wind turbine blade (photo Cornelius Bartke)
Last year was undoubtedly historic for the German power sector – for the first time in Germany´s modern history renewables accounted for a third of the country´s electricity consumption and secured their position as the number one power source defeating lignite (but not lignite and coal together). If nothing untoward happens and the Germans stick to their plans, bituminous coal and lignite will never be restored to their former glory, writes Jakub Kucera, economic analyst at RSJ, a Prague-based investment company. The year 2015 showed, however, that getting rid of coal completely will be unexpectedly hard.
Renewable energy sources, taken together, covered 32.5% of German electricity consumption in 2015, while lignite provided only 26%. Since 1990 the electricity output from renewables has risen tenfold to last year´s level of 194 TWh. The year-on-year increase was also the highest on record – a staggering 31.6 TWh which is an increase of 20 TWh. At this pace, the 2025 goal for the share of renewables in consumption would be reached in 2017-2018.
Certain threshold
The increase was almost completely due to higher wind production (90% of the increase, 28.7 TWh). There were two reasons for this. Firstly, last year was windy above average, particularly compared to the previous rather wind poor years. Secondly, substantial new capacities were connected to the grid (in 2014 and 2015 more than 10 GW). Since the new installations are often located offshore, where capacity factors are higher, the growth rate is bound to be maintained for some time.
Germany is now on a trajectory to miss its climate targets by a wide margin
It may prove hard to add new renewable power sources once a certain threshold has been reached. The renewables share is set to grow in the near future, though, and Germany will without any doubt achieve its 2025 goal of 40-45% some years ahead of schedule (see chart 1). Incidentally, renewables, taken together, have become the largest source of electricity in modern German history – when lignite was at its height in 1990, it supplied only 171 TWh. The same amount was generated by nuclear power plants in 2001, their peak year.
Chart 1 – The renewables share in German consumption (goals for 2025 and 2035)
source: Agora Energiewende (2016): Die Energiewende im Stromsektor: Stand der Dinge 2015. Rückblick auf die wesentlichen Entwicklungen sowie Ausblick auf 2016.
This undisputed success was, however, muted by the fact that production from lignite and bituminous coal hardly declined (a decrease of a mere half-percent or 1.4 TWh). This is a problem since the German plan to battle climate change includes renewables replacing dirty coal-fuelled sources, thus lowering greenhouse gas emissions.
With coal-fuelled power plants still resisting retirement, greenhouse gas emissions in Germany actually grew last year; when the cooler weather is taken into account they stagnated at best (see chart 2). Germany is now on a trajectory to miss its climate targets by a wide margin. In view of the financial and political capital which has gone into the energy transition, the so-called Energiewende, this is bad news for German politicians.
Chart 2 – Greenhouse gas emissions in Germany (goals for 2020 and 2030)
source: Agora Energiewende (2016): Die Energiewende im Stromsektor: Stand der Dinge 2015. Rückblick auf die wesentlichen Entwicklungen sowie Ausblick auf 2016.
Why is coal’s share not shrinking? A partial answer lies in the decommissioning of yet another nuclear power plant (the 1345-megawatt Grafenrheinfeild power plant, run by E.ON, went offline in June). Coal power plants thereby lost another low-cost competitor.
Eating away at profits
The opportunity to sell more power in the domestic market is, however, not enough to explain Germany´s situation. The key is to be found in two other records the country set in 2015. Last year, Germany produced the most electricity in its history, beating even the pre-crisis record of 2007. As domestic consumption more or less stagnated, this means the country exported the largest amount of electricity on record.
German coal power plants are hindering reduction in CO2 emissions not only at home, but also abroad
Focusing on trade flows (actual physical flows in the grid were somewhat smaller), net export amounted to 60 TWh or 9% of production. The year-on-year increase was 31 TWh, as much as two thirds of the rise in renewables production. The surplus was exported mostly to Austria, the Netherlands, France and Switzerland. Nevertheless, cheap German electricity lowers prices in all neighbouring countries, eating away at profits of their power plants, particularly of the more environmentally friendly gas-fuelled ones. This way, German coal power plants are hindering reduction in CO2 emissions not only at home, but also abroad.
