End of atomic age seen as Merkel’s biggest headache now

Business Demands

The BDI industry federation that represents about 100,000 companies including Siemens AG and Volkswagen AG on Sept. 19 called for an end to feed-in tariffs and said developers must sell power on the market to encourage output that responds to demand, rather than when the wind is blowing or the sun shines. That echoes similar demands from industry groups such as the VCI chemical lobby, utility groups VKU and BDEW as well as the Free Democratic Party, Merkel’s second-term junior coalition partner.

Merkel’s environment minister, Peter Altmaier, a member of her Christian Democratic Union and a long-time confidant, has repeatedly clashed over the 550 billion-euro ($743 billion) project with Economy Minister Philipp Roesler, the FDP leader whose ministry shared responsibility for the program known in German as the Energiewende.

Merkel’s Command

Those frictions will be a thing of the past after Merkel’s Christian Democratic bloc got the biggest vote tally since Helmut Kohl’s post-reunification victory of 1990, taking 41.5% in the Sept. 22 elections, and the FDP crashed out of the lower house of parliament.

That leaves a coalition with the Social Democrats or the Greens as possible options, Volker Kauder, the CDU’s parliamentary caucus leader, said yesterday on ZDF television. Merkel has made contact with the Social Democrat leadership and also refused to rule out speaking to the Greens, she told reporters yesterday in Berlin. Negotiations could take some time. In 2005, it took 65 days to swear in the so-called grand coalition of CDU/CSU and Social Democrats, a record in post- reunification Germany.

“Energy policy will be key for Merkel’s coalition negotiations,” Claudia Kemfert, who heads the energy unit at the DIW economic institute, a research group in Berlin, said today by e-mail. Talks may be easier with the Social Democrats than the Greens because the latter favor a speedier expansion of renewables, she said.

Governing with the Social Democrats may help Energiewende reform, since friction that has delayed energy-related bills in the SPD-controlled upper house of parliament, the Bundesrat, would be dissipated. In any case, the Social Democrats are the co-architects of Germany’s first nuclear exit under Chancellor Gerhard Schroeder.

Offshore Gridlock

Getting Germany’s state leaders, who sit in the Bundesrat, to sign off on legislation may be easier in a grand coalition, Nickel said. “Convincing the states is key for this reform as there are so many different interests across the country,” he said.

For Merkel, there’s more to do than just getting costs under control. Germany last year alone added 10 gigawatts of wind turbines and solar panels -- the capacity of about 10 nuclear plants -- yet output varies with the weather and nightfall. That puts strains on an already outmoded electrical grid.

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