Global Energy Crisis, Germany Unplugged
Commodities / Energy Resources Jul 07, 2011 - 03:56 PM GMTBy: Richard_Mills
The International Energy Agency (IEA) has recently warned us the world will face higher energy costs, higher carbon emissions and greater uncertainty over security of energy supply if it turns its back on nuclear power.
The IEA believes the future for nuclear power, and a subsequent reduction in carbon emissions, will be show cased in China, India and Russia. Out of the 62 reactors currently under construction, 48 - or 77% of the total - are being built in China, India, South Korea and Russia, another 82 reactors are planned and 210 are proposed for these four markets.
China is the world's largest consumer of coal, India produces more than 70 per cent of its electricity by burning coal and Russia mainly uses natural gas for electricity generation. A reduction in all three countries carbon footprints could be reached by switching a lot of fossil fuel generated power to nuclear power as nuclear's life-cycle emissions range from 2 to 59 gram-equivalents of carbon dioxide per kilowatt-hour while emissions from natural gas fired plants range from 389 to 511 grams and coal produces 790 to 1,182 grams of carbon dioxide equivalents per kilowatt hour.
In 2002, Germany enacted a law to phase out nuclear power, but the current government, led by Chancellor Angela Merkel decided (just last autumn) to extend the lifetimes of the country's reactors by an average of 12 years. This was based on the judgment that Germany would not be able to meet its power demand using only natural energy sources - wind and solar power - and would not be able to meet the governments ambitious goals of a 40% reduction in carbon emissions by 2020 burning more coal and natural gas.
Merkel has consistently said that Germany has to remain a net exporter of energy, repeatedly stressing that there is no point closing German nuclear plants only to import nuclear power.
In 2010 Germany was a net exporter of power to France, sending 16.1 terawatt hours to the country compared with imports of 9.4 terawatt hours.
Then, playing populist politics and over reacting to the partial meltdowns in Japan's Fukushima Daiichi nuclear complex Merkels government immediately shut down almost half of the countries nuclear power and is closing the remainder in stages - the last reactor is to be closed in 2022. Germany, overnight, decided 40 percent of its nuclear power capacity will be shut down and removed 8,800 megawatts (MW) from the grid, the remaining 12,700 MW of nuclear supplied electricity will be gone by 2022.
Before the Merkel government shut down 40 percent of Germany's nuclear power plants Germany had been an energy exporter. Not anymore, DIE WELT reports:
"Before and after the moratorium - as is usual for this time of the year - between 70 and 150 gigawatt-hours were exported. After switching off the German nuclear plants, that surplus disappeared. Since then 50 gigawatt-hours have been imported. The power coming in from France and the Czech Republic has doubled and exports to Holland have been cut in half."
In April 2011, France was a net exporter of power to Germany for the first time since the summer months of June, July and August 2010.
This author would like to suggest the real proving grounds for nuclear power will not only be in China, India and Russia as the IEA predicts, but will also - and give us much more immediate results - be in Germany and the European Union.
The IEA says Germany faces a big challenge to achieve its goal of replacing a significant part of its nuclear power generation with wind and solar. The Breakthrough Institute says that renewable energy sources would have to generate 42 percent of Germanys electricity in 2020 in order to replace 21,500MWs of nuclear power.
Germanys Green Power Quick Start:
- The Federal Electricity Feed Law (StrEG) of 1991 compelled public utilities to purchase renewable generated power from private producers on a yearly fixed basis
- The Market Incentive Program (MAP) was introduced in 1999. MAP offered government grants totaling 203 million Euro in 2003 for the commercialization and deployment of renewable energy systems
- The Feed-in Tariff was introduced into the solar industry - the tariff gives producers of solar electricity a guaranteed price for the energy they supply to the grid. The price is set for 20 years and that price is considerably higher than the price paid for fossil fuel electricity (more than double). The Feed-in Tariff is open to both commercial solar providers and householders who connect their own solar panels to the national grid
Recently the German government has been lowering feed-in tariffs, and solar power, much pricier than wind, has seen steep cuts in incentives. Germany also plans to slash subsidies paid to households generating electricity.
Germanys wind power generation is concentrated in the northern parts of the country. For Germany to supply its southern region with electricity from wind power in the north the country would have to build more of those extremely expensive giant offshore windmill parks in the North Sea. That also means a massive financial commitment to not only upgrade the existing grid to handle such diverse, spread out power but also building massive transmission lines to cross the country and deliver that northern power to the south.
Many green organizations are against the transmission lines and offshore wind park construction has been held up for a year because of environmental issues.
In any event offshore power generated by windmills in the North Sea would be much more expensive than French or Czech nuclear generated power which is readily available to southern Germany (where most of the shutdown reactors were located).
