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Germany has decided to eliminate a large part of classical electricity generation sources – 80 or even 100% – by 2050. A first step would be to quit nuclear energy, move that displays an ambitious target: 2022.
“There are many reasons why we decided to quit nuclear energy. We have created Energiewende, a policy for switching to green energy, to escape the dangers and hazards related to conventional energy. I believe we will manage to have a 100% renewable energy sooner, in 2035”, Andreas Kraemer, director of German Ecologic Institute, says.
Even if some experts are reluctant when it comes to switching at a rate of 100% to green energy, they all believe that Germany will manage within 20 years to reach an energy mix based in an overwhelming rate on renewable sources.
“Our target is to reach at least 80% of energy consumption ensured from renewable sources by 2050. Today, we have 25.4%. Energy efficiency must also increase to 50%, while today we have only 3.3% (*compared to 1990 – Ed.)”, Marius Backhaus, representative of the German Ministry of Economy and Energy, stated.
Energiewende, or energy transition, has advanced with quick steps, especially after the disaster at Fukushima, when a Japanese nuclear power plant was seriously damaged due to weather events caused by an earthquake: a series of huge waves, a phenomenon called “tsunami”, destroyed three nuclear reactors.
“We wiil definitely manage to be 100% green by 2030. There are even independent analysts who say that we need at least 90GW from conventional sources, to ensure the complementarity of sources”, says Joachim Lang, Director, E.On Germany.
“In order to further develop the shaping of the renewable industry, we provide to East European countries our experience. We can learn from each other. There are commercial and investment opportunities”, says Ernst Peter Fischer, Deputy General Manager of the General Directorate for Economy and Sustainable Development in Germany.
The cost of giving up nuclear energy, EUR 0.5-1bn per reactor
Germany is ready to quit the 17 nuclear reactors it owns, but the dismantling and storage costs will amount to EUR 500mln – 1bn for each reactor, E.On Director Joachim Lang stated for energynomics.ro.
Although Joachim Lang does not believe that the German industry will accept the Energiewende program any time soon, denouncing the lack of similar programs of neighboring countries, he claims that Germany has invested approximately EUR 10bn in renewable energy in the past 7 years and it only needs to find a solution for the periods when solar or wind energy cannot be available as an effect of unfavorable weather, disruption period called in Germany the “November phenomenon”.
“Germany needs EUR 20bn in the short term for investments in networks”, E.On director claims.
At the same time, Germany needs EUR 20bn to improve its networks, Lang also said. He added that E.On, a company 100% private, has merged the energy generation units into a single unit, in order to facilitate the switch from conventional energy to renewable energy.
“We are the first company in the world that merges its divisions: the problems consist of network control. We need investments in networks in certain regions, but also investments in storage. One of the storage solutions would be turning energy into gas by hydrolysis, because the batteries are very small, of only 10 MW”, Lang also said. However, Germany has invested EUR 200mln in battery systems. Investments in storage and networks led to the occurrence of a related overcharge, but only in 8 of the 16 lands, where green energy is predominant. Economic disparities have emerged: some farmers get more money from rents related to the rental of land for wind or solar projects rather than agriculture”, Lang says. At the same time, the entire Germany pays an additional tax for green energy, although only eight lands pay an extra tax for network improvement.
A new subsidy system
The need for investments in networks is very high and it cannot be fully incurred. Large companies have been exempt from the payment of energy surcharge, and the entire burden of green energy falls on the consumer.
Last year was an election year in Germany and the question of green energy cost was raised. The industry did not accept easily the energy transition process, because the neighboring countries don’t have such a program and thus we can lose competitiveness”, Lang says.
Investments in renewable energy benefited however from subsidies from the German state. There were the so-called connection tariffs or “feed-in tariffs”, established based on a growing surcharge for the consumer. Even if the surcharge increased each year, German experts say that it has reached its peak and critical mass, followed by a decelerated growth in the coming years, or even stagnation, but the generated benefits are huge.
Moreover, Lang says, Germany studies various subsidizing systems in the world to quit the feed-in tariffs. “We want to move to an auction system. We don’t know exactly how it will look like in the end, but we are studying various systems applied in the world”.
One thing is certain: Germany quits the polluting industries, and in the next five years it will have a production overcapacity. Even if not all the conventional plants will be closed, because 80GW per day is needed to ensure the complementarity of the system, most of the system will receive mostly wind energy by 2030, Lang believes.
