Many Europeans complain about their high energy costs, largely due to their increasing dependence on renewables — the most costly energy sources. But European political parties as well as a majority of people still want government to promote costly options, especially wind and solar power.
This is killing European economies. Electricity costs in Europe are more than double the cost of electricity in the U.S. High electricity costs make it difficult for businesses to operate if they need a lot of electricity. Their cost of electricity is high, and they might not be able to pass it on to consumers when consumers are free to patronize businesses operating where electricity costs are much lower. Many businesses under pressure are likely move to a lower-cost location, and jobs will go with them. Antonio Tajani, European Commissioner for Industry and Entrepreneurship, warned: “We face a systemic industrial massacre.”
The Germans probably have done more than anyone else to promote high-cost wind and solar power. Other types of renewable energy, like hydropower and geothermal power, usually are limited to a small number of suitable sites. The Germans want to have renewables account for 80 percent of their electricity. Their experience illustrates consequences of such a policy.
The most obvious consequence is lots of subsidies and taxes. The German government has arranged for renewable energy producers to sell the power grid their electricity at more than 6 times the wholesale electricity market rate. Nature reported that in 2012 renewable energy producers “cashed in an estimated €20 billion for electricity worth a mere €3 billion.” Counting the costs of electricity from all sources, the Institute for Energy Research reported that “Germans pay 34 cents a kilowatt hour compared to an average of 12 cents in the United States).”