Tuesday, May 30, 2017

The Road To Germany -- An Update -- Electricty Now Considered A "Luxury" In Germany -- May 30, 2017

Angela Merkel has recently turned incredibly vitriolic in her comments about the US. It appears she is running scared. All things being equal, the US will have a huge energy advantage compared to Germany (and the entire EU) for decades, maybe centuries. But all things are not equal. Germany bought into hook, line, and sinker on global warming, and worse, rashly and inexplicably she killed their nuclear industry after the Japanese tsunami debacle (not much risk of a tsunami in Berlin).

Electricity is now considered a "luxury" in Germany (see below). Merkel desperately needed to close the energy-cost-advantage/gap with the US, and the only way to do this was to convince Trump to saddle Americans with higher electricity prices by buying into solar and wind energy.

The first to feel Merkel's policies will be all the blue-collar workers not hired by new plants in Germany. Those losses will be invisible. The second to feel her policies will be all the blue-collar workers laid off by the closing of manufacturing plants that require huge amounts of electricity.

From The Wall Street Journal today: electricity for Germans is now a luxury.
Mrs. Merkel seemed especially miffed about Mr. Trump’s decision not to embrace the Paris climate accord that Mr. Obama signed in his final year as President. “The whole discussion about climate has been difficult, or rather very unsatisfactory,” Mrs. Merkel told reporters. “Here we have the situation that six members, or even seven if you want to add the [European Union], stand against one.’

But wait. Since when is a difference of opinion on climate policy a signal of U.S. retreat from Europe? And why is Mr. Trump’s reluctance to sign on to Paris—he says he’ll decide whether to leave the accord this week—a failure of leadership? Mrs. Merkel’s comments suggest that she is most upset because Mr. Trump declined to follow her lead on climate.

Mr. Trump should decline if he wants to fulfill his campaign promises to lift the U.S. economy. Mrs. Merkel’s embrace of green-energy dogmas has done enormous harm to the German economy. She reacted to the Fukushima meltdown by phasing out nuclear power, and her government has force-fed hundreds of billions of dollars into solar and wind power that have raised energy costs. As Der Spiegel once put it, electricity is now a “luxury good” in Germany.

It’s not surprising that Mrs. Merkel and the Europeans should want to shackle the U.S. with similarly high energy costs, and Mr. Obama was happy to oblige. But Mr. Trump was elected on a promise to raise middle-class incomes, and domestic energy production is essential to that effort. Mrs. Merkel doesn’t care if Mr. Obama committed the U.S. to Paris without any Congressional approval, but Mr. Trump has to take that into account.

The U.S. natural-gas fracking revolution also has the benefit of reducing fossil-fuel emissions by reducing reliance on coal. To the extent that U.S. energy production can supplant Russian natural-gas supplies to Europe and keep the price of oil low, it also undermines Vladimir Putin’s influence at home and abroad.


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Previously Posted

Everything below this line was previously posted a little over a year ago, March 30, 2016:

Germany’s switch to renewable energy sources is a success story. [Yes, that's the first line -- Germany's switch to renewable energy sources is a success story. Now the article goes on to say how this appears to be a "trainwreck." If this is how Handelsblatt defines a "success story," I sure hope Germany does not have something they would call a failure. Oh, that's right; they do: open borders.]
Ever since the country dedicated itself to a transformation of its energy supply following Japan’s Fukushima nuclear disaster five years ago, renewables have been booming. Last year, they accounted for a third of the energy consumed in Germany.
But while this success goes far in protecting the climate and environment, it has an economic downside. The electricity market has come apart at the seams.
While wind and solar electricity are being fed into the grid at set prices on a priority basis, natural gas- and coal-fired power plants, and soon nuclear power plants, are being forced off the market.
The price of electricity on the wholesale market has been in freefall for five years, plunging from €60 ($67.37) per megawatt-hour to the current €20.
The situation poses an existential threat for German operators of conventional plants like E.ON and RWE.
According to Trendresearch, a marketing research institute commissioned by Handelsblatt, the use of conventional power plants will continue to decrease. The gas- and coal-fired power plants and the nuclear power plants that remain on the grid will produce around 435,000 gigawatt hours of electricity this year.
Although that’s about two-thirds of the total German electricity production, the power plants were designed for 521,000 gigawatt hours. This means the utilization of their capacity is lagging around 17 percent below what they were designed for. By 2020, the gap between capacity and production is likely to increase to 23 percent.
The plunge in price is putting the heads of E.ON and RWE, Johannes Teyssen and Peter Terium respectively, in a predicament. With prices of €20, restructuring is in danger. When Mr. Teyssen decided to spin off the ailing power plants in 2014, the megawatt-hour of electricity was still at €33.
At the moment, the two executives are watching as their business is virtually imploding. First gas-fired power plants were forced off the market, then the black coal plants, and now low-priced lignite and even nuclear energy is struggling against being shut down.
While consumers are being forced to pay rising prices for electricity because of constantly higher taxes, fees and levies, the quoted rates on the wholesale market for electricity from coal, gas and nuclear power plants have been heading in the other direction for years. In recent weeks, they reached a dramatic low point that no manager would have thought possible.
At times, the price of electricity broke below the €20 per megawatt-hour mark on the futures market. Five years ago, before Germany’s energy transition was stepped up, the price was sometimes over €60. Since then, the market has been flooded with expensive wind and solar electricity.
Much more at the linked article.

