Der Spiegel Slams Germany’s Energiewende
By Paul Homewood
Der Spiegel has published a long article, which effectively tears to shreds Germany’s energy policy over the last few years. Excerpts below:
If you want to do something big, you have to start small. That’s something German Environment Minister Peter Altmaier knows all too well. The politician, a member of the center-right Christian Democratic Union (CDU), has put together a manual of practical tips on how everyone can make small, everyday contributions to the shift away from nuclear power and toward green energy. The so-called Energiewende, or energy revolution, is Chancellor Angela Merkel’s project of the century.
"Join in and start today," Altmaier writes in the introduction. He then turns to such everyday activities as baking and cooking. "Avoid preheating and utilize residual heat," Altmaier advises. TV viewers can also save a lot of electricity, albeit at the expense of picture quality. "For instance, you can reduce brightness and contrast," his booklet suggests.
Altmaier and others are on a mission to help people save money on their electricity bills, because they’re about to receive some bad news. The government predicts that the renewable energy surcharge added to every consumer’s electricity bill will increase from 5.3 cents today to between 6.2 and 6.5 cents per kilowatt hour — a 20-percent price hike.
German consumers already pay the highest electricity prices in Europe. But because the government is failing to get the costs of its new energy policy under control, rising prices are already on the horizon. Electricity is becoming a luxury good in Germany, and one of the country’s most important future-oriented projects is acutely at risk.
After the Fukushima nuclear accident in Japan two and a half years ago, Merkel quickly decided to begin phasing out nuclear power and lead the country into the age of wind and solar. But now many Germans are realizing the coalition government of Merkel’s CDU and the pro-business Free Democrats (FDP) is unable to cope with this shift. Of course, this doesn’t mean that the public has any more confidence in a potential alliance of the center-left Social Democrats (SPD) and the Greens. The political world is wedged between the green-energy lobby, masquerading as saviors of the world, and the established electric utilities, with their dire warnings of chaotic supply problems and job losses.
Even well-informed citizens can no longer keep track of all the additional costs being imposed on them. According to government sources, the surcharge to finance the power grids will increase by 0.2 to 0.4 cents per kilowatt hour next year. On top of that, consumers pay a host of taxes, surcharges and fees that would make any consumer’s head spin.
Former Environment Minister Jürgen Tritten of the Green Party once claimed that switching Germany to renewable energy wasn’t going to cost citizens more than one scoop of ice cream. Today his successor Altmaier admits consumers are paying enough to "eat everything on the ice cream menu."
For society as a whole, the costs have reached levels comparable only to the euro-zone bailouts. This year, German consumers will be forced to pay €20 billion ($26 billion) for electricity from solar, wind and biogas plants — electricity with a market price of just over €3 billion. Even the figure of €20 billion is disputable if you include all the unintended costs and collateral damage associated with the project. Solar panels and wind turbines at times generate huge amounts of electricity, and sometimes none at all. Depending on the weather and the time of day, the country can face absurd states of energy surplus or deficit.
If there is too much power coming from the grid, wind turbines have to be shut down. Nevertheless, consumers are still paying for the "phantom electricity" the turbines are theoretically generating. Occasionally, Germany has to pay fees to dump already subsidized green energy, creating what experts refer to as "negative electricity prices."
On the other hand, when the wind suddenly stops blowing, and in particular during the cold season, supply becomes scarce. That’s when heavy oil and coal power plants have to be fired up to close the gap, which is why Germany’s energy producers in 2012 actually released more climate-damaging carbon dioxide into the atmosphere than in 2011.
If there is still an electricity shortfall, energy-hungry plants like the ArcelorMittal steel mill in Hamburg are sometimes asked to shut down production to protect the grid. Of course, ordinary electricity customers are then expected to pay for the compensation these businesses are entitled to for lost profits.
The government has high hopes for the expansion of offshore wind farms. But the construction sites are in a state of chaos: Wind turbines off the North Sea island of Borkum are currently rotating without being connected to the grid. The connection cable will probably not be finished until next year. In the meantime, the turbines are being run with diesel fuel to prevent them from rusting.
In the near future, an average three-person household will spend about €90 a month for electricity. That’s about twice as much as in 2000.
Two-thirds of the price increase is due to new government fees, surcharges and taxes. But despite those price hikes, government pensions and social welfare payments have not been adjusted. As a result, every new fee becomes a threat to low-income consumers.
Consumer advocates and aid organizations say the breaking point has already been reached. Today, more than 300,000 households a year are seeing their power shut off because of unpaid bills. Caritas and other charity groups call it "energy poverty."
It is only gradually becoming apparent how the renewable energy subsidies redistribute money from the poor to the more affluent, like when someone living in small rental apartment subsidizes a homeowner’s roof-mounted solar panels through his electricity bill.
Still, the government is pressing ahead with wind expansion, and the plans are breathtaking. By 2020, offshore wind turbines are expected to generate up to 10 gigawatts of electricity, theoretically as much as eight nuclear power plants. To attract investors, the government has created the best possible subsidy conditions, so that operators will be paid 19 cents per kilowatt-hour of offshore electricity, or about 50 percent more than from land-based wind farms. The government has also assumed the liability risk for the wind farm operators. If anything goes wrong, taxpayers will bear the cost.
