Climate Stasis German Failure on the Road to a Renewable Future

Paul Langrock/ Zenit/ Laif

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Part 2: How Germany's Energiewende Could Work After All


An additional factor exacerbating the renewables crisis is the fact that, two decades after the enactment of the Renewable Energy Sources Act (EEG), 20-year guaranteed feed-in tariffs will begin expiring next year for the first wind, solar and biomass facilities. Some of those who installed solar panels back then -- often farmers and homeowners -- are still receiving 50 cents for every kilowatt hour they feed into the grid. Today, larger facilities receive just 5 cents per kilowatt hour.

The state has redistributed gigantic sums of money, with the EEG directing more than 25 billion euros each year to the operators of renewable energy facilities. But without the subsidies, operating wind turbines and solar parks will hardly be worth it anymore. As is so often the case with such subsidies: They trigger an artificial boom that burns fast and leaves nothing but scorched earth in their wake.

Germany finds itself trapped in an energy dilemma, having grown used to maintaining two separate systems running in parallel. One of them, based on fossil fuels, has proven difficult to discard, while the other, powered by renewables, hasn't yet gained sufficient traction. But the longer it takes to shift from one system to the other, the more expensive and challenging it will become.

If all goes according to plan, the last nuclear power plant in Germany will be mothballed in just four years. The first coal-fired power plants are also set to go offline by then. At the same time, though, Germany's energy needs are likely to continue climbing.

That means that if renewable capacity isn't quickly expanded, a shortage could soon develop. All it would take is an overcast cold spell in 2023 with no sun and no wind. Should the so-called "dark doldrums" continue for several days, the system could quickly reach its limits. Mid-January 2017 was the last time Germany experienced such a situation.

Soon, the coal- and natural gas-fired power plants that have traditionally been used to maintain grid stability in such periods will no longer be there, and a solution must quickly be found to address the issue. The good news, though, is that Berlin seems to be finally paying attention. That, at least, is how it seemed at an April podium discussion held at a conference hosted at a church in the city. In their own way, each of the politicians on stage promised to reinject momentum into the Energiewende.

Making Up Lost Ground

Green Party parliamentarian Cem Özdemir, whose electoral district is in the homeland of Daimler and Porsche in Stuttgart, confirmed that the end of the internal combustion engine was nigh, saying: "Last rights for the automobile have been read." Christian Lindner, the leader of the business-friendly Free Democrats, insisted that construction be accelerated on high-voltage transmission lines.

Annegret Kramp-Karrenbauer, head of the center-right Christian Democrats, admitted that climate protection used to be a higher priority for her party and then pledged: "We are working to make up lost ground." The climate, she said, would be a vital issue this year.

That could very well be, and one reason for that is the Fridays for Future student protests that are increasingly finding support among parents and grandparents as well. An additional motivation is the fact that falling short of climate protection goals will soon be penalized. Starting next year, Berlin will have to pay a fine for each additional ton of CO2 admitted in excess of the target Germany negotiated with its northern European neighbors. Because the country will almost certainly fall short, the Finance Ministry is planning on extra expenditures of 300 million euros next year to cover the fines.

In the face of such penalties, the government has concluded that it would be better to invest money in climate protection than to pay the levies. Still, even Berlin has begun to realize that the Energiewende no longer has the reputation it once did among the voters.

The man who is charged with injecting momentum and acceptance into the Energiewende is Andreas Feicht. Since February, he has been state secretary in the Economics Ministry. And on his very first day in his new office, he was given an indication as to just how difficult his task will be. His boss, Economics Minister Peter Altmaier, took him along on a trip to see firsthand how grid expansion was going.

Their journey took them to Niedernhausen, a municipality in the state of Hesse just east of Frankfurt. Luckily for Feicht, most of the cameras were pointed at Altmaier as he stepped out of the black bus with the tinted windows and walked through a gauntlet of furious citizens, many of them wearing yellow vests. One poster read: "No experiments over our heads."

'Give Us an E!'

