Merkel's Blackout German Energy Plan Plagued by Lack of Progress



Part 3: Power Plants: Forced to Lose Money

A kaiser still ruled Germany when the Franken 1 power plant generated electricity for the first time, almost 100 years ago. The plant was in fact slated for closure, but because of the energy turnaround, Franken 1 has been allowed to remain in operation.

This coming winter, on days when the sun isn't shining and there is no wind, Bavarians could very well count themselves lucky that the old plant is still connected to the grid. The plant can produce more than 850 megawatts of electricity on short notice, says plant manager Wolfgang Althaus, albeit at a high cost.

Franken is part of the so-called cold reserve of the German energy supply. As long as there isn't enough storage capacity, virtually every solar plant and every wind turbine has to be backed up by a conventional power plant. Without this double structure, the power supply would collapse.

At the same time, however, the boom in subsidized renewable energy is ensuring that conventional power plants are no longer profitable. Since the law requires that preference be given to green energy, if it's available, gas-, oil- and coal-fired power plants frequently have to be shut down to avoid overloading the grid. This reduces their revenues while increasing costs because powering plants up and down consumes a lot of fuel and inflicts additional wear and tear on the equipment.

In the past, power plant operators were able to charge higher electricity prices around midday. But now there is more competition from solar plants at this time of day. On days when there is a lot of wind, the sun is shining and consumption is low, market prices on the power exchange can sometimes drop to zero. There is even such a thing as negative costs, when, for example, Austrian pumped-storage hydroelectric plants are paid to take the excess electricity from Germany.

The prospects are so poor that energy providers have little interest in building new power plants. Under current conditions, even the most modern and efficient combined steam and gas power plants are not recovering billions in investment costs.

"It's hard to justify building new conventional power plants in this difficult transitional phase," says RWE CEO Peter Terium. If companies had their way, they would also demolish old plants like Franken 1.

The Economics Ministry is drafting a new regulation under which power plant operators could be forced to keep their old plants connected to the grid. But the companies won't stand for that. Although they are willing to make short-term compromises, they are not about to keep any power plants connected to the grid in the long term if "they don't recover their capital costs," Terium says.

What this amounts to is that companies will be compensated in the future for keeping their backup power plants up and running. As the government considers writing a bill to this effect, electricity consumers will once again be the ones to foot the bill.

Energy Storage: Too Little, Too Expensive

When workers at the ArcelorMittal steel mill dump a load of scrap iron into the blast furnace, yellow and white flames shoot out of the furnace, producing an infernal noise. The enormous amount of energy being consumed is almost physically palpable. The plant, in Hamburg's Finkenwerder district, consumes a billion kilowatt hours of electricity a year, or about as much as 250,000 four-person households. That number could become relevant in an emergency, like the one that occurred at the beginning of February.

With extremely cold temperatures gripping large parts of Europe, there was a spike in power consumption. Hamburg was on the verge of a blackout, says plant manager Lutz Bandusch. To keep the lights from going out in the city, he shut down the blast furnaces and rolling mills in Finkenwerder.

Instead of making money by producing steel, the plant operator was compensated for not producing it. It was a profitable arrangement for the steel mill. "It has to be worthwhile from an economic standpoint," Bandusch admits, even though he felt that it was somewhat odd to be getting paid to do nothing.

Several companies are currently negotiating with the Federal Network Agency over how much they will be paid to shut down their equipment in the event of an electricity shortage. Germany unfortunately doesn't have enough storage capacity to offset the fluctuation. And, ironically, the energy turnaround has made it very difficult to operate storage plants at a profit -- a predicament similar to that faced by conventional power plants.

In the past, storage plant operators used electricity purchased at low nighttime rates to pump water into their reservoirs. At noon, when the price of electricity was high, they released the water to run their turbine. It was a profitable business.

But now prices are sometimes high at night and low at noon, which makes running the plants is no longer profitable. The Swedish utility giant Vattenfall has announced plans to shut down its pumped-storage hydroelectric power station in Niederwartha, in the eastern state of Saxony, in three years. A much-needed renovation would be too expensive. But what is the alternative?

Batteries are also part of the government's plans, and €400 million in public funds have already been earmarked for related R&D. The industry also has high hopes for battery technology. But it this realistic?

