GERMANY: Renewable Energy Policy “Complete Failure”… Bring On The Dirty Coal Monsters
In a stunning admission, the German Government recently announced that its transition to Renewable Energy was, "On the Verge of Failure." This blunt statement was released by Germany's Economic Minister and Vice Chancellor to Angela Merkel, Sigmar Gabriel at an event at SMA Solar... Germany's leading manufacturer of Solar technology....
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Steve, I listened to the original Gabriel video. I think your conclusion did not correctly reflect the spirit of the message Gabriel delivered. His point (which he repeated many times) was that renewable energy is too expensive. The discussion was about the level of government subsidies to the renewable energy industry. He is in favor of lower subsidies. The “complete failure” he was talking about was a financial failure. He quoted the figure of 23 billion Euro (roughly $30 billion) which german households and industry have to pay every year in excess of what other countries have to pay for electricity. The failure he was referring to was the assumption that Germany can pay this surtax for decades. So the talk was about competitiveness of German economy versus other economies which operate with much lower energy costs.
In no way was he talking about abandonig renewable energy in favor of coal or nuclear, His mesage can be summarized in one sentence: The transition to renewable energy yes, but at a much slower pace in order to moderate the cost. Burning coal is an acceptable alternative simply because the cost is lower.
What nobody mentions is that burning fossil fuels is not a long term solution. Sooner than later, we will run out of all fossil fuels. When burning nuclear material, sooner than later, we will be overwhelmed by the huge amounts of radioactive waste.
When that happens, we will discover that the cheapest form of energy is indeed renewable energy, All other forms of energy are not sustainable long term. But that is precisely the point, nobody cares for the long term. Everybody is concerned about making money today.
The cheap energy today is an unsustainable illusion. Energy is expensive if all costs are properly accounted for.
Germany was indeed a champion of renewable energy for many years. However, since the rest of the world did not follow the German lead in the transition to the renewable energy future, suddenly the German economy found itself with an uncompetitive energy cost structure in comparison to competitors like China (which runs on coal) and the US (which declared energy independence with cheap shale gas). The response of Gabriel was predictable: He said to the renewable energy industry: We can not compete against the US with your expensive solar and wind energy. We need lower prices. It is that simple.
Steve. if you are correct, and the shale boom collapses, there will be another German politician delivering at some point in the future the opposite statement that more renewable energy is needed.
Robert,
Agreed. However, without govt subsidies including purchases of solar & wind generated power at 2-4 times the wholesale rate… the the renewable energy policy is toast. This is exactly my point. Renewable’s are TOO DAMN EXPENSIVE for the world to afford.
Furthermore, the more SOLAR & WIND they add to the grid, the more volatile the balancing of the power. I see this as a DEATH-BLOW to the renewable industry.
steve
Hold on there, ALL energy is subsidized. Why does that always have to be used as a weapon against renewable and conveniently ignored for everything else? For example, what’s the military if not a trillion dollar subsidy for the oil companies?
Would you agree that global solar PV capacity is experiencing exponential growth right now with concomitant price deflation? That’s pretty extraordinary in this economy. How many things can you name that are experiencing such growth in a world that’s hitting limits to growth?
The problem with renewable (solar/wind) energy is that 1) people wrongly think it can sustain business as usual and 2) there is no good way to store excess energy. But who’s to say that NO solution exists for #2, especially when Germans are sitting there burning their lowest grade coal and, like China, can’t breathe their own air?
However, I think that we would agree in the end this argument is moot anyway because humanity’s energy footprint will decline dramatically one way or the other.
Steve,
All, and I repeat the word all energy sources, fossil fuel and renewable are subsidized by governments. Its always been this way and most likely always will be as the true cost of energy production is well beyond what people can afford to pay. This is true for the oil and gas industry, coal and in particular the nuclear energy and particularly here in the U.S.
When one looks at the photos you included about massive coal digging machinery to go after less than optimal brown coal and how entire towns and villages have to be moved in order to get at it, one can only ask, what is the cost of all that and who is paying for it as in subsidizing such costs? Perhaps the German government itself?
What is also overblown is the entire issue of integration of solar and wind into the grid. This is yet another canard played by the electric utility industry who make more money owning massive coal and nuclear plants than they do owning highly efficient wind and solar farms. The most optimal use of resource base is when renewables are combined with natural gas peaker plants such as what Florida Power and Light is doing combining these technologies for optimal output. Solar declines at night however the winds blows at night as in wind farms.
