The change in the geopolitical order, disrupted by the invasion of Ukraine, has exposed the weaknesses of the German economic model. The German model, points out Wolfgang Münchau in one of his analyses for Eurointelligence, hinges on three ingredients: cost competitiveness, technological leadership in its industry and geopolitical stability, and ‘all of them are gone,’ he adds. On the one hand, the cut-off of Russian gas — which accounted for more than 50% of the gas consumed in Germany — has impacted the electro-intensive industry, forcing businesses like the chemical company Lanxess to restructure their business and close plants.
France imports solar electricity from Germany during the day because Germany installed too much solar without the necessary storage capacity. This power is often sold at a negative price because it’s not needed but must go somewhere. Germany imports nuclear electricity from France and coal electricity from Czechia and Poland at night because it doesn’t have enough baseload capacity.