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The German Conundrum: Renewables Break Records, Coal Refuses to Go Away

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wind turbine blade (photo Cornelius Bartke)

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.

Kucera 1

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.

Kucera 2

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.

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.

Content Discussion

Hops Gegangen's picture
Hops Gegangen on March 27, 2016

Bear in mind of course that Germany is poor place for solar, as is any place at that latitude. Not only is it dark most of the day in Winter, but even during other seasons the angle of the sun changes so you can’t optimize the angle of fixed installations. And then there are clouds.

It’s a different story in the U.S. southwest and in southern Europe.

I think northern latitudes will have to either find a way to import clean energy much of the year or accept nuclear.

It looks like the U.S. is going to make some progress bringing wind power eastward.

Engineer- Poet's picture
Engineer- Poet on March 26, 2016

The year 2015 showed, however, that getting rid of coal completely will be unexpectedly hard.

Unexpected by whom? Many people predicted and warned about it (I’m one of the smallest voices in that chorus) but were were ignored and derided by the Greens who claimed “we can have a 100% renewable economy!”
Now that they’re failing I intend to give them some well-earned abuse while enjoying my schadenfreude.

Mark Heslep's picture
Mark Heslep on March 26, 2016

In 2015, the biomass and hydro share of Germany’s “renewable” electricity production was 38%, made possible by roughly a tripling of biomass production there in the last dozen years. The UK’s renewable production figure similarly includes an increasing conversion of its coal plants to wood chips, fueled by US and Canadian forests. The relevant technical aspect of the high penetration clean energy argument is i) the feasibility of nuclear power versus ii) the feasibility of solar and wind power (along with storage and transmission). High penetration clean power can not be, or should not be, accomplished via biomass, producing more ash, particulate, and NOX per unit energy than coal.

https://www.energy-charts.de/energy.htm

Joe Deely's picture
Joe Deely on March 26, 2016

Below are German electricity exports – definitely a screwed up market.

Willem Post's picture
Willem Post on March 26, 2016

Joe,

1) The graphs in the article are a misrepresentation.

The renewable energy should be a percentage of all generation.

It should not be presented as a percentage of consumption, which is much less than all generation, because of exports, transmission and distribution losses, etc.

2) Germany has been closing down its nuclear plants and older coal and gas plants, and has been building new, more efficient coal plants.

The net effect likely would lead to less flexibility for balancing wind and solar energy and less synchronous rotational inertia.

However, during higher levels of wind and solar generation (sunny and windy periods), often coinciding with low night-time demands, Germany has to export its excess generation, because its own generators cannot balance it; curtailments would be a solution, but would not be politically acceptable.

Instead, Germany is borrowing the spare balancing capacity of nearby grids, plus their synchronous rotational inertia, to help stabilize its domestic grid. See Note No. 6 in this URL

http://www.theenergycollective.com/willem-post/2264202/reducing-us-primary-energy-wind-and-solar-energy-and-energy-efficiency

Mark Heslep's picture
Mark Heslep on March 26, 2016

“Germany has been closing down its nuclear plants and older coal and gas plants, and has been building new, more efficient coal plants.”

And new gas, adding roughly 6 GW of new gas (21% increase) since 2010. Over the same period, Germany dropped the usage rate of its gas fleet by 48%, 58 TWh to 30 TWh . Building more capacity to use less is an expensive proposition.

https://www.energy-charts.de/power_inst.htm

Willem Post's picture
Willem Post on March 27, 2016

Mark,

More CCGT plants are needed for balancing.

They are meant to operate ramping up and down, at part load; very inefficient.

They are not meant to be base-oaded to produce a lot of TWh.

Nathan Wilson's picture
Nathan Wilson on March 28, 2016

Yes, while we can point to countries, cities, and even ships that have gone low-carbon using nuclear, the renewable route becomes very challenging at the level of 20-40% variable renewables, for the resource quality of most nations.

The Germans and Danes could make the renewables work by throwing vast quantities of money at pumped-hydro and hydrogen storage, or simply admit the limitations of the renewable approach. Instead, they are outsourcing their load balancing, and claiming successful medium renewable penetration, when in fact they are part of a larger grid, which has rather low renewable penetration.

Nathan Wilson's picture
Nathan Wilson on March 26, 2016

The first step in addressing any addiction is to admit that there is a problem. The Germany people need to admit that fossil fuel, especially German brown coal, is the problem with their energy system (and the world’s), and stop pretending that nuclear is the enemy. Unlike coal, nuclear does not produce air pollution, emit CO2, or contribute to the hundreds of thousands of deaths each year due to fossil fuel use (EndCoal.org says 800,000 global premature deaths per year due to coal). In comparison, the much publicized nuclear accidents at Three Mile Island and Fukushima killed no one.

As reported by the Breakthrough institute: outdoor air pollution, caused principally by the combustion of fossil fuels, kills as many people every 29 hours as will eventually die due to radiation exposure from the Chernobyl nuclear disaster.

Nuclear power’s unpopularity today is exclusively due to successful PR campaigns launched against it by the fossil fuel industry (which is aided in this by scientifically indifferent “green” groups, self-seeking politicians, and sensationalist journalists). If we don’t return to science based public policy, we’ll be powerless to stop the environmental harm caused by fossil fuel (and biomass energy) use.

We know what a fossil fuel phase-out should look like because we have seen it happen in France. No major grid has ever been decarbonized this successfully without nuclear power.

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