Here, we have finally arrived at the root of the German conundrum – the relatively cheap coal-fuelled power plants in Germany have found a replacement for the domestic market. If they cannot sell their output in Germany, often because of high production from renewables, they simply turn to export. As a result, however large a share of the market renewables will achieve in Germany over the next few years, coal’s share will not shrink much. Neither will Germany’s energy-related CO2 emissions. The current market is not able to solve this issue. Only political action will. But it will come at a price, again.
Editor’s Note
Jakub Kucera (jakub.kucera@rsj.com) is economic analyst at RSJ, a trading and investment company based in Prague.
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Over and over again people forget that the use of energy in the form of electricity is a small part of the total used electricity. For instance I calculeted that it is in the Netherlands 13%. Had Germany put all that money they used for wind- and solar production of energy for improvement of isolation of buildings or other efficiëncy improvements, reduction in CO2 emissions would be much, much higher then now and that is were it is all about, isn’t it?
The reason and prime motivation of the Energiewende is the removal of all nuclear.
The Energiewende was discussed in Germany since ~1980 in the anti-nuclear movement, and spread over the population after Chernobyl (1986). While 1.000mile away many Germans experienced the health effects. Even now, mushroom in some German woods are still not eatable due to accumulated radiation.
After a decade of debate with many studies by independent (international) consultancy firms whether it was possible (then solar was >10times more expensive, etc) and what the optimal policy (acceptable/minimal costs) would be, the new elected socialist-green coalition government made the Energiewende part of their program in 2000 and started to implement.
The scenario became law in 2001. Negotiations with the utilities to close all nuclear delivered results in 2003 (all nuclear out in 2022).
At that time population support was ~55%.
Apart from a short lapse by Merkel in 2010/11(forced by coalition partner FDP, which lost all seats at next elections), the scenario is executed with only small modifications. The most important:
– great reduction of biomass targets because the costs didn’t go down substantially by creating a mass market;
– increase of PV-solar as the costs went more down than expected.
In past 5years, the transition speed is almost twice the scheduled 1.5%/a. Mainly due to lower costs than expected in 2000.
Population support is now ~90%. Also because the costs are insignificant for the population. They will go down gradually after 2022 as then the high guaranteed Feed-in-Tariffs of the first years are ending. That may create financial space for more CO2 reduction via more renewable car fuel, 100% energy neutral buildings (in Denmark only those get a construction license), etc.
CO2 reduction comes after:
1- all nuclear out;
2- democratization of energy. Hence 50% of renewable is owned by citizens, farmers, etc. Often local cooperation’s; and
3- the increase of renewable. Hence you always see renewable share in publications.
Hi Jos. You are totally right. It would likely be much more sensible to put the money into energy savings measures. This issue doesn´t get enough attention not even in Germany, but also in other countries such as the Czech Republic. Perhaps, it is politically not “cool” enough. On the other hand, Germany´s and other countries´ drive to develop solar and wind energy quickly, sometimes at whatever cost, has contributed to the lowering of cost of these technologies, thereby benefiting the whole world, including the poorest countries (kind of a veiled development aid).
Jos is right here…but it gets even worse…
First of all, capacity on itself doesn’t mean anything…what matters is, how much energy you can get out of it…
Electricity accounts for approx. 22% of German final energy demand, 30% of it is renewable. That’s only 6.6% of all final energy demand. And the irony is, that is exactly this renewable energy, that keeps coal fired thermal plant working…because someone has to cover for intermittency of solar and wind…but coal power plants are not flexible, so the only thing left is to export…but why not using gas turbines peakers, like in Spain…well, Spain has much more hydro, in Germany they’ll have to cover enormous amount of electricity with gas…coal is much cheaper…so, CO2 emissions are in Germany high BECAUSE of renewables …they are actually piggybacking on coal.
