German automakers are caught in a quandary – how can they pay more for a clean energy surcharge tax when automotive sales are down. The problem stems from German Chancellor Angela Merkel's move to take the country further away from nuclear and toward using more renewables to power the electricity grid.
For automakers, it can therefore make more sense to generate their own energy than to pay taxes on renewables made by commercial producers. "Generating your own power is not only cheaper in most cases, it could also protect you from grid failures," Sebastian Bolay, an energy policy analyst at DIHK, told Bloomberg.
BMW is funding four wind turbine towers that will soon supply almost a quarter of the power used at its Leipzig plant. It's there that the automaker builds its X1 sport-utility vehicle and will soon make the i3 electric car. Overall, the company generated 28 percent of its power from renewables in 2011 and wants to eventually reach 100 percent. BMW wants to meet two targets – cutting its carbon output and achieving cost savings from anticipated falling prices for wind and solar energy.
Daimler and Volkswagen are changing over to gas-powered plants to reduce energy costs. Daimler will be opening a gas-fired plant to supply power and heat to its truck factory in Woerth, reducing energy costs about 26 percent and carbon emissions 15 percent compared to its previous energy supply. Volkswagen will also open a 70-megawatt, gas-powered station at a component plant in Kassel, and may add at least five more generators in coming years.
This year, a 47-percent hike in the clean-energy surcharge will be implemented in Germany, which could add as much as 254 million euros (about $332 million) to the combined power bills of automakers and parts suppliers in Germany. The surcharge has gone up sixfold since 2006 and the German government estimates it will cost about 550 billion euros (about $719 billion US) for plant and grid upgrades during the switch away from nuclear. That cost will be covered in part by raising power surcharges.
All of this takes place during a period of declining auto sales in Europe. Demand in Europe is going into its sixth consecutive annual decline in 2013, and last year experienced its lowest level in nearly two decades. In Germany, automakers are paying more for energy and in labor costs than competitors in other European nations.
Chancellor Merkel's plan was proposed after Japan's Fukushima nuclear plant meltdown nearly two years ago, and it relies on expanded use of wind and solar power. Along with the surcharges, renewable energy fluctuates based on ideal weather conditions, which increases the risk of power outages. This risk and cost factors have motivated automakers to invest in their own power generators.