Although German politicians celebrate the huge decline in energy consumption as a success, the reasons for this are not very encouraging. It is mainly energy-intensive industries that are closing or outsourcing their production. Deindustrialization is working. If the energy transition continues as it has, Germany will be in for a rude awakening. This is just the beginning.
Germany’s energy consumption has started decreasing. According to a report, the Energy Balance Working Group is estimating a decline of eight percent this year as compared to last year. However, the price has not been this low since 1990. However, it is not the energy saving measures of private households that are responsible for this, but energy-intensive industries either reducing their production or outsourcing it abroad. Electricity and gas are very expensive in the Federal Republic.
Soft weather compared to 2022 reduced general heating demand, accounting for about one-half of the eight percent decline, but most of the decline comes from the economy. On the one hand, there is a need for measures to increase energy efficiency due to the persistently high energy prices in Germany, but on the other hand, they also require the installation of photovoltaic systems for personal consumption. But it is not possible to ensure fair compensation everywhere, so outsourcing of production is increasing on a large scale in countries with fairly cheap energy prices.
The result of this can be seen in the forecasts for this year’s economic performance, which may see a decline of half a percent. The economic contraction will likely be somewhat more pronounced when final counts become available. Because all indicators show a negative picture across the board, that could lead to a rude awakening. After all, the migration of individual companies also causes a chain reaction with respect to suppliers and the local economy in general. The rude awakening is yet to come.