I made some back of the envelope calculation…Germany is used in 2015 27% of the energy for space heating…space heating demand is on average still 120kWh/sqm.
This could be easily reduced to 30-40kWh/sqm…but that’s on average..even passive standard is nowadays not a problem…If all that gas heating oil and biomass would be fired in CHP plants instead for heating and all the heat would be efficiently used instead of wasted through cooling towers, Germany would emit 5t/capita instead 10t/capita…without solar, wind and coal!
@Rok,
“… but coal power plants are not flexible …”
That applies for the old coal plants.
It’s one of the main reasons German utilities decided to replace those with the new super critical coal power plants.
Those use the circulating fluidized bed process which allows flexible up- & down-regulation.
The much lower burning temperatures also imply that they hardly create any other toxins (NOx’s, etc). So those new plants have no high chimney.
Because their efficiency is 30% better (44% vs 33% for the old plants), the CO2 emission of the new plants is not more than older gas plants. With gas, only new CCGT with >60% efficiency is better.
But these coal plants have the benefit that they don’t leak a % of the natural gas, which is 84 times more damaging for the climate (per unit) than CO2 emissions.
So in the past 5 years electricity production by:
– renewable increased from 105TWh/a => 196TWh/a;
– gas decreased from 89TGWh/a => 60TWh/a.
– coal increased from 263GWh/a => 273TWh/a
Total consumption in Germany is 600TWh/a.
Note that those new coal plants produce for a cost price of ~2.5cnt/KWh, which is lower than the marginal costs of many nuclear power plants. It is also a strong indication that the av. whole sale price in Germany (now 3cnt/KWh) will decrease further in coming years until 2.5cnt/KWh.
Which also explains why the utilities offered to sell all nuclear (incl. the large decommission fund, etc) to government for zero ~2years ago. That initial offer indicates that they are prepared to pay if they can get rid of their NPP’s, as it’s normal here that during negotiations parties give in (government flatly refused).
Yes, I know new coal power plants are better, but still not comparable in flexibility with gas turbines. And they are few and far between. Average efficiency is still 35%. True, they can be better regulated, but not just shut down at will. And even that is true for black coal. Brown coal power plants are still predominantly base load. You still have to deal with heavy metal pollutants and sulfur dioxide. Alone complex flue gas treatment (which is still far from perfect) and high pressure piping makes them expensive. And lets not forget, mining alone is a dirty business. We have built one such new supercritical in Slovenia and proved to be a financial disaster (TEŠ6). Ok, there seemed to be corruption involved and are under investigation, but they don’t come cheap anymore. Cost overruns are common, it’s difficult to built one under 2000$/kW. Coal fired plants can be due to fuel cheap and dirty or clean(er) and expensive…but not both. So alone for financial reasons, they cannot follow demand and cannot be just turned on and off. They must run base-load just in order to be amortized.
@Rok,
Sorry, but may be you can update your knowledge about CFB technology. This PPT gives an introduction:
http://goo.gl/niFklD
At sheet 12 you can see the net plant efficiency of the Łagisza plant (Poland): 43.3%.
These flexible plants also allow to burn combinations of coal with biomass & waste, etc. So they can last in a relative high renewable environment.
This B&W overview explains a little about the low emissions of toxins: http://goo.gl/PZtRg6
All mainly due to the lower burning temperatures and the excess oxygen in the process.
Sorry that your trial in Slovenia didn’t work well.
Alstom was (and may still be) the leading supplier.
Yep, the biggest problem of Energiewende is now the lack of a coal killing mechanism. They would need some Beyond Coal, governmental buyout and closeres, carbon taxes of something.
This story shows how the EU electricity market is becoming significant, with its larger interconnections. It also shows that coal will keep winning, as long as the ETS allowances have a price that is far below anything that is reasonable after even a superficial glance at the externalities of CO2 emissions and all the health effects of burning coal.