As fascinating as the plan is for engineers, economically it’s a potential disaster. Experts believe that because of the more challenging conditions, the power offshore wind turbines generate will be consistently two to three times as expensive as on land. Although the wind blows more consistently at sea, this comes far from offsetting the higher costs.
The less visible costs are also high. There is little demand for electricity in the thinly populated coastal region. New high-voltage power lines will be needed to transport the energy to industrial centers in western and southern Germany. The government already estimates the costs of expanding the grid at €20 billion, which doesn’t include the additional ocean cables for offshore wind power.
If the government sticks to its plans, the price of electricity will literally explode in the coming years. According to a current study for the federal government, electricity will cost up to 40 cents a kilowatt-hour by 2020, a 40-percent increase over today’s prices.
Cossebaude is also part of the enormous Niederwartha pumped storage hydroelectric plant. Now the power plant, along with the recreational lake attached to it, could soon be gone. The company plans to shut down the energy storage facility within the next two years. This is bad news for Dresden’s swimmers, but it’s especially detrimental to Germany’s energy transition, which depends on backup power plants like the Niederwartha facility.
An ironic result of the green energy expansion is that many of the reliable pumped storage stations could be forced out of the market. There are roughly 20 of these power plants in Germany, with Vattenfall being the most important operator. The plants were very profitable for utilities for decades, but now the business has become highly unreliable. Dresden is a case in point.
When it’s sunny and people are most likely to head to the lake, solar power is abundant and electricity prices drop. This means the pumped storage station earns less money, so the power plant is shut off. In 2009, for example, the turbines in Niederwartha were in operation for 2,784 hours. Last year, Vattenfall ran the facility for only 277 hours. "Price peaks that last only a few hours aren’t enough to utilize the plant to full capacity," says Gunnar Groebler, head of Vattenfall’s German hydro division.
Not surprisingly, the company invests very little in its pumped storage plants today. In Niederwartha, the buildings are filled with the musty smell of earlier floods, the paint is peeling from the walls and the reservoir leaks.
It would cost Vattenfall €150 million to modernize the plant. But company executives are hesitant, fearing they won’t recoup that money with future profits. Vattenfall has also hit the brakes elsewhere, like in Hamburg suburb of Geesthacht. Plans to increase the capacity of the existing reservoir there have been put on hold. Instead, the plant is used only as a backup.
All this gives credence to the claim that Germany’s energy reform is its own worst enemy. Despite the erratic expansion of wind and solar projects, the backup power capacity those projects require is lacking. One study found that Germany’s expansion of renewable energy will require additional storage capacity for 20 to 30 billion kilowatt-hours by 2050. So far the storage capacity has grown by little more than 70 million kilowatt-hours. And hardly anyone is interested in maintaining the existing storage facilities.
More and more wind turbines are turning in Germany, and solar panels are basking in the sun, yet the amount of pollutants and greenhouse gases emitted by smokestacks increased last year. This dramatic turn of events is especially evident in small town of Grosskotzenburg, just east of Frankfurt.
Germany’s largest energy provider, Düsseldorf-based E.on AG, has been operating a large coal-fired power plant in Grosskotzenburg for many years. The oldest of the five units at the Staudinger plant was built in 1965 and operates at a ridiculous 32-percent efficiency level. Even at E.on, the Staudinger plant is now seen as "completely unacceptable, both economically and environmentally."
“To be on the safe side, we informed the relevant authorities several times that we are shutting down the unit," says E.on CEO Johannes Teyssen. When regulators did not object, the company began in May to dismantle key components of the power plant and transfer employees to other sites. E.on had planned to complete the work by the end of the year and remove what was left of the ancient plant.
But the situation suddenly changed on June 30, when E.on received a letter from the grid operator associated with the plant, Tennet, and the regulatory agency. The unit, the letter read, was needed to maintain grid stability, and E.on was to reestablish the coal plant’s operational readiness without delay.
This is one of the most curious developments in the story of German energy reform. The country’s most heavily polluting plants are now also its most profitable: old and irrelevant brown coal power stations. Many of the plants are now running at full capacity.
This leaves a dirty stain on Germany’s environmental statistics. While the amount of electricity from renewable energy rose by 10.2 percent in 2012, the first year of the new energy policy, the amount of electricity generated in hard coal and brown coal plants also increased by 5 percent each. As a result, German CO2 emissions actually increased by 2 percent in 2012. Environment Minister Altmaier was clearly upset, saying: "This development cannot become a tendency."
But experts expect Altmaier will be humiliated once again at the end of the year, if he’s still in office. A study released last week by the Federal Network Agency shows that energy generated with brown coal will remain virtually stabile, at 148 terawatt-hours, until 2022. It reached the depressing conclusion that brown coal’s competitive position will be "hardly diminished by an increasing share of renewable energy in the mix."
Meanwhile, Altmeier had this tip for hard pressed consumers:-
"When I cook, I try to keep the lid on the pot."