Someone should really define what “expensive” means and not in terms of yet another fossil fuel industry “apples to oranges” cost analysis they are so famous for generating in order to preserve the status quo.
Bob in Philly
Bob,
I agree with you. When I wrote that article, I was focused on showing how “Renewable Energy” isn’t a viable energy source either. I realize there are subsidies in all ENERGY SOURCES. However, Renewables are known shown by an Official Govt institution as to be a failure.
steve
Steve,
What forces are behind what this particular German government “official” said? Is the worldwide nuclear industry now pressuring the German government as it attempts to move away from nuclear post Fukushima? We see such pressure in Japan and certainly in the U.S.
Just look at the Energy Information Administration (EIA) here in the U.S. Look at how many ex, former and recently employed government “officials” at the EIA come directly from the Oil and Gas industry and its front groups. Are all these people to be believed or at some point does advocacy, for many reasons, play a role?
One thing I will say with certainty, no one better understands declining energy returns on energy investments than Steve does.
Best regards,
Bob
Bob,
That’s a good question that I don’t have an answer for. However, if we are talking about the huge decline in Govt sponsored Renewable subsidies, then it comes down to simple math… I gather. The Germans have been cutting back on Renewable subsidies since 2011. This has caused a great deal of stress for the Solar companies in Germany as the number of solar jobs fell 50%. Same crunch is taking place in Spain.
Spending on renewables peaked in 2011… been falling ever since. Renewables are still less than 1% of total Global Energy.
steve
Robert: In spite of what was said in the video, there is more to the problem besides finances and subsidies. The technological issue of grid stability is one, that of power distribution is another. A third issue is land area, which isn’t discussed much. Power from weather (wind, solar) takes up a lot more land area than a natural gas power plant, matching megawatt for megawatt. These subjects have been hit by other folks in comments, except for the land area.
Electric power generation from wind and solar is too variable. The “grid” cannot store electricity. At all times, generation must match use. Any significant mismatch tries to force the grid frequency to soar above 60Hz, or sag below 60Hz. To keep the grid stable at 60Hz, an oversupply of electricity is countered by “turning down” a generator’s output. If that is not a rapid-enough response, circuit breakers snap open to disconnect generators from the grid. If the sudden disconnect results in a significant mismatch where demand now exceeds generation, the remaining generators try to ramp up to meet demand. If they aren’t fast enough, loads are shed (blackouts). Wind and soar contributions are okay until they reach about ten- to twenty-percent of the grid’s total. Then, the natural variations of wind and solar become dominant, and other generation facilities cannot respond fast enough. Coal-fired generation is very slow to respond, Nuclear is a bit quicker, but Germany has abandoned nuclear. Natural gas-fired turbine generation is the fastest. Germany doesn’t have much natural gas; I think they get it from Russia… As solar and wind are added, gas-fired facilities are strained to match the variations, reducing their efficiency. The wasted gas is approximately the same as the contributions from solar and wind … If you are concerned about carbon dioxide, well, the inefficiencies… you end up emitting CO2 due to inefficient operation at a magnitude comparable with what you were supposed to save by using electricity generated from the weather. A new gas power plant (run at steady power levels) is very efficient… but if you make it dispatchable, (make it compensate for variations from weather-power) then it is less efficient (just like your car, if you have a steady foot on the gas pedal, you get good economy, but if you floor it, then brake hard, then floor it, then brake hard… your economy suffers). It takes about ten thousand dollars’ worth of natural gas, and about eight hours, to take a gas power plant from “off” to “on” and ready to connect to the grid… so it becomes cheaper to just keep them on-line, burning gas, generating little to NO electricity, so that, at any moment, they can jump in and pick up load from slacking wind or solar facilities… in order to keep the grid stable. The inefficiency is even worse for coal-fired generation. The inability to dispatch weather power has caused Germany to find itself in an odd bind – that of having the sun shining, the wind blowing, early on a saturday or sunday morning of a nice spring day, when nobody is using power… Germany has had to PAY other european nations to take their excess power. How is that for a ‘return on investment’?
