Marita Noon: Germany’s Energy Transformation

Marita Noon

Link to: Germany’s “energy transformation:” unsustainable subsidies and an unstable system (I’d really appreciate it if you would click on this link to RedState.com and select the “recommend” option. If a column on RedState gets a lot of “Recommends,” it gets the editors’ attention and has a higher likelihood of being posted on the front page where the readership is much higher. After all, I work so hard to produce good content each week so people will read it and be informed, and act, on the issues. The option? Gruber is right about the people.)

Greetings!

This year’s climate change talks in Lima, Peru, ended yesterday with a watered down compromise and virtually no major news coverage—leading one to believe that they’ve become almost irrelevant. My column this week, Germany’s “energy transformation:” unsustainable subsidies and an unstable system (attached and pasted-in-below), uses the talks and Germany’s recent decision to ratchet up its commitment to carbon dioxide reductions as the launching place to discuss what the U.S. should be learning from Germany’s renewable energy experiment. After all, our legislators are currently wrestling with whether or not to extend subsidies for renewables.

Germany’s “energy transformation:” unsustainable subsidies and an unstable system features many quotes and observations from a report done by a Swiss group that closely analyzed Germany’s Energiewende and offered important lessons the U.S. and other countries should learn from—whether or not we will remains to be seen. But, as I say in my closing remarks, an educated constituency is important! My writing, and your sharing of it, is part of the education process.

Thanks for posting, passing on, and/or personally enjoying Germany’s “energy transformation:” unsustainable subsidies and an unstable system. Once again, I’ve attached both the full-length- and 900-word versions. If you post my work, please use whichever you feel is best for your audience.

Merry Christmas!

Marita Noon

Executive Director, Energy Makes America Great, inc.

PO Box 52103, Albuquerque, NM 87181

505.239.8998

 

Germany’s “energy transformation:” unsustainable subsidies and an unstable system

Perhaps when Germany’s Chancellor Angela Merkel was a child, she attend a party and was the only one who came without a present, or wearing inappropriate attire—and the embarrassment she felt haunts her to this day. That’s how psycho-dynamic psychology (Freud) might explain her December 3 decision spend more money on Germany’s failing energy experiment to avoid, as Reuters puts it: “the embarrassment of missing her government’s goal of a 40 percent reduction of emissions by 2020.”

As Europe’s biggest economy, Germany has also embraced the biggest carbon dioxide reductions through a program known as “Energiewende”—or, in English, also called energy change, shift, or transformation. Energiewende was launched in 2000 under Merkel’s predecessor who offered subsidies for any company that produced green energy.

While the European Union (E.U.) has committed to carbon dioxide cuts of 40 percent by 2030, Germany’s national goal aims to get there a decade sooner—which may have seemed achievable early in the program. After the 1990 reunification of Germany, the modernization of East Germany brought rapidly reduced emissions. However, the program’s overall result has raised costs and the emissions the expensive programs were designed to cut.

A few months ago, Bloomberg reported that due to increased coal consumption: “Germany’s emissions rose even as its production of intermittent wind and solar power climbed fivefold in the past decade”—hence Merkel’s potential embarrassment on the global stage where she’s put herself in the spotlight as a leader in reducing emissions.

On December 3, while 190 governments were meeting for two weeks of climate change talks in Lima, Peru (which, after 30 hours of overtime, produced a compromise deal that environmental groups see “went from weak to weaker to weakest”), Merkel’s cabinet agreed to a package that continues Germany’s optimistic—though unrealistic—goal and increases subsidies for measures designed to cut emissions. Regarding Germany’s “climate protection package”, Barbara Hendricks, Environment Minister, admitted: “if no additional steps were taken, Germany … would miss its targets by between five to eight percentage points.”

The results of the German agreement will require operators of coal-fueled power plants to reduce emissions by at least 22 million tons—the equivalent of closing eight of them. The Financial Times (FT) believes the plan will “lead to brownouts in German homes.”

With the goal of generating 80 percent of its energy from renewable sources by 2050, Germany has aggressively pursued a green dream with unsustainable subsidies that have produced an unstable system described by FT, on November 25, as: “a lesson in doing too much too quickly on energy policy.”

So, what are the lessons? What should the U.S., and other countries, learn from Germany’s generous subsidy programs and rapid, large-scale deployment and integration of renewable energy into the power system? These are the questions U.S. legislators should be asking themselves as they argue over a tax extender package that includes a retroactive extension for the now-expired Production Tax Credit for wind energy.

Fortunately, the answers are easy to determine. Finadvice, a Switzerland based advisor to the utility and renewable industry, did an exhaustive study: “Development and Integration of Renewable Energy—Lessons Learned from Germany.” The introductory comments of the resulting report, includes the following statement: “The authors of this white paper would like to state that they fully support renewables as a part of the power portfolio. …a couple [of the authors] have direct equity interests in renewable projects.” The author’s viewpoint is an important consideration, especially in light of their findings. They wanted Germany’s experiment to work, yet they begin the Executive Summary with these words:

“Over the last decade, well-intentioned policymakers in Germany and other European countries created renewable energy policies with generous subsidies that have slowly revealed themselves to be unsustainable, resulting in profound, unintended consequences for all industry stakeholders. While these policies have created an impressive roll-out of renewable energy resources, they have also clearly generated disequilibrium in the power markets, resulting in significant increases in energy prices to most users, as well as value destruction for all stakeholders: consumers, renewable companies, electric utilities, financial institutions, and investors.”

