Friday, October 12, 2012

The Irresistible Chaos of German Energy Policy

heart of glass
"It should make you think..."
Stefan Guttler in Werner Herzog's Heart of Glass (1976)
The news out of Germany could be better, but your feeling about it may depend on how much sympathy you have for a country that keeps shooting its own feet:
Germany's surcharge for renewable energy will rise by almost half next year, a government source told Reuters on Wednesday, intensifying the burden for consumers from the country's shift away from nuclear power.
Reuters could have avoided the nuclear energy angle, but make no mistake – the decision to shut the nuclear plants before renewable energy sources were really ready to take over has done no one any favors.

This story in Der Spiegel (in English) makes the point the German way – bluntly:
With the new rates, German citizens will be paying a total of more than €20 billion ($25.7 billion) next year to promote renewable energy. This is more than €175 for an average three-person household, a 50 percent increase over current figures. And then there are the additional charges a consumer pays for the electricity tax, the cogeneration assessment, the concession fee and value-added tax.
And remember, the majority of Germany’s nuclear facilities (a bare majority – 9 of 17) are still operating, reducing the nuclear share of electricity generation from about 25 percent to 17 percent. So Germany is running on the fumes, so to speak, of an industry it intends to close down by 2022 – and not well.

Think there might be a political price?
In a government statement issued in June 2011, Chancellor Angela Merkel promised that prices would remain stable. "The EEG assessment should not increase above its current level," she told the German parliament, the Bundestag. Economics Minister Rösler said that there could even be "room for decreases." The environment ministers, first Norbert Röttgen and then Peter Altmaier, behaved as if Germany's phase-out of nuclear energy was not going to cost anything, even as they handed out billions in subsidies to owners of homes with solar panels and wind-farm operators.
In the interim, prices are going up and Germany has switched on plants using brown and black coal. See here for more. Renewable energy sources are up, too, with biomass and wind providing about 20 percent, also higher than nuclear energy, but without a grid that can handle sporadic generation well.
All this has caused some chaos:
What some grid operators, power plant owners and scientists are doing today is nothing short of flabbergasting. There are power plants that are not connected to the grid, power masts without lines, and power lines leading to nowhere.
This is a little overstated, but the Der Spiegel story is a real hair raiser and well worth a full read. It barely mentions nuclear energy, but it’s there in the negative space.
The prospects are so poor that energy providers have little interest in building new power plants. Under current conditions, even the most modern and efficient combined steam and gas power plants are not recovering billions in investment costs.

What this amounts to is that companies will be compensated in the future for keeping their backup power plants up and running. As the government considers writing a bill to this effect, electricity consumers will once again be the ones to foot the bill.
And this is only the first full year of the transition.

The German director Werner Herzog made a movie back in the 70s called Heart of Glass about a small town that loses its ability to make a special kind of glass, causing the townspeople to lose their minds. But that wasn’t an intentional loss. This is. Call it Heart of the Atom.

1 comment:

Anonymous said...

As difficult as this is for individual consumers, think what will happen to large-scale users of electricity, factories and assembly plants, for example, that require large amounts of electricity on demand at reasonable cost. Those are going to be devastated by the price spikes. German's economy is really going to suffer. I would not be surprised if many of them simply leave Germany entirely. It all goes to show you what can happen if you don't pay attention to the downside risks of getting rid of nuclear in favor of something entirely unreliable and uneconomical.