Social Costs of Energy Consumption: External Effects of Electricity Generation in the Federal Republic of Germany

This report systemically compares all kinds of external costs and benefits of different electricity generating technologies. Environmental effects, employment and production effects, the depletion of natural resources and different kinds of public subsidies are all considered. Electricity production based on fossil fuels and nuclear energy is compared to electricity production with wind energy and photovoltaic systems. The impact of including the substantial external effects in the electricity prices on the competitive position of different energy technologies is analyzed. It is shown that the present allocation process is seriously distorted resulting in sub-optimal investment decisions concerning competing energy technologies. For the first time this book carries through the theoretically discussed idea of external effects of energy systems not only to the quantification of different kinds of external effects but analyzes the consequences for the choice of competing electricity generating technologies. The analysis shows that renewable energy sources are at a serious competitive disadvantage as long as external costs are not taken into consideration. The introduction of wind energy systems on a broad scale may be delayed up to fifteen years. This results in considerable costs to society. The book suggests possible corrective actions.