If Germany keeps its nuclear plants alive for 15 years past the current 2022 deadline – and taxes them to help support a move to renewable energy – that’s good news for renewable energy, isn’t it?
“It’s probably detrimental for offshore [wind],” Hodges said. “Keeping that much nuclear power online means electricity prices will be stable and maybe even with some downside potential. That suggests less investment” in wind energy.
Well, boo-hoo. Electricity that is lower cost and free of carbon emissions? Surely, it is to die of shame. Hodges is Charlie Hodges, an analyst at Bloomberg New Energy Finance. It gets better.
“The decision is step backward to the energy technology of yesterday,” said Hermann Albers, president of the German Wind Energy Association. “The government is squandering the potential for wind energy.”
I always dislike this argument because it assumes that the new is shiny and bright while “the energy technology of yesterday” is gray and dingy. But let’s add mature and well-understood; also not exactly free of new development and potential. And it gets even better.
Yesterday’s decision “puts the brakes” on investment worth billions of euros and “cements the baseload-oriented oligopoly” tilted toward nuclear power and fossil fuels, Albers said.
An oligopoly is a small group of vendors that between them corner a market. Because there are so few of them, vendors within an oligopoly have been know to engage in price fixing and other ills. That isn’t known to have happened in Germany and likely isn’t the implication Albers intended.
But I think Albers is saying that the nuclear plants had to be shut down on schedule to spur development in wind energy and that the motivation evaporates if nuclear energy is covering the carbon emission free base longer.
Frankly, 15 years is not a very long time and ought to provide breathing room to wind, especially since Germany really wants wind and a lot of it. And who will be providing it?
RWE spends about 1.4 billion euros a year on renewable energy, and “a lot of funds” for its expansion into the business come from its nuclear plants, said Julia Scharlemann, a spokeswoman for the company. E.ON is investing 8 billion euros in the five years through 2012 mainly on wind parks.
Yes, indeed, those old oligopolists.
The above story is in reaction to the German government’s new energy policy. Der Spiegel lays it out in great detail (and in English) here.
Here’s the nuclear bit:
The lifetimes of the 17 nuclear power stations in Germany will be extended by 12 years on average. Nuclear plants that went on line before 1981 will have their lifetimes extended by eight years, and the younger reactors by 14 years.
The government's main reason for the extension is that power production must remain affordable. It has had energy scenarios drawn up according to which the nuclear reactors will enable the price of electricity to remain relatively constant.
Der Spiegel says this last part isn’t strictly true, as nuclear energy doesn’t play much of a part in the Leipzig Energy Exchange and that the higher price of natural gas is determinative. I don’t understand why any of this should be so, but there it is.
In any event, the price of electricity at the wholesale level is set by Leipzig. The result is that the gap in price between nuclear and natural gas is taken as profit by nuclear energy suppliers (or as Der Spiegel tartly puts it, they “pocket the difference”). Here is the bit on wind:
The aim is to increase offshore wind power generation to 25 gigawatts by 2030 in a development drive that would require investment of around €75 billion ($95.6 billion) according to government estimates. The investment risks are hard to assess because the technology is relatively new. The government plans to promote the construction of the first 10 offshore wind farms with €5 billion ($6.4 billion) in low-interest credit made available by Germany's KfW state development bank.
Most turbines have a five megawatt capacity, so that’s about 25,000 turbines – not a bad deal – and the government is seeding the effort with 5 billion Euro in loan guarantees, also not bad.
So does nuclear trump wind like paper covers rock? The evidence suggests No. Both have a place and can co-exist quite nicely.
One thing I noticed when I stayed in Germany for awhile is that German politicians rarely smile. They’re all Calvin Coolidge there. So this picture of Prime Minister Angela Merkel is a nice change of pace.