Kraemer, German Ecologic Institute: Behind the nuclear industry there are hidden interests
Behind the nuclear industry there are usually subsidies and hidden interests, and the construction of new nuclear reactors has a strong smell of corruption, Andreas Kraemer, director of the German Ecologic Institute, believes.
“The construction of new nuclear reactors usually takes place for military interests or it’s about corruption, given that there are billions of euros or dollars changing destination. Germany will fully eliminate the nuclear industry by 2022”, Kraemer said, when asked by energynomics.ro about his opinion on the fact that Romania, but also other countries, are building new reactors.
“The French and Polish coal and nuclear industries are not competitive and they will only survive with subsidies”, Kraemer says.
He believes that the East European countries, including Romania, should improve their interconnections and networks, which are priority investments, to the detriment of new capital injections in dangerous industries.
“I predict that Germany will have 100% renewable energy by 2035… From 1952, when the nuclear accident in Ontario took place, an accident happens every five years. Moreover, the reactors are shut without any reason, we can take the example of UK, where disruptions take place every four days”, Kraemer also said.
Investors in renewable energy have yields of 7-8%
Energiewende must be followed by private investments, but investors in Germany must accept a lower profit margin compared to the previous years, or compared to yields achieved in the emerging markets.
“Investors in renewable energy currently accept yields of 7-8%, much more than offered by banks, Patrick Graichen, CEO Agora Energiewende – a local think tank -, believes. Two years ago, investment yield would even reach 20-25%, but it currently dropped, with the change in the subsidy scheme.
“The advantages of investments in renewable energy in Germany are related to the stability of the market and of the legislative system, we are not talking about risky conditions, where yields should reach at least 15%. We are talking about a regulated market, attractive even for the investment funds, pension funds and other investors”, Graichen says.
The only problem in the way of achieving the daring plans of Germany to fully eliminate conventional energy by 2050 remains the fight with conventional utilities.
“Utilities will fight against this trend, of course. They will not accept a model voluntarily. But it is all similar to the period when the industrial revolution started: we currently have cheaper renewable technologies that will radically change the environment. Of course, they can fight against this trend, but nobody has won in the fight with cheaper technologies”, Graichen also said.
Will Germany keep the 20% of the energy mix on coal?
Despite the optimistic beliefs on moving to a 100% green system, realistic experts claim that Germany will have to keep a 20% rate of the energy mix allocated for coal. Marius Backhaus, representative of the Federal Ministry of Economy and Energy, says that 70% of Germany’s fuel is currently imported.
Germany also imports 90% of its gas demand, as the domestic production drops.
“The coal industry will no longer receive support. By 2018 subsidies to this industry will be eliminated. It’s an uncompetitive industry”, Backhaus says.
Germany has managed to decrease from 24.1% in 2003 to 19.6% the share of hard coal (anthracite) in the national energy mix, while the nuclear industry decreased from 27.1 to 15.4%. At the same time, lignite decreased from 26% to 25.6% in the mentioned decade. Even if the federal government wants to quit coal entirely, it will not be able to do it, the analysts say. While anthracite may no longer be exploited, pit coal will remain. And the coal mix will remain at a share of 20% of the total, in order to ensure the balance of the system.
Already over 30% of energy from renewables
In the past nine months, Germany produced 30% of electricity from renewable sources, Ernst Peter Fischer, Deputy General Manager for Globalization, Energy and Climate of the General Directorate for Economy and Sustainable Development, says.
“Energy supply must be economic, reliable, sustainable and especially designed to reduce our dependence on other countries,” Fischer says, who admits that although wholesale energy prices fell, the final consumer price increased because of subsidies. “However, Germany is the only strongly industrialized nation that changes its energy mix. There is a major consensus among the society in favor of Energiewende”, he says, explaining that the latest elections have proven that people want a greener energy, because those who supported transition were elected.
The fact is that as green energy production grows, the cost of facilities decreases more and more, facilitating investment. Increasingly more commercial centers and households or housing associations have resorted to the use of solar panels, whose production cost fell by 99% in the past 30 years. With the Chinese pressure, prices fell even further, and the only problem of Germany remain the surcharge of end household consumer and uneven subsidies. But they are about to change, and the lower electricity price will be seen in time in bills. And if Germany manages to prove that the system is economically viable, it will be followed by the surrounding countries, probably even by Romania.
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Energynomic.ro hereby thanks the German Ministry of Foreign Affairs, the German Society for International Cooperation GIZ and the German Embassy in Bucharest.
