Tuesday, September 07, 2010

Rock Paper Nuclear

angela-merkel-3 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.

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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.

5 comments:

donb said...

Sounds like an evil conspiracy to keep the price of electricity low. Someone needs to get to the bottom of this!

DocForesight said...

Isn't the basic premise of the wind advocates incorrect: wind power isn't new, we've known about the potential of wind for power since the first helmsman figured he'd get fewer hand blisters from rowing if he'd just unfurl some goat skin fashioned into a sail.

His next trick was to coax the wind to cooperate on command. Not unlike wind turbines of today.

Yes, donb, that affordable, abundant, on-demand energy must be of nefarious origin! Check the usual suspects and play it again, Sam.

Anonymous said...

The argument that wind power being new makes it better is weak. It's also fundamentally flawed.

History lesson!

7th-9th Century A.D.: First practical windmills built in Sistan region.

http://en.wikipedia.org/wiki/History_of_wind_power#Antiquity

July 1887: James Blyth constructs the first wind turbine to produce electricity.

http://www.oxforddnb.com/public/dnb/100957.html

19 October 1941: The Smith-Putnam Wind Turbine feeds AC power to the electric grid, the first wind machine ever to do so.

http://www.wired.com/thisdayintech/2009/10/1019wind-turbine/

2 December 1942: Enrico Fermi's Chicago Pile becomes world's first artificial nuclear reactor.

http://en.wikipedia.org/wiki/Chicago_Pile-1

20 December 1951: Experimental Breeder Reactor I becomes first nuclear reactor to generate electricity.

http://www.anl.gov/Media_Center/logos20-1/ebr1.htm

26 June 1954: Obninsk nuclear power plant is first nuclear reactor to supply electricity to the gird.

http://en.wikipedia.org/wiki/Obninsk_Nuclear_Power_Plant

If nuclear power is the technology of yesterday, wind power is the technology of last week.

Anonymous said...

If there are any technologies out there that are poster children of "the energy technology of yesterday" they are wind and solar energy. Those are ancient, ancient energy sources. Windmills date back to the early Middle Ages, and solar energy to the neolithic era. I've never understood why so many, especially the media, consider these "new" and "modern", while things like nuclear are "yesterday". The most modern technology out there is nuclear, being the most recently-developed source of energy production on an industrial scale.

DocForesight said...

@Anon - The news media generally is innumerate and scientifically illiterate, that's why they are so easily duped into thinking wind and solar are "new". Because the source is "free" they think the output is also free - never doing the math of material inputs to convert that "free" kinetic or radiant energy into useful electricity.

See: www.bravenewclimate.com (the TCASE series - left hand side)