Mr Pentland begins:
Germany’s energy revolution has become the perennial punching bag of American energy policy.
In particular, American pundits have lampooned German Chancellor Angela Merkel’s decision to phase out the country’s fleet of nuclear reactors by 2022 as at best naïve and at worst delusional. Germany’s generous renewable energy subsidies have also provoked the ire of conservative groups.
Germany’s energy policy – the Energiewende or Energy Transition – has pushed up electricity prices, eroded the profitability of Germany’s largest power companies and created a clutch of operating challenges that could ultimately threaten the central power grid’s reliability.
And yet as the Energy Transition emerges from the chaos of its beginning, it is becoming increasingly clear that American critics of the Energiewende are missing the forest for the trees. The critics are not wrong. Germany’s renewable subsidies have pushed up electricity prices. It is also true that Germany’s policies requiring natural gas and nuclear plants to mitigate the grid impacts of variable resources like solar and wind have massively eroded the economics of baseload power plants.
And Mr Pentland concludes:
So it goes with Energiewende. So what is it that makes the Energiewende unique? It wants to make baseload power obsolete. This ambition distinguishes Energiewende from every other large-scale energy initiative underway in the world.
The Energiewende has galvanized a gale of economic destruction. What American critics of the Energiewende have yet to appreciate is that the Energiewende’s destruction is of the decidedly creative ilk.
Joseph Schumpeter is cheering.
About feed-in tariffs.