Germany and the “Energy Poverty” Crock

August 10, 2016

energypov

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Craig Morris is the most relevant and reliable reporter on the German Energy Transition.

Energytransition:

Recently, I had dinner with a group of North Americans who had come to Berlin to see what they could learn from the German energy transition. A Canadian expressed his concern that “Germany has hundreds of thousands of people who cannot pay their power bills.”

“The exact number is around 350,000,” I answered, “and we know this because the country’s Network Agency publishes the figure every year.” I then asked the group whether that number was high or low. For instance, how many households in Canada or the US had their power cut off for failing to pay the bills?

No one knew.

As we pondered the irony of energy experts not knowing statistics about their own countries that they know about Germany, I put the numbers into context. “That’s 0.9 percent of the 39.9 million households in Germany.” Still, how does that performance stack up internationally?

The visitors to Germany did not know because other countries don’t always publish their statistics. Whenever the US press reports on such matters, we get a hodgepodge of numbers from particular utilities. Usually, we are only provided with the number of households affected (such as 70,000 in Memphis over eight months) without any indication of the percentage. Another example: 91,000 households in Iowa (equivalent to seven percent of all households in the state) received disconnection notices in the fall of 2015. There are no statistics on “energy poverty” for the US as a whole.

Judging from this article, Canada does not collect official statistics either (but please drop us a link in the comment box below if you know better). We simply know that a bank survey of Canadian households with incomes of at least 50,000 CAD found that 40 percent had trouble paying their monthly energy bills at least once in 2014. That’s not the same as having your power disconnected, of course, but the numbers tally roughly with Australia as well—and again, the statistics are based on a survey, not official government data.

The best comparison I know of is from Eurostat, (above) and it makes Germany look quite good indeed. Here, we see the number of households unable to pay monthly energy bills (not just electricity) on time. The US protects its poor less, with utility firms sometimes cutting people off when they are only 30 dollars behind—and then charging hefty sums for re-connections, up to five times more than in Germany. Furthermore, while prices may be higher in Germany, bills are not necessarily, because North Americans consume so much energy.

EnergyTransition:

While Americans pay on average around 12 cents per kilowatt-hour of electricity, Germans easily pay twice as much. Yet, citizens are not demonstrating against the energy transition. On the contrary, when an Energiewende demo takes place, it is always citizens wishing to protect their right to make their own energy.

One reason is that the average power bill is a fairly small part of household budgets. Germans consume only a third as much electricity as Americans do. Their power bills are thus not so large.

But how can we compare these rates? If we do so with the exchange rate, then German power bills currently look very small indeed because the euro has dropped from around 1.30 USD in recent years to around 1.10 USD in the past few months. Convert at that rate, and Germans only pay around 92 dollars a month for electricity – compared to the US average of 110 dollars. But even at the higher exchange rate from 2014, German power bills would still only come in right at around 110 dollars.

Another question is whether Americans simply have more appliances at home. Aside from air-conditioning, which is practically unknown in Germany, Americans and Germans have quite similar creature comforts at home. Granted, homes are larger in the US at around 2,400 square feet, whereas the average German home comes in closer to 1,000 square feet. Likewise, refrigerators and some other appliances are generally bigger in the US. Otherwise, the differences are not that great:

appliances

Clearly, Germans are not doing without appliances for a lack of money. So in the chart below, we separate out air-conditioning to isolate the biggest difference between the two countries.

germanhousehold

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Because the exchange rate has fluctuated so greatly, we opted for a different conversion metric: purchasing power parity. The average German power bill squeaks in at the lowest level of any US census region. However, if the impact of air-conditioning is removed, German power bills would be among the highest. Furthermore, in a state-by-state comparison (here is a PDF listing average power bills by US state) Germany would come in with the 21st lowest monthly power bills, quite close to the middle.

Clearly, the message in this comparison largely depends upon assumptions and the means of conversion. Our chart is therefore not the final word, but we hope it will improve the discussion outside Germany.

The German energy transition has been a consistent target for climate disinformers, sometimes hilariously, as this clip from Fox News shows. (forward to 2:49 to see the pathetic, brow-beaten and sexually harrassed hostess Gretchen Carlson follow the fossil fuel script..)

I always show that 10 second clip at my climate talks, and gets a consistent laugh.

Memo to Fox News: If you are concerned about your credibility going in the dumper, maybe you should review items like this.

Media Matters:

Fox News claimed that the future of solar power in the U.S. is “dim” because we have less sunlight than countries like Germany, the current world leader in solar generation. But Fox completely reversed the facts: the U.S. receives far more direct sunlight, but has been outperformed due to Germany’s superior solar policies.

On Fox & Friends, co-host Gretchen Carlson claimed that the U.S. solar “industry’s future looks dim.” The show brought on Fox Business reporter Shibani Joshi, who said that Germany’s solar industry is doing “great” because “they’ve got a lot more sun than we do,” before adding,  “In California, it’s a great solution, but here on the East Coast it’s just not going to work.”

The U.S. is lagging behind Germany in solar power generation, but it doesn’t have anything to do with our solar potential. In fact, the Southwest has “among the best photovoltaic resources in the world,” according to a report by GTM Research. And even the East Coast states have greater solar potential than Germany, as illustrated by this map from the National Renewable Energy Laboratory:

ussolargermany

Just for reference, Germany is at approximately the same latitude as Labrador, Canada.

lat

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4 Responses to “Germany and the “Energy Poverty” Crock”

  1. John Garland Says:

    One tiny correction: The island of Newfoundland–the typical meaning of the term–is below your yellow band. Given your graphic, Germany is perhaps better described as at the same latitude as southern Labrador. Or perhaps James Bay.

  2. Gingerbaker Says:

    ““The exact number is around 350,000,” I answered, “and we know this because the country’s Network Agency publishes the figure every year.” I then asked the group whether that number was high or low. ”

    I dare say it is MUCH lower than the U.S. The median standard of living in Germany is – I think – MUCH higher than in the U.S. Two Mercedes in the driveway higher. Much less poverty.

  3. webej Says:

    I am surprised the article is not including taxes and network charges in your comparison of electricity prices. My recollection of reviewing my annual recalculation is that I was paying about €0,22/KWh, but the base charge, without VAT, energy surcharges, transit and network charges was around €0,05. There is very little price differential between green choice electricity and regular electricity.
    Obviously all these factors have to be included to avoid making apples to oranges comparisons.
    These charges are for retail customuers: if you use a lot more electricity there are two much cheaper tariffs, and of course refineries or aluminum smelters have tailor-made contracts with their energy providers.


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