills are saving families so that they can now spend on the important things in life, but that's not all that Germany's highly efficient electricity sector has achieved with its lower bills for consumers:

1. It has funded the Feed-in-Tariff levy to get the target of 20 per cent renewable energy in the German supply mix 10 years ahead of schedule.

2. Renewable energy is restructuring the German economy for a carbon constrained, climate friendly future, already eliminating 75 million tonnes of CO2 per annum – all inside Germany and powered by German innovation and jobs.

3. By reducing technology costs through large scale deployment, future carbon abatement is made even cheaper.

4. Reducing the already high volumes of Russian gas imports, which are being increasingly seen as a security risk to the nation.  (Australian domestic gas supply prices will soon be linked to the high cost Asian LNG market, which is generally more expensive than the German imported gas market.)

5. Lowering the cost of future renewable. For solar the cost per tonne of abatement will eventually be negative. This will occur once Germany gets beyond its incentive program (Feed-in-Tariff) 40GW deployment target in 2015 (Germany has 25GW on the grid today).

6.  Helping all economies globally get renewable energy cheaper. This is especially of benefit to underdeveloped nations. The Grameen bank has been able to provide half a million Bangladeshi households an electricity service. This has only been possible due to significant deployments in the west (mostly in Germany) which have driven R&D and scale up to make it affordable for Bangladesh to have lighting and power for other basic services such as driving motors and charging mobile phones.

7. Building a leading dynamic adaptive industry that will compete with the lower cost Chinese production through leading R&D and product innovation, so carving the high-end space.

So how did Germany get itself into a position of having significantly cheaper annual electricity bills than Australians?

Germany's approach as a global technology leader has been energy service-based. It is an approach that really got cemented when the German Greens went into an alliance with the Social Democratic Party (SDP) back in the early 2000s. Hans Josef Fell (Greens), along with Herman Scheer (SDP), promoted significant policies that were about moving the Germany and the world from 19th century fossil fuel-based economies to 21st century renewable-powered clean tech economies.

Germany is reducing their emissions by 30 per cent by 2020 and they have a new renewable energy target at 30 per cent of the nation's supply for 2020 (as they passed the old 20 per cent target in early 2011).  Not content with just using half the electricity of Australians, they have an all sector 20 per cent energy efficiency target as well.

Germany now has a 100 per cent renewable energy target for 2050 and given they completed their 2020 target 10 years early, it is quite likely that the Greens' policy position of 100 per cent renewable energy by 2030 will be met. Germany is achieving all this while hitting the lowest unemployment since reunification.


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