03/28/2024

100% Renewables by 2050 — Germany Pays the Price for its Ambition

Germany’s two major electricity companies, E.ON and RWE, have announced stunning losses.  For E.ON, these will be the highest losses in its history. Both companies are cutting employment. RWE has cut its dividend entirely, and EON has slashed its dividend more than half. Part of E.ON’s loss is due to a $10 billion payment into the nuclear energy waste storage fund.

The financial losses by Germany’s two energy giants raise fundamental questions about who will pay for the country’s ambitious renewable energy program. To date, German households and small businesses have borne the burden in the form of high electricity prices. Now the shareholders of E.ON and RWE are being asked to step up. If they continue to face losses and cut dividends, they will not be able to attract the capital necessary for Germany’s electricity grid to survive. At that point, Germany’s tax payers will be invited to the payments window to keep companies like E.ON and RWE in business.

Germany’s electricity market, with its super ambitious goals for renewables, again illustrates Hayek’s point that the road to serfdom is paved with good intentions.

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