Private businesses’ nominal value added in Greece has fallen by 38 percent over the last ten years. Micro firms were hit particularly hard. Despite efforts to stabilize the macroeconomic environment, there are only weak signs of recovery. Future prospects are not much better, as—with the ... more

The cost of renewable energy technology has plunged in recent years. But the extent to which electricity consumers can benefit from the reduced costs depends on the design of renewable remuneration mechanisms. Calculations of a financing model show that the current sliding premium is leading to ... more

„Future of capital funded old age provision in Germany – sovereign wealth funds versus individual retirement accounts“Editors: Timm Bönke, Markus M. Grabka and Carsten SchröderIn May 2018, the German Federal Ministry of Labour and Social Affairs duly convened the pension ... more

The construction of a second Baltic Sea natural gas pipeline from Russia to Germany (Nord Stream 2) is very controversial for political, energy economic, and ecological reasons. The project owner and some European energy companies argue that it is a profitable, private-sector investment project that ... more

Linking cap-and-trade systems promises gains in cost effectiveness and signals a strong commitment to carbon policy. Linking is also seen as one possible way of converging from regional climate policy initiatives toward a global climate policy architecture. Two linked systems have been established ... more

• Current DIW Weekly Report 29/2018
• To Table of Contents

Private businesses’ nominal value added in Greece has fallen by 38 percent over the last ten years. Micro firms were hit particularly hard. Despite efforts to stabilize the macroeconomic environment, there are only weak signs of recovery. Future prospects are not much better, as—with the exception of labor market regulations—the conditions for investments and business activities have not been sufficiently changed through eight years of reform process. Fundamental issues— excessive red tape, bulky administrative procedures, slow courts, complicated taxes, and an inefficient knowledge transfer— remain unaddressed. Greece cannot achieve its urgently needed strong and sustainable economic growth without these reforms. When the third economic adjustment program for Greece ends in August, so will external reform pressure. It remains an open question whether the government—current or future—will feel compelled to complete and implement the pending reforms.

The cost of renewable energy technology has plunged in recent years. But the extent to which electricity consumers can benefit from the reduced costs depends on the design of renewable remuneration mechanisms. Calculations of a financing model show that the current sliding premium is leading to increasingly higher risks for investments and in turn, increasing equity requirements. As a result, financing costs increase, which counteracts the lower cost of technology. Furthermore, increased equity requirements could negatively affect the diversity of players investing in renewable energy and thus the level of competition as well as the rate of project realization in the sector. A change towards contracts for difference (CFDs) can remedy the situation. CFDs lead to low financing costs and therefore reduce overall costs of supplying renewable electricity, reducing expected annual costs for German consumers by approximately 0.8 billion euros per year by 2030. They also safeguard consumers against high payments for renewable electricity in case of high electricity prices. A transition to CFDs provides the opportunity to create more effective and simpler incentives for system-compatible site selection and plant design.

The construction of a second Baltic Sea natural gas pipeline from Russia to Germany (Nord Stream 2) is very controversial for political, energy economic, and ecological reasons. The project owner and some European energy companies argue that it is a profitable, private-sector investment project that is necessary to secure natural gas supplies for Germany and Europe. However, DIW Berlin analyses show that the planned pipeline project Nord Stream 2 is not necessary to secure natural gas supplies for Germany and Europe. The energy consumption forecasts on which the project is based, especially the EU Reference Scenario, significantly overestimate natural gas demand in Germany and Europe. On the supply side, there will be no supply gap if Nord Stream 2 is not built. Different profitability studies suggest that high losses up to the billions can be expected from the project. It is also unclear to what extent Nord Stream 2 would lead to higher prices for natural gas customers in Germany.