The question I have: how does this play out? It appears that Germany runs the risk of conventional power plants being taken off line past the point that intermittent energy (wind, solar) can make up the difference.

What we have is this:
  • German consumers are paying more and more for home electricity
  • their conventional power plants may have to be taken off-line; some conventional providers may go broke
  • at some point, too many conventional plants not on-line, but intermittent energy neither adequate/nor dependable --> brownouts or worse
I honestly don't know how this plays out.

This was the ORIGINAL POST
 
Flashback: this was posted September 21, 2014:
Bloomberg is reporting:
When Germany kicked off its journey toward a system harnessing energy from wind and sun back in 2000, the goal was to protect the environment and build out climate-friendly power generation.
More than a decade later, Europe’s biggest economy is on course to miss its 2020 climate targets and greenhouse-gas emissions from power plants are virtually unchanged.
Germany used coal, the dirtiest fuel, to generate 45 percent of its power last year, the highest level since 2007, as Chancellor Angela Merkel is phasing out nuclear in the wake of the Fukushima atomic accident in Japan three years ago.
The transition, dubbed the Energiewende, has so far added more than 100 billion euros ($134 billion) to the power bills of households, shop owners and small factories as renewable energy met a record 25 percent of demand last year.
RWE AG, the nation’s biggest power producer, last year reported its first loss since 1949 as utility margins are getting squeezed because laws give green power priority to the grids.
“Despite the massive expansion of renewable energies, achieving key targets for the energy transition and climate protection by 2020 is no longer realistic,” said Thomas Vahlenkamp, a director at McKinsey & Co. in Dusseldorf, Germany, and an adviser to the industry for 21 years. “The government needs to improve the Energiewende so that the current disappointment doesn’t lead to permanent failure.”
While new supplies sent wholesale power prices to their lowest level in nine years, consumer rates are soaring to fund the new plants. Germany’s 40 million households now pay more for electricity than any other country in Europe except Denmark, according to Eurostat in Brussels. A decade ago, Belgium, the Netherlands and Italy all had higher bills than Germany.
“Politicians are often trying to kid us,” Claudia Fabinger, a 65-year-old self-employed marketing manager, said in between shopping for groceries on Leipziger Strasse in Frankfurt. “Our power bills keep rising and rising to fund clean energies; on the other hand, we are still polluting the air with old coal plants.” 
The entire article is a must-read. Go to the link to read the full article. As you read the article, remember: Germany accounts for 2.4% of all the CO2 emitted into the atmosphere. A lot of pain for making absolutely no difference. And now it seems, they don't even feel good about it.

The story above ... well, what can I say? It can't be much worse. But, actually it is. Just a few weeks ago, the Germans said this sacrifice was their gift to the world (at the linked post, scroll down to "tilting at windmills") (I can't make this stuff up):
I'm posting this for the archives. I assume no one will read the entirety of the linked article over at The New York Times. The article is on Germany's transition to renewable energy. It is costing the average German a lot of money, and there are questions whether the transition will even succeed. The article concludes:
“Indeed, the German people are paying significant money,” said Markus Steigenberger, an analyst at Agora, the think tank. “But in Germany, we can afford this — we are a rich country. It’s a gift to the world.”
I wonder if the average German is aware how little their efforts will result in anything meaningful. I wonder if the average German has looked at the graphic at the bottom of this article. Because it's always possible that the graphic will disappear some day, here are the data points.
Unrelated, but the thousands of folks who attended today's global warming march in NYC arrived in 500 diesel-burning buses. Not natural gas buses, or propane buses, or electric buses. But diesel buses.

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