Germany recently announced its latest massive project, the Stromautobahn. An autobahn is a federal controlled access highway system or what is commonly called federal motorway.
But instead of cars and trucks such as Audis and BMWs, the Stromautobahn will carry high voltage electricity over hundreds of kilometres of steel cables and aluminium, going from the North Sea to the country’s south corridor.
Stromautobahn will be the hub of Germany’s Energiewende, the country’s solar energy revolution, which has led to Germany becoming the biggest global installer of solar panel systems. This is Angele Merkel’s top priority domestic project costing a trillion-euro – a massive project designed to wean Germany off nuclear and fossil fuels by the middle of the century.
Germany’s transition from nuclear and fossil fuel to renewable energy has taken off at a fast rate than expected. The country is admittedly well on its way to using green electricity supply as its primary source of electricity. But this comes at a very high price.
Nuclear energy phase out in Germany actually started in 2000 during the Schroeder administration where a 20-year timetable was initiated. The government at that time was not as aggressive as it is now. However, the situation changed because of the Fukushima nuclear plant meltdown.
Now, the German Chancellor has made the renewable energy translation her explicit policy goal and gave it a top-priority status. The project consists of four aspects: a) reduction of CO2 emissions, b) improvement of energy efficiency, c) promotion of renewable energy, and d) gradual phase-out of nuclear power.
The direction taken by the German government is widely supported by its constituents. Politically, nuclear power in this country is not an option, at this time.
Economic effects of the Stromautobahn
However, many economists and companies in Germany, as well as its neighbouring countries are concerned because of the massive cost of the extensive Stromautobahn project. To replace an existing electrical system will adversely affect and weaken Germany’s industrial base. If that happens, other countries in the European Union will also feel the pinch.
The entire European economy will be affected by the Stromautobahn project. For example, over-all euro-zone economic activity slowed down, resulting in a flat rate for the quarter because of the decline in Germany’s second quarter GDP by 0.6%.
At the same time, the average electricity prices for companies increased by 60% over the last 5 years. This happened because the costs of government subsidies for renewable energy producers were passed along to companies. As a result, prices of electricity in the country are now more than twice those of the United States.
The industrial sector in the country is naturally apprehensive about the Stromautobahn project. “German industry is going to gradually lose its competitiveness if this course isn’t reversed soon,” says Kurt Bock, BASF SE chief executive. BASF SE is the world’s biggest chemical manufacturer.
However, Germany’s Chancellor is unperturbed by criticism of the Stromautobahn project. “No country of Germany’s scale has pursued such a radical shift in its energy supply,” says Merkel. “I’m convinced that if any country can successfully implement the Energiewende, it’s Germany,” she proudly boasts. It is estimated that by 2040, the Stromautobahn green electricity supply project will cost the country around €1 trillion, approximately half of Germany’s GDP.
