As the Department of Energy considers a loan guarantee for the Cape Wind Project in Massachusetts, it should learn from Europe's failed wind energy experiments – and from its own troubled experiences with renewable energy projects.
Germany and Spain are waking up to the inevitable truth about renewable energy, especially offshore wind. They are now realizing the projects cannot survive without subsidies and that they make energy much more expensive to households and businesses. In an age of austerity, they are a luxury even Germany, Europe's economic powerhouse, cannot fully afford any more.
When Germany decided to close down its nuclear power stations after the Fukushima disaster in Japan, the original plan was to replace most of the lost generating capacity with wind power. However, wind power is expensive, and the growing size of the industry has meant that subsidies – and energy bills – have surged. The German subsidy is paid for by a surcharge on household electricity bills. The growth in wind power meant that in January the surcharge increased to over 5 cents (euro) per kilowatt hour,representing 14% of all electricity bills.
In Germany, Chancellor Angela Merkel, realizing that wind power is economically unsustainable, has proposed capping the subsidy until the end of 2014 and capping further rises to 2.5%, with the probability of further significant reform after the federal elections this year. It's a similar story in Spain, where subsidies have been cut so much that the chairman of the country´s Association of Renewable-Energy Producerssaid recently: "Spain's government is trying to smash the renewable-energy sector through legislative modifications."
President Obama has repeatedly said we should look to Spain and Germany for the lead on renewable energy policy. He is right, but not in the way he thinks.
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