If the ETS system doesn’t do it, the markets will not help to close down coal and its emissions. It will have to be a forced exit like for nuclear. With strong protests from the population.
Germany is a democracy.
All nuclear has to be out before the population can be persuaded to support coal out.
Note that it will occur anyway with the continued progress of the Energiewende.
Hi Bas. I would not be so concerned about the German population´s acceptance of a coal-exit. I believe most of Germans would be principally fine with that. The more important question, in my humble opinion, is how the new system will operate. We often speak about a good and healthy energy MIX but after the nuclear phase-out and a possible coal-exit there will be pretty much only renewables and gas. It is still far from clear how such a system would work. I think that if such a move (politically motivated phase-out of both nuclear and coal) is done only by Germany, it could work without big trouble since Germany will be able to use other countries as a back-up capacity. But, I think it will complicate the development of wind and solar in the neighboring countries. The more Germany gets greener in power production, the harder it will be for the other countries to get as far.
An active coal decrease policy before all nuclear out, is nearly impossible. Because of the promise that the Energiewende levy won’t increase. It would be a major risk as it may take major support away from the Energiewende.
Another issue is that the mighty coal unions won’t accept it. Breaking the unions, as in UK, is simply not done in a social democracy as Germany.
They did the scenario studies already long ago. Incl. systems with:
– only renewable + gas;
– only renewable.
Also with different renewable mix’s, etc. Looking for cheapest options.
One of the results is the 2050 target of only 52GW solar. Which is now outdated due to the stronger than expected price decreases of solar (they have 40GW solar and are on an increase corridor of ~2.5GW/a).
Im- and export of electricity don’t play an important or critical role in big Germany. Trading makes the whole thing somewhat cheaper.
It may have more influence on wind and solar developments in other countries as those have to compete against the German prices (which already are low with av. 3cnt/KWh). Not sure whether that will be positive of negative.
Note that:
– our Dutch ~500MW NPP also has to compete and probably will run into losses then, hence will stop prematurely.
– Denmark is ~15years ahead of Germany. They will have >50% generated by wind alone in 2020. More than 100 days a year wind will produce more than 100% of what Denmark needs. So P2G and other solutions are coming up.
http://www.reuters.com/article/germany-shale-idUSL8N15A2SN
As Germany sits on huge shale resources too. Mad.
The stories about the side effects in USA, motivated the Germans to install a ban on shale gas & oil.
And what side effects are there? Unavoidable and intrinsic? Or short term locall accidents as in any process? Surely the good lawyers of the USA would have monetised them long ago?
Nothing is perfect, but given that wind provides a third of Texas electricity, renewables can hold their own.
I haven’t seen any US side effects more damaging than either lignite mines on the landscape or enabling Putin’s adventures
Nick,
A major factor is probably that in Germany, the country (= the public) owns any minerals found deeper below the surface, incl. the contamination. And the public doesn’t want a risk that their soil becomes contaminated by some big (gas/oil) company who wants to pay (foreign) shareholders.
Why should they take the risk?
Germany is on the road towards 100% renewable, so no need for that gas & oil.
They follow (~2 decades behind) Denmark who schedules to be 100% renewable regarding all energy (so incl. cars, heating, etc) in 2050.
Every single country in the world, except the US has publicly owned mineral rights
Two important factors are left out of the article.
1) Cap and trade does not really work, there are too many loopholes and the caps are set too high, resulting a negligible price for CO2 emissions. If there would be a realistic price for C02 emissions of about 80€*, coal and lignite power plants would be out of business in no time.
2) The power producing companies owning the coal and lignite power plants have a strong influence on politics for several reasons. A large part of the stock of these companies is owned by German municipalities and states, there is therefore a financial intensive for these governments to keep the coal power plants open. Also the there is traditionally a strong connections between the socialist party, unions and coal miners. Finally, lignite mining provides jobs in the economically weak East. All these factors make it very difficult for the German government(s) to do the right thing and too close down the coal and lignite plants.
*Realistic as in reflecting the real costs caused by CO2 emissions.