IEA: Germany must cut costs of renewables switch

The German Government needs to do more to protect consumers from paying too much for the transition costs to renewables. That’s according to the International Energy Agency (IEA) in its […]

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By Priyanka Shrestha

The German Government needs to do more to protect consumers from paying too much for the transition costs to renewables.

That’s according to the International Energy Agency (IEA) in its latest review of German energy policies following the nation’s ambitious aim to switch from nuclear power and fossil fuels to renewable energy.

The IEA warned the Government must rein in its retail electricity prices or risk a backlash from consumers.

Maria van der Hoeven, IEA Executive Director said: “The fact that German electricity prices are among the highest in Europe, despite relatively low wholesale prices, must serve as a warning signal.

“The German Government should maintain its policy course based on a predictable and stable regulatory framework while actively seeking means to reduce the costs. Sudden changes can undermine investor confidence and will drive up costs in the long term. Any form of retroactive tariff cuts – even if applied for only a short period – must be avoided.”

Among the recommendations, the IEA has called for the development of suitable mechanisms to manage the cost of renewable energy capacity and more investment in new gas-fired generation and cost-effective electricity storage.

Following a review of Finland’s energy policies, the IEA praised the role of renewables in the country and the Government’s commitment towards a sustainable future.