For the fun of it, Florian Schlögl, director of the regenerative power plant department at the Fraunhofer Institute for Wind Energy and Energy System Technology (IWES) in the central German city of Kassel, calculated how large a battery would have to be to supply a city like Munich (pop. 1.38 million) with electricity for two or three days.

The answer, says Schlögl, depends on which battery technology is available. A cube-shaped lithium ion battery, such as the ones used in cell phones and laptops, would be 53 meters (174 feet) long on each edge. This would make it as tall as the roof of the Allianz Arena, where FC Bayern Munich plays its home games, and it would weight 250,000 metric tons. The dimensions would be even larger in the case of a lead acid battery, such as those used in cars. A cube-shaped battery would be 93.3 meter long on each edge -- and Munich would have a new signature landmark.

Experts Agree on Goal but Question Path

The eastern state of Brandenburg has already created a similar landmark for itself. Last week, Germany's biggest solar park was inaugurated in the Märkisch-Oderland administrative district, sandwiched between Berlin and the Polish border. It can produce enough electricity to power 48,000 households, at least when the sun is shining. But, regrettably, it won't be generating electricity just yet because the project isn't connected to the grid. The power lines and transformer station won't be finished for a few more months.

There is a method to this madness. To maximize government subsidies, the operator of the solar park wanted to be finished before the end of September. This guarantees him 20 years' worth of subsidies under the old law, so waiting a few months before being connected to the grid doesn't make much difference to him.

In the next few years, electricity consumers will pay for more than €100 billion in subsidies for solar power. Additional billions will follow. Like its predecessor, the current CDU/CSU-FDP government has also bowed to the solar lobby. The latter's business model is still based on collecting as many subsidies as possible rather than on feeding as much usable electricity as possible into the grid.

Experts believe that the energy turnaround will be a failure if this continues. The committee tasked by Chancellor Merkel with monitoring the progress of the energy turnaround will present its first report in December. Initial statements suggest that its verdict will be highly critical.

When Andreas Löschel, the chairman of the committee, rides his bike to work at the Center for European Economic Research (ZEW) in the southwestern city of Mannheim, he passes an ancient power plant. Last winter, the chimneys there were belching smoke once again. The power supply would have been in trouble without the plant.

Löschel and his colleagues in the monitoring group believe that more solar roof panels and wind turbines make little sense as long as there isn't enough storage capacity. They warn that subsidies could end up distorting business decisions and result in mismanagement of the system. In their view, it is a questionable practice to saddle electricity consumers with the costs and risks, which in turn reduces public acceptance of the project. Georg Erdmann of the Technical University of Berlin, another member of the monitoring group, has calculated that the EEG assessment will increase to up to 10 cents per kilowatt hour unless the government does something about it.

Despite all the criticism, the experts still believe that the energy turnaround is the right thing to do. It just has to be done correctly, says Löschel.

When Environment Minister Altmaier was traveling this summer, he was often asked about the nuclear phase-out. In these conversations, his English-speaking counterparts matter-of-factly used Energiewende, the German word for the energy turnaround. The term has apparently become established worldwide.

Altmaier was pleased. But it remains to be seen whether talk of Germany's Energiewende will be taken as a compliment in the future, just as kindergarten and autobahn have entered the English language as largely positive terms, or whether Energiewende will become more of a derisive term, like "German angst."


Translated from the German by Christopher Sultan

Discuss this issue with other readers!
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Inglenda2 10/11/2012
1. Blackout or Blackmail?
It is strange to observe in the production of electricity, how the free energies of water, wind and sun, becomes more expensive than complicated gas, coal and atomic processes, when placed in the hands of politicians. Once again we must fear, that this is another new tax, brought in by the backdoor, in co-operation with lobbyists, to comply with the unwarranted coercion by the power industry.
florianbamberg 11/17/2012
2. Nuclear Imports
Another questionable point of the German Energiewende is the fact that we now import nuclear energy - so we basically exported the risk. Just blogged on that, always happy about debate and feedback:
powermeerkat 11/20/2012
3. Thank you, Angela! - KGB gen. Putin
Merkel, trying to increase her popularity has not only made Germany even more vulnerable to Putin's and is GAZPZROM's blackmail but also made it into a even greater C02 producer. Can any German posters explain it away?
florianbamberg 12/15/2012
4. The Offshore Problem
Part of the trouble is getting the offshore power ramped up. I analyzed that aspect of the problem in my blog, looking forward to some debates:
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