The share of energy wind contributed to Germany's power generation mix did not grow in 2009 because of a weak meteorological wind year. Despite more generational capacity being built, produced electrical energy from wind farms amounted to 37.5 TWh in 2009, compared to 40.4 TWh in 2008.
Chancellor Merkel has forsaken Germany's much needed nuclear contribution to developing a sustainable, environmentally friendly energy policy. Unfortunately she's created not just a German problem but a European one as well:
- Germany will import more nuclear generated electricity from its neighbors, France and the Czech Republic (who still use the old soviet style reactors) and will also have to import more natural gas from Russia (and coal from Poland), which makes the country even more dependent on Moscow for its energy supply
- Germany's new need for NG, coal and oil will push up energy prices for the rest of the EU - higher electricity costs will also project into the prices of consumer products. German and other EU consumers will see sharp increases in their energy bills as Germany is forced to import more electricity and pay for fossil fuels to generate electricity in-country while already built nuclear reactors sit idle and more are decommissioned
- Germany's unilateral decision will impact the competitiveness of not only German industry but of the rest of Europe's as well - which is already under pressure from an overvalued currency
- Germany's unilateral decision shows a glaring weakness of Europe - the absence of a common energy policy
- Donald Tusk, Poland's prime minister announced Germany has put coal fired power "back on the agenda." European financial analysts estimate that Germany's move will result in about 400 million tons of extra carbon emissions by 2020
- Germany has just demonstrated that their EU leadership role takes a backseat to domestic populist politics
Conclusion
A team of German academics, led by physicist Manuel Frondel, in a 2009 report concluded the following regarding Germany's record with renewable energies: Germany's conversion to green energy imposed "high costs without any of the alleged positive impacts on emission reductions, employment, energy security, or technological innovation...The government's [subsidies] have in many respects subverted these incentives, resulting in massive expenditures that show little long-term promise for stimulating the economy, protecting the environment, or increasing energy security."
The Frondel report also found that far from creating the much publicized tens of thousands of jobs - "the net employment balance is zero."
An analysis published by the Ruhr University - Ruhr Economic Papers #156, Economic Impacts from the Promotion of Renewable Energy Technologies, The German Experience reported the following:
When the German program began in 2000, it offered index linked payments of 51 euro cents for every KWh of electricity produced by solar PV. These payments were guaranteed for 20 years.
The real net cost of the solar PV installed in Germany between 2000 and 2008 was €35bn. By 2008 solar PV was producing 0.6% of Germany's electricity - 0.6% for €35bn. The Ruhr analysis estimates a further real cost of €18bn in 2009 and 2010: €53bn in ten years. Today, solar energy's share in Germany's overall energy production is about two percent.
While Europe's carbon trading system was pricing carbon at $19 a ton, the International Energy Agency says the subsidy inflated cost to the German public stood at $80 a ton for wind energy and a staggering $1,000 a ton for solar. The Ruhr paper estimates that saving one ton of carbon dioxide through solar PV in Germany still costs €716.
Why such a huge gap between the blue sky green promise of renewable energy and the reality of performance? Germany's table pounding champions of green energy didn't calculate the lost opportunity costs of the massive subsidies that are handed out and guaranteed for 20 years to the solar and wind energy sectors - according to the Frondel report, by 2008, Germany's worker subsidies had reached the incredible amount of US$254,000 per solar energy job. The Ruhr University analysis estimates that the subsidy for every solar PV job in Germany is €175,000 - which means the subsidy is far higher than the wages the workers are going to earn.
"Any result other than a negative net employment balance of the German PV promotion would be surprising." Ruhr Economic Papers #156
"Although Germany's promotion of renewable energies is commonly portrayed in the media as a 'shining example' ... for the world, we should instead regard the country's experience as a cautionary tale of massively expensive environmental and energy policy that is devoid of economic or environmental benefits." Frondel report
Renewable energy in 2010 provided 17 per cent of Germany's electricity - the questions Germans should be asking their government, and themselves, are: Firstly, just what did we accomplish spending €53bn in ten years? And secondly, can we afford to do it again on a much bigger scale - increase our production of green energy electricity from 17 per cent to over 40 per cent in just 11 years while we phase out nuclear power?
The path the country will be compelled to take is to import more and more electricity - either in the form of nuclear power from France and the Czech Republic, coal from Poland or natural gas from Russia. Going down this path has consequences that reach, as we have seen, far beyond Germany's borders.
"It's hard to see how they will replace the energy. I'm not sure there is enough Polish coal, and it creates carbon problems. Alternative energy sources are intermittent sources. I think they will do what Austria did in its time: import nuclear electricity from neighboring countries." Anne Lauvergeon, chief executive officer Areva SA
This is a truly interesting drama being played out in real time on the world stage for all to see. It should be on everyone's radar screen. Is it on yours?
If not maybe it should be.
By Richard (Rick) Mills
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