Germany wants wind and solar power to replace the recently abandoned nuclear and fossil fuels. But the rate of inflation could thwart the government's grandiose plans.

After a long struggle, Germany finally broke completely with the production of nuclear energy, thereby choosing a path directly opposite to that taken by several European countries who have embarked on building nuclear power plants and developing and expanding their existing facilities. A growing number of countries are taking this latter route, recognising that nuclear energy is the most reliable, predictable, and one of the safest sources of energy today. Although Germany is going its own way, inflation can thwart the government’s grandiose, ideology-driven plans in an instant.

Germany is planning huge wind farms in the North and Baltic Seas, with the goal of producing 70,000 megawatts of electricity there. This would require the federal government to work with the electric power suppliers, but the ever-increasing material and infrastructure building costs could derail all plans.

The price of steel has recently risen by 80 per cent. Special vessels that install wind turbines on the seabed now cost 60 per cent more than they did three years ago, and interest rates have also hiked. Without the construction of offshore wind farms, a vast majority of the energy transition will not materialise.

The service companies complain that the original agreement is no longer viable for them. The higher costs cannot be passed on to consumers, and the government will not allocate more money than the original for the entire investment, so the project would be an utter loss maker, and several giant companies have therefore already considered halting the planning for good. A wind turbine in the sea currently costs 3 million euros per megawatt, which is almost three times the previous amount.

Adding the total cost of producing the 70,000 megawatts targeted by the federal government to the construction costs at three million per unit, we get a total of €210 billion. Companies are unlikely to be able to cope with this.

Meanwhile, demand for electricity is greater than ever in Germany, as the government plans to mandate households to use electricity for heating instead of natural gas or wood burning.