The people of Niedernhausen are surrounded by infrastructure of all kinds, such as the highway that buzzes just past the town, along with several train lines, including the high-speed link between Frankfurt and Cologne. And the power lines, which run right over their homes. Grid operator Amprion would like to span high-voltage lines between the existing towers.

The line, 340 kilometers long, is called Ultranet, and it is part of the high-voltage link taking electricity from the coast to the industrial centers in central and southern Germany. Only around 15 percent of Germany's wind turbines are located south of the Main River, which runs like a belt through the middle of the country. Another line further to the east, known as Suedlink, is to be buried underground -- which is vastly more expensive.

"Peter, give us an E!" read one of the posters in Niedernhausen, with "E" representing the German word for an underground transmission line. The head of the local citizens initiative accosted Altmaier, saying the plan as it currently stands is nothing less than an experiment with the lives of humans and that the magnetic radiation of high-voltage lines had not been sufficiently researched. "I will take a close look at the route of the line," Altmaier promised. And then he and the state secretary climbed back onto the bus.

Feicht is a specialist and knows a lot about energy issues, but only at a regional level. He used to be head of WSW, the city-owned utility company in Wuppertal. His ambitions sound rather modest when he speaks of the Energiewende: "We have to make a bit of progress."

The reality is that Feicht has to succeed where his boss Altmaier has failed. He must create a new, stable system out of all of the component parts he has inherited. Because even if not much fits together at the moment, there are some areas where progress has been significant, and which can be used as pillars of a sensible energy policy.

The EEG subsidies have resulted in the installation in Germany of 1.7 million solar units. There are also around 30,000 wind turbines on land and an additional 1,305 offshore in the North Sea and Baltic Sea. In some cases, those facilities generate power at a cost below four cents per kilowatt hour, making it cheaper than coal or nuclear.

A Lack of Tax Breaks

Germany generates 35 percent of the electricity it needs from wind, sun, biomass and hydro and last year, renewables caught up with coal as Germany's most important source of electricity. And yet, none of this is much more than a good start. The advances in electricity production are impressive, but there are many more sectors that must be integrated into the Energiewende, including buildings, industry and traffic.

There are around 19 million residential structures in Germany, but only just over 4 million of them have been brought up to state-of-the-art energy efficiency standards. Many heating units are outdated and around a quarter of the buildings are still heated with oil. Owners have been slow to update, with only about 1 percent of the country's housing inventory being modernized each year. If the pace doesn't increase, only about half the residential structures will have been modernized by 2050. The coalition agreements of a succession of German governments have included the intention of providing tax breaks to promote building modernization, but a corresponding law has never been passed.

Energy remains a significant cost factor for industry, which has led manufacturers to make their factories as energy efficient as possible. But while they have been successful, industry has continued to grow, cancelling out the gains. The result has been a level of industrial energy consumption that has remained largely unchanged for two decades.

Of all the sectors in question, vehicle traffic has fallen the furthest behind, with mobility still almost entirely based on the burning of gas and diesel. Car and truck emissions remain at roughly the same level they were in 1990. The goal of sinking such emissions to 40 percent of their current levels by 2030 seems illusory, as a simple calculation shows: There are around 47 million passenger cars registered in Germany with an additional 3.4 million being sold each year. Even if half of these new vehicles were electric -- which is unrealistic -- there would only be around 15 million such vehicles in Germany by the end of the 2020s.

It's not enough, in other words, to simply produce more and more green electricity. It won't be enough to fulfill the dream of a low-carbon future. It is time for Energiewende 2.0, a much more all-encompassing version that integrates all sectors, technologies and markets. In the end, the system must be extremely interconnected and more than just a gigantic machine that produces and distributes electricity generated by wind, sun and water.

Hydrogen will be an important element of this new energy environment. Hydrogen is an energy source that does not produce any harmful emissions and which is available in infinite quantities. The potential this molecule carries is well-known. Indeed, the hydrogen revolution was announced many years ago. It was too early at the time, but now, the time may be ripe.