After reading the entire 80-page white paper, I was struck with three distinct observations. The German experiment has been has raised energy costs to households and business, the subsidies are unsustainable, and, as a result, without intervention, the energy supply is unstable.

Cost

We, in the U.S., are constantly being told that renewable energy is close to cost parity with traditional power sources such as coal and natural gas. Yet, the study clearly points out the German experiment has resulted in “significant increases in energy prices to most users”—which will “ultimately be passed on to electricity consumers.” Germany’s cost increases, as much as fifty percent, are manmade not market-made—due to regulation rather than the trust costs. The high prices disproportionately hurt the poor giving birth to the new phrase: “energy poverty.”

The higher costs hurt—and not just in the pocket book. The authors cite an International Energy Agency report: “The European Union is expected to lose one-third of its global market share of energy intensive exports over the next two decades due to high energy prices.”

Subsidies and instability are big factors in Germany’s high prices.

Subsidies

To meet Germany’s green goals, feed-in tariffs (FIT) were introduced as a mechanism that allows for the “fostering of a technology that has not yet reached commercial viability.” FITs are “incentives to increase production of renewable energy.” About the FITs, the report states: “This subsidy is socialized and financed mainly by residential customers.” And: “Because of their generosity, FITs proved capable of quickly increasing the share of renewable power.”

Germany’s original FITs, “had no limit to the quantity of renewables to be built” and “lead to unsustainable growth of renewables.” As a result, Germany, and other E.U. countries have “had to modify, and eventually phase out, their program because of the very high costs of their renewable support mechanisms.”

Germany has also begun to introduce “self-generation fees” for households and businesses that generate their own electricity—typically through rooftop solar, “to ensure that the costs of maintaining the grid are paid for by all consumers, not just those without rooftop PVs.” These fees remove some of the cost-saving incentive for expensive solar installation.

Section four of the report, “Unintended Consequences of Germany’s Renewable Policies,” concludes: “Budgetary constraints, oversupply and distortion of power prices, transaction-specific operational performance, market economics (i.e. Germany proposing to cut all support for biogas), debt structures, and backlash of consumers paying higher prices were all factors contributing to regulatory intervention. Projecting past 2014, these factors are expected to continue over the next several years.”

Stability

Hopefully, by now, most people—especially my readers—understand that the intermittent and unreliable nature of wind and solar energy means that in order for us to have the lights go on every time we flip the switch (stability) every kilowatt of electric capacity must be backed up for times when the sun doesn’t shine and the wind doesn’t blow. But, what most of us don’t think about, that the report spotlights, is that because the favored renewables benefit from “priority dispatch”—which means that if a renewable source is generating power, the utility company must buy and use it rather than the coal, natural gas or nuclear power it has available—the traditional power plants operate inefficiently and uneconomically. “Baseload thermal plants were designed to operate on a continuous base. …they were built to operate at their highest efficiencies when running 24 hours a day, seven days a week.” Now, due to renewables, these plants operate only a fraction of the time—though the cost to build and maintain them is constant. “The effect of fewer operational hours needs to be compensated by higher prices in these hours.”

Prior to the large integration of renewables, power plants earned the most when demand is high—in the middle of the day (which is also when the most solar power is generated). The result impacts cost recovery. “There are fewer hours in which the conventional power plants earn more than the marginal cost since they run fewer hours than originally planned and, in many cases, provide back-up power only.”

This translates into financial difficulties for the utilities that have resulted in lower stock prices and credit ratings. (Note: utility stocks often make up a large share of retirement portfolios.) Many plants are closed prematurely—which means the initial investment has not been recovered.

Because the reduced use prevents the power plants from covering their full costs—yet they must be available 24/7, power station operators in Germany are now seeking subsidies in the form of “capacity payments.” The report explains that a plant threatened to close because of “economic problems.” However, due to its importance in “maintaining system stability” the plant was “kept online per decree” and the operator’s fixed costs are compensated.

*****
Anyone who reads “Development and Integration of Renewable Energy” will conclude that there is far more to providing energy that is efficient, effective and economical than the renewable fairytale storytellers want consumers to believe. Putting a solar panel on your roof is more involved than just installation. The German experiment proves that butterflies, rainbows and pixy dust won’t power the world after all—coal, natural gas, and nuclear power are all important parts of the power portfolio.

Why, then, did Merkel continue Germany commitment to an energy and economic suicide? It is all part of the global shaming that takes place at the climate change meetings like the one that just concluded in Lima, Peru.

