Rhein on Energy and Climate

Chancellor Merkel has done it. With a combination of determination and conviction she has achieved in no time what one day will be remembered as an “energy revolution”. After the approval by the Cabinet on June 6th the two legislative chambers are next to certain to approve the package of legislation (seven laws and two regulations to be amended or enacted) before the summer recess in early July.

The seven oldest nuclear plants that had been closed immediately after the Fukushima meltdown will not return to the grid. This was an almost foregone conclusion.

The 10 remaining reactors will be shut off progressively until 2022. The Chancellor has reached a consensus among all major parties and the Laender on this schedule, which constitutes the core of the exit strategy. That is crucial for the full acceptance of the exit, including its economic and financial consequences.

Nuclear power contributes presently 20 percent to the German electricity supply. For reasons of climate policy it is essential to replace most of this capacity by renewable sources, above all wind parks.

By 2020 Germany aims at supplying at least 35 percent of its power consumption from renewables, essentially wind. To that end, Germany will put the emphasis ongoing off-shore and on equipping existing on-shore wind parks with turbines of up to 6 MW. Off-shore electricity will benefit from feed-in tariffs of 15 cents/kWh guaranteed for 12 years, while on-shore wind parks will see their feed-in rate progressively decline from an initial rate of 8.9 cents .

Bigger turbines and going off-shore are technical necessities. Germany lacks the space to locate enough wind parks to compensate for the closure of nuclear plants. Nuclear power plants operate up to 8000 hours/year, average wind turbines only 1300 hours. Thus one installed MW of nuclear capacity requires six times that capacity from wind turbines. That ratio can be reduced by turbines operating more hours thanks to height or off-shore location and better inter-connections between wind parks to make optimal use of varying wind speeds in different parts of the country. Still, Germany will have to install new wind turbines with a capacity in the order of 150 GW until 2020 to offset the nuclear plants to be taken off the grid during the next 10 years. That is bound to give a boost to European wind turbine producers, in terms of technological advance and cost-cutting.

Add to this

  • the urgent need to expand and modernise the German grid. Germany will have to build some 4500 km new high-tension “smart” connections between wind parks in the Baltic, the North Sea, the North-German plains and southern Germany that is most dependent on nuclear power.
  • the need to provide for bigger storage capacity, through hydro-power in Scandinavia or alternative technologies (gas, chemical, heat).
  • the absolute necessity to decide on safe underground sites for permanent storage of nuclear waste. Germany would be among the first countries to tackle this thorny issue and gain valuable technological experience that might be marketed elsewhere.

Considerable research will need to be undertaken to develop advanced cost-efficient technologies for the improvement of the grid, wind turbines and power storage. This should offer European industry incentives to invest in these areas, which will become crucial for the low-carbon societies of the future.

Solar energy will only play a marginal role in the German energy revolution, at least for the coming 10-20 years. Germany starts realising that it cannot afford to continue granting the excessively high subsidies presently paid for solar PV installations (feed-in rates of 20-40 cents/kWh). DESERTEC is still so far from maturity that the issue of extending feed-in tariffs to electricity imported from North Africa has not even been discussed.

Last, not least, Germany has no choice but to put more emphasis on energy saving/ efficiency. To that end, it will

  • improve incentives for better insulation of housing by offering landlords and house owners attractive 10 year depreciation for energetic overhaul and increase the financial support for such programmes to € 1.5 billion p.a. , which is not huge for a big country like Germany;
  • make energy efficiency a factor to be considered in public tenders .

The German energy revolution will not be for “free”. It entails two sorts of “costs”:

  • Budgetary charges for financial support of off-shore wind parks, thermal insulation of buildings, compensation of energy-intensive industries for higher electricity prices and possibly compensation of the utilities for the premature closure of their nuclear plants. These charges should be moderate, no more than € 3 billion p.a. to be financed through revenues from auctioning of emission certificates from 2013 onwards.
  • Higher electricity costs for commercial and private electricity consumers.Taking off the seven oldest nuclear power plants in the aftermath of the Fukushima meltdown has led to tighter market conditions and a 10 percent increase of electricity rates. It is not surprising that energy-intensive industrieshave expressed anxieties about their long-term competitiveness. But as the share of electricity in total manufacturing costs tends to be small and prices of fossil energies will keep rising the net impact of the nuclear exit should be quite moderate.

The German “energy revolution” will address less than 40 percent of total energy demand, i.e. the share of electricity in energy demand. It excludes thermal and transport needs, which account for two thirds of European energy demand.

Hopefully, the new policy will teach all EU countries that national self-sufficiency in electricity belongs to the past. Thanks to the future EU-wide grid it should no longer matter from where electricity is being supplied.

Europe and the world will carefully observe the German experiment. If Germany succeeds, which is likely, other countries will follow suit, though at a lower speed.

The Italian population will probably reconfirm the ban against nuclear energy in the forthcoming referendum. Switzerland has announced its intention to phase out its nuclear energy within the coming 20 years. Japan has also second thoughts about building new nuclear power plants. In France the next government is likely to come under pressure not to build new capacities, as public opinion is turning against it.

These are basically good news, provided countries exiting from nuclear energy will replace it by renewable energies, which is anything but certain considering the temptations of natural gas!

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Comments

  1. Dear Mr. Rhein,

    You write:

    “The German exit from nuclear power by 2022, though not directly related to climate change, constitutes such a courageous political act.”

    This is totally wrong.

    With the german exit to nuclear power, at least 19 new german coal power plants are being built already right now. And this will even ncrease in the future.

    Switching off a technology with massive energy production while simultaneousely emitting zero greenhouse-gases is EXACTLY THE WRONG WAY and only politically motivated step in Germany in order to save Mrs. Merkel’s power.

    We must exit from coal!
    Best Regards

    Dr. Fabry

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