How the Energiewende Could Still Succeed

"Head of Hydrogen" is the rather spectacular title given to René Schoof at the energy supply company Uniper. The company produces green hydrogen in Pritzwalk, located halfway between Berlin and the Baltic Sea. Schoof walks past shiny silver cauldrons in which honeycombed compressors divide water into its component parts.

The facility, which opened in 2012, is one of the first and largest of its kind in the world. And it demonstrates that green electricity can easily be turned into synthetic fuel -- into hydrogen or methane, into gasoline, diesel or kerosene. The technology is ready. But Schoof isn't particularly pleased by the Pritzwalk project. It would be enough for him, he says, if it weren't just "sitting around unused in the middle of the landscape."

From a business perspective, it isn't worth it. Much of the energy is lost in the process of turning wind into electricity, electricity into hydrogen and then hydrogen into methane -- efficiency is below 40 percent. It isn't enough for a sustainable business model.

The process has its shortcomings, but there is one decisive argument in its favor: If the number of wind turbines continues to increase, mandated turbine shutdowns due to network oversupply will increase. The companies are compensated for their losses -- in 2017, to the tune of over half a billion euros. But instead of wasting so much money, suppliers could store the extra energy -- and use it to produce methane and hydrogen that could then be fed into the natural gas network, which has 500,000 kilometers of pipelines -- a kind of gigantic battery that could come in handy in times of low wind and low sunlight.

Another option would be to turn the wind power into methane or hydrogen and then turn them into so-called e-fuels. Here, too, existing infrastructure could be used: fuel-storage facilities, pipelines and gas stations of the petroleum industry.

A study by the German Economic Institute and Frontier Economics confirms the astonishing potential of e-fuels. By the middle of the century, global demand could be as large as half of the current market for crude oil. Manufacturers of electrolyzers could find it especially profitable -- and German companies are the world leaders in the field, having cornered almost one-fifth of the global market. This includes Siemens, ThyssenKrupp and MAN -- the old industrial elite.

Wind-Powered Vehicles

But there are also opportunities for younger companies. In northern Germany, not far from the Danish border, the founding duo of GP Joule, two agricultural engineers, are building a complete hydrogen-processing chain. The project is called EFarm. Wind turbines supply the region with electricity. They sit adjacent to electrolysis facilities that turn wind power into hydrogen and heat homes with their excess heat. The plan calls for the resulting hydrogen to be transported to gas stations in Husum and Niebüll and for two fuel-cell buses to be introduced for local use. Wind-powered vehicles.

The coastal project is intended to demonstrate that wind power can remain profitable even after the EEG subsidies disappear. It shows how flexible and interconnected the energy system of tomorrow must be and how much more complex it will be to make renewable energy available reliably.

Today, renewable energy is fed into the grid from all sides, with the amount heavily dependent on the weather. The danger of the system falling out of balance is a constant presence. The only antidote is controlling it as intelligently as possible.

In the western German town of Hagen -- on Impulse Square -- a white Nissan Leaf can frequently be found at a charging station there, located just out front of the headquarters of the energy supplier Enervie. What can't be seen from the outside, though, is that the car is also able to relinquish some of its energy as needed. It can charge itself, or it can feed energy into the grid. Few other electric cars in Germany can do that.

The car is essentially making a tiny contribution to stabilizing the system. When Enervie needs energy, the car can feed electricity into the system within the space of three seconds. And the car owner is paid for the emergency assistance. During one test week, the car owner received a total of 20 euros, but ideally, it would be around a thousand euros per year. A car that earns money for its owner.

Essentially, every driver could be a mini-energy supplier, just like those who operate wind turbines, solar cells, biogas facilities and other sources that feed energy into the grid. Taken together, it becomes a kind of virtual power plant. In such a world, utilities would have the task of orchestrating the supply.

The potential problems here are relatively obvious: What happens when a large number of people plug in their electric cars at roughly the same time -- when they come home from work, for example? Utilities could provide discounts to those who plug in later, for example. There is already software and algorithms in existence to make such a thing possible.

Frustration with Stasis in Berlin

In some municipalities, local utilities have already begun developing such intelligent supply concepts. They are, essentially, taking control of the Energiewende locally out of frustration with the stasis in Berlin.