If only U.S. legislators would read “Development and Integration of Renewable Energy” before they vote for more subsidies for renewable energy, but, heck, they don’t even read the bill—which is why calls from educated constituents are so important. I am optimistic. Maybe we could learn from Germany’s experience what they haven’t yet learned themselves.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column.

When Will We See Them Again

I have taken an image of the MV Faina with the...

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By Chuck Ring (GadaboutBlogalot ©2009 – 2011)

Quote Freely From The Article – Leave The Pseudonym Alone

As folks used to say, “if I never see you again, it will be too soon.”  Not necessarily speaking to me, but speaking to someone they are expressing some form of anger toward.  My question in the title above refers to the Somali pirates who have consistently robbed, kidnapped and killed over the last several years.

We learn today that a Danish family was attacked on the high seas and three children and their parents were kidnapped and presumably taken to shore.  I believe there should be little doubt about where the money, at least most of it, winds up.  Terrorist groups  likely receive the bulk of any ransoms collected and they probably receive much of the food and other supplies off-loaded from the cargo ships  captured by the lowly pirates.

In the past week or so, according to BBC News Africa :

As of last week, the EU’s anti-piracy naval force said pirates were holding a total of 31 vessels, and 688 hostages.

Perhaps the better question would be, when will we see the captured again … if ever?   It does not say much for the powers of the world, when nothing is found about how to free the captives; but then again, we are not privy to all considered and discarded because of various possibilities  —  personally, at this point, I do not care to know.  Maybe one day in the future we will learn the complete story.

Here are a couple of links from BBC which might help to understand some of the difficulties and the more or less total of incidents initiated by the Somali pirates:

You’ll see that there has been very limited action and success from action taken.  It doesn’t seem like unilateral action or actions taken by coalitions of the meek will ever solve the problem.  As difficult as it is to ponder, perhaps a no quarters given policy would be the best for a long-term solution.

Thanks and a flap of the cap to the BBC and you may want to check for any links shown below.

We Love To Whittle While The UN Ponders

Coat of arms of Libya -- the "Hawk of Qur...

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By Chuck Ring (GadaboutBlogalot ©2009 – 2011)

Quote Freely From The Article – Leave The Pseudonym Alone

We wrote about Libya‘s citizens having a tough time as they attempt to remove themselves from under the iron claw of a dictator’s control over them for a little over forty years.  We didn’t say much when Libya along with other proven human rights violators were elected to the United Nations Council on Human Rights.  And we haven’t said much more as Qaddafi has continued down the path of killing and torture.  Now as the killing has continued since revolutionaries have bucked the madman and reports tell us he has had over 1000 of his citizens murdered by his military, we finally peek out such as a wild turkey might peek over a log in the woods.

We have now asked that Libya be stripped of her seat on the council and a few other members have joined with us asking for the same.  Bets are that it isn’t going to happen, at least not in any hurried fashion, and perhaps never.  There are likely reasons why we have not acted more forcefully in the past and perhaps the inaction can be excused, but to be a part of the spit and whittle club that most of the United Nations’ members seem a part, seems a little much when we have touted freedom and democracy to the extent we have.  I am not suggesting that we have to invade, but maybe a little action such as that taken by President Reagan might go toward a end to Qaddafi and his craziness.

Since we don’t seem inclined to act in an fast way,  perhaps others who have an interest in freedom and democracy will step forward.  In the meantime, here’s a rather lengthy interview from PBS which might entertain while it provides speculation on what groups are, and what groups are not, on the Libyan dictator’s side:

 

Wind Power Installed In Europe For 2009

Enercon E70-4 wind energy converter at Steinko...
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By Chuck Ring (GadaboutBlogalot ©2009 – 2010)

Quote Freely From The Article – Leave The Pseudonym Alone

More wind power generating capacity was installed in Europe than any other technology last year.  Gas generating capacity followed with second place and solar photo-voltaic came in third.  All this according to PR Newswire.  The report states that more coal and nuclear capacity was decommissioned than was installed for the two sources during 2009. The story continues:

Investment in new European wind farms in 2009 reached EUR13 billion, including EUR1.5 billion offshore. 10,163 MW of wind power capacity was installed across the European Union – a 23% increase compared to 2008 installations – made up of 9,581 MW onshore (up 21% from last year) and 582 MW offshore (up 56% from last year).

2009 is the second year running that more wind power capacity has been installed than any other electricity-generating technology, and wind’s share of newly installed capacity increased from 35% in 2008 to 39% in 2009. It is also the second year running that renewable energies have accounted for the majority of new investments.

Industry managers are praising the increased capacity as decreasing carbon, while increasing jobs, other economic activity and overall electricity production.  The total European generating capacity from wind generation sources is found in this quote:

Wind power’s total capacity in the European Union has now reached 74,767 MW, up from 64,719 MW by the end of 2008 with Germany remaining the EU country with the largest installed capacity, followed by Spain, Italy, France and the UK.

Optimism appears to be common in the European renewable energy field. To read the forecast possibilities, click here.

To see and read a PDF with all the 2009 statistics, click here.

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