Futures Forum: “Energiewende” – energy transformation... reducing dependence on fossil fuels and changing the role of the large traditional utilities.
it seems that, due to sunnier and windier days this year, that Germany's solar and wind farms produced 'too much energy' - which seem to have produced 'overcapacity' in the German energy sector.
But how exactly does the energy market work...
Emerging influences of the German power market
In a recent article we set out the impact of the rapid increase in renewable production on the German market. Because Germany is at the core of the European power market, with large volumes of interconnection to its neighbours, Germany is exporting the impact of its aggressive renewable policy across North West Europe.
Overcapacity in Germany is driving down European power prices and crushing gas plant load factors. At the same time, intraday price shape is decreasing and spot volatility increasing as growing volumes of German intermittent capacity impact marginal pricing. In response, forward market liquidity is falling along the curve and becoming more focused in the prompt. These trends are set to continue as renewable capacity expands.
Overcapacity and changes in marginal pricing
German policy support for renewable capacity has lead to a surge in new generation capacity at the same time demand has slumped as a result of the financial crisis. As this growth in low variable cost generation impacts marginal pricing, Germany’s renewable policy is effectively subsidising lower power prices across North West Europe. This is clearly of benefit to consumers but is creating headaches for owners of gas plant as load factors and returns plummet. The German transition to renewable capacity is acting to materially change market price dynamics.
Energy CEOs call for end to renewable subsidies
Energy CEOs call for end to renewable subsidies | EurActiv
Germany Threatened by Energy Overcapacity, FT Deutschland Says
By Patrick Donahue - Jun 7, 2012 6:43 AM GMT
Competition by Germany’s regions to produce renewable energy as the country shifts away from nuclear and coal power could cause overcapacity if the process isn’t coordinated, the Financial Times Deutschland reported. Chancellor Angela Merkel will meet with state premiers next week to discuss greater cooperation as regional governments develop plans to build wind and clean-energy capacity, the newspaper said. Competing plans could cause overcapacity in the coming decades, the FTD cited Hildegard Mueller, who heads the BDEW industry association, as saying. The northern state of Schleswig-Holstein aims to produce by 2020 three times more energy from offshore wind parks than its population uses, and southern states such as Bavaria are planning more energy self-sufficiency, the newspaper said. Overcapacity could be costly for consumers because German regulations require them to pay for unused power generation, the newspaper said.
Merkel's gas gridlock: Will renewables pay? | Business Spectator
Renewable Power Generation Costs in 2012:
As the world embarks on the transition to a truly sustainable energy future, the world’s renewable resources and technologies increasingly offer the promise of cleaner, healthier and economically and technically feasible power solutions and sustainable energy access for all. With over 100 gigawatts of renewable power generation capacity added in 2011 alone, renewables have gone mainstream and are being supported by a “virtuous circle” of increasing deployment, fast learning rates and significant, often rapid, declines in costs.
www.irena.org/DocumentDownloads/Publications/Overview_Renewable Power Generation Costs in 2012.pdf
Here is a critique of the 'Energiewende':
Germany’s Green Energy Bust
Energiewende by the Numbers
Germany was the great green hope, promising to dispel the aura of impractical utopianism surrounding the renewable energy project by implementing it with fabled Prussian efficiency. Yet, instead of vindicating renewable energy, the mounting evidence from the German experiment spotlights its limitations: high costs, low and unreliable productivity, intractable problems with grid integration, a reliance on subsidies that impose bizarre and counterproductive distortions on energy markets, and an unbreakable dependency on the fossil fuels it is supposed to displace.
July 30, 2013 | Will Boisvert
Through much of 2012, the Energiewende, Germany’s pioneering effort to construct an energy system around renewables while simultaneously phasing out nuclear power and cutting carbon emissions, was on a roll. Plunging prices and eye-popping production figures for wind and solar power seemed to fulfill all the visionary prognostications. Germany shrugged off the shuttering of nearly half its nuclear plants without a backward glance: not only did it not suffer the predicted power shortages, it boosted electricity exports. Renewable power pushed market prices down and threatened to drive gas- and coal-burning power plants into bankruptcy. The press and the green blogosphere celebrated passed benchmark after shattered milepost, including the day in May when, according to Treehugger.com’s headline, “Half of Germany Was Running on Solar Power.”
But statistics on Germany’s electricity sector for the whole of 2012 are now in, and when you look beyond the cherry-picked hype, the results are dismal and disquieting. Despite massive construction of new capacity, electricity output from renewables, especially from wind and solar, grew at a sluggish rate. Germany is indeed avoiding blackouts—by opening new coal- and gas-fired plants. Renewable electricity is proving so unreliable and chaotic that it is starting to undermine the stability of the European grid and provoke international incidents. The spiraling cost of the renewables surge has sparked a backlash, including government proposals to slash subsidies and deployment rates. Worst of all, the Energiewende made no progress at all in clearing the German grid of fossil fuels or abating greenhouse emissions—nor is it likely to for at least a decade longer.
Germany has become the great green hope, promising to dispel the aura of impractical utopianism surrounding the renewable energy project by implementing it with fabled Prussian efficiency. And the Energiewende is doing so while repudiating nuclear power, the low-carbon cure for global warming that most supporters of renewable energy consider even worse than the disease. That adds a seemingly unanswerable pragmatic argument to anti-nuclear power advocates’ usual claims of apocalyptic danger: no need to build risky, expensive nuclear power plants when Germany’s example shows that renewables can do the job better.
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Will Boisvert is a freelance writer who lives in New York.
This article is reprinted with permission from Dissent Magazine, a quarterly of politics and culture. Boivert’s piece is part of a debate on the German plan to eliminate nuclear energy. To read Osha Gray Davidson’s response, click here.
The Breakthrough Institute - Germany’s Green Energy Bust.
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