In Bordesholm, a community of 7,500 near the port city of Kiel, the municipal utility company recently inaugurated a battery storage space -- a black, windowless building as big as two houses. Its shelves hold 48,048 modules and the ventilation system constantly hums, since the batteries work best at temperatures between 17 and 23 degrees Celsius (63-73 degrees Fahrenheit).

The local utility uses it to store the electricity produced in a neighboring biogas plant. The batteries provide locals with electricity, but if necessary, they can also feed in power to the national grid within just 0.2 seconds to provide stability -- just as the Nissan Leaf in Hagen does. And the utility receives compensation for doing so. "That's how we earn our money," says Frank Günther, director of the Bordesholm utility.

Intelligent systems are important. But incentives for individuals and companies to act in environmentally friendly ways are even more important. And that's where price matters. The more expensive the production of CO2, the more worthwhile it becomes to invest in climate-friendly technology.

The European emissions trading scheme, which was introduced in 2005, has thus far proved insufficient. The EU issued too many certificates and as a result, prices have remained low and their future trajectory is hard to predict. Furthermore, the trade in certificates only covers half of all emissions: transportation, buildings, trade and agriculture are not included.

A climate tax would be an elegant way of integrating all sectors and interlinking them into a larger system. Over 3,500 economists have called for a constantly rising, globally standardized tax and in the current governing coalition in Berlin, the idea of a CO2 tax is also gaining support. The question is simply how high it should be.

And once again, everyone is being cautious. German Environment Minister Svenja Schulze (SPD) has preferred to rely on a proposal by a leading government economic adviser, Christoph Schmidt, of 20 euros per ton. But at such a low level, its effect would hardly be noticeable -- it would only make a liter of gasoline a few cents more expensive.

The Fridays for Future activists argue for action on a different scale. They believe a price of 180 euros is appropriate. That would make a liter of gasoline about 43 cents more expensive and boost the cost of heating oil by 58 cents per liter. A flight from Germany to New Zealand and back would cost about 2,000 euros more.

Either way, it's clear that the higher the price, the more people will be negatively affected: commuters, people living in older buildings, frequent flyers. At the ESYS Conference in February, Thorsten Herdan, head of energy policy at the Economics Ministry, described the dilemma currently being faced by the government. He argued that although many are now pushing for higher CO2 prices, if you make them high enough to have an actual effect, people will suddenly say: "For God's sake, not that. Otherwise I'll put on a yellow vest."

He was referring to the country-wide protests in France triggered by plans for a higher fuel tax. The result has been that Berlin policymakers are currently leaning toward a model like the one used in Switzerland, in which a large portion of the CO2 tax revenues is sent back to citizens as compensation for the fact that climate-neutral behavior can be expensive and requires sacrifice. That's the core lesson of more than two decades of the Energiewende: Policymakers must ensure that people are on board. Voters must begin to understand what the transformation means for them and that it is vital that they change their behavior. Without sacrifice, it won't work. The second, more difficult, part of the Energiewende -- the intelligent interlinking of different sectors -- is bringing the Energiewende closer to ordinary people. It is influencing how and where people live, how they travel.

Technologically speaking, it's possible to make the energy system free of fossil fuels by 2050, especially in a high-tech country like Germany. Everything is ready: the studies, the strategies, the facilities. ESYS, the association of scientists, has formulated recommendations for how politicians, businesses and society can reach their goals.

According to ESYS, Germany needs to increase its solar- and wind-facility capacity by a factor of five to seven, make synthetic fuel a pillar of the energy system and introduce a CO2 tax in all sectors. According to ESYS predictions, the transformation would cost 2 percent of the country's annual GDP. Currently, that would be about 70 billion euros.

By 2050, the costs would add up to 2 to 3.4 trillion euros, depending on the scenario. Other forecasts fluctuate between 500 million and about 2 trillion euros. One way or the other, the second part of the Energiewende will be expensive and exhausting, a project as demanding as German reunification.

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