Energy storage by pumping water uphill (and generating power when it goes downhill) does not react quick enough to respond to weather variations in electrical generation through wind and solar. An all weather-power grid is presently impossible – not just expensive, impossible (while maintaining grid stability). Maybe in a decade or so. If Germany’s grid is unstable, manufacturing will leave.
oops, Germany’s grid is 50Hz, not 60.
serious joe,
Thanks for your comments. Couldn’t agree more. Mechanical engineer, Jerry Graf has a website I linked in another comment that goes into the problem of ELECTRIC VOLATILITY in the grid due to solar and wind. He told me that the balancing power is much more expensive than regular wholesale rates… so Solar and Wind actually make the situation worse.
steve
Hi Steve,
the story with renewables in Germany is more complex then reported here.
The ‘old’ German power grid was not designed to transport big amounts of energy. The renewable energy sources are in the north of Germany, the industrial users are in the south few hundered miles away. To connect power source and consumer new and different power lines are needed; to balance the net a huge amount of energy needs to be stored.
For both problems are solutions known but were not implemented on time.
To transport the electricity extreme hig voltage DC power lines have to be built; for storage hurge reservoirs have to be built on different levels. Then water gets pumped up when elctricity is plentiful and drives tubines when electricity is in short supply.
Both tasks got stuck in bueraucracy and the ‘not in my backyard’ attitude. On top of that is a power grid operator that is way too small to stem the costs to perform the task.
Morover, solar in Germany is not a good idea because most areas do not have a lot of sun. The hope was to make solar cheap enough to get it viable in sunny regions of the world.
The optimistic case for solar would be to ge a new industry started; the pessimistic case would be that solar was only to collect subsidies; the conspiracy case would be that the US ordered the German lackey politicians to waste money.
Now to the Soft coal is cheaper to mine in Germany then hard coal. There is plenty of hard coal around in Germany that is just too expensive to mine. That is why you see the huge open-pit minig in Germany. The underground mining is almost dead while soft coal mining is still done.
That is by far not acomplete account of the story but should provide an outline what is going on.
Gunther
Gunther,
Thanks for sharing that info. Of course everything is more complex, however the important factor to consider here is that the cost of renewables is just too high to be implemented on a large scale basis. Well, let’s just say on the scale that is forecasted to be reached by 2030.
I have seen several CASH FLOW studies by Jerry Graf, Mechanical Engineer on many of the Solar & Wind projects in the states… and all of them do not pay back their initial investment without long term energy contracts at 2-4 times the wholesale electric power rate.
steve
Pumped hydro storage? Completely ridiculous at the scale you’re talking about.
http://physics.ucsd.edu/do-the-math/2011/11/pump-up-the-storage/
I would like to add that saying solar is too expensive relative to hydrocarbons is not the whole story. It is however, how we value things at the moment. Politicians may need to always be stuck in the short-term, but as a regular human being, its pay not to be most of the time. Gasoline, at say, $3.75/gallon, seem cheap, but really only because we value it used data that is not properly aggregated, accounting for all the inputs that don’t immediately stand out at the pump price. It all of those costs were actually part of the price at the pump, at the very least, we would have a lot less fat folks who rode bikes…and probably a much smaller military as well. This is an extraordinarily interesting, broad, and complex topic. But nowhere in it do I see anything on the horizon to replace the hydrocarbons we now use. My opinion is still that the next big thing in energy, will be using less. Sadly, at a personal level, solar has NEVER been more affordable. I am looking at an ad on craigslist for US or Japanese made panels for less than a $1/watt. This is cheap! Much more so if we just took a step back and realized that loosening up on our sky high expectations just a bit, would bring some of these things into play much quicker, and much more economically viable, rather than a simple, and straightforward comparison shows. A decent analogy would be an electric car. They are really only making headway for the very wealthy, who can afford to have a $90,000 runabout. Because, more or less, that is about what it takes to ALMOST equal even an average gasoline powered car, something like a hyandai. As if the relative energy density differences did not make this apparent enough. But what if we could live with a simple, aerodynamic 2 person commuter that would top out at 45-50mph, and cost $12,000(this also assumes we can afford the roads to drive them on, another doubtful proposition)? This is not, as I see it, really a technical discussion, rather, a sociological one. Once you live large, it is almost un-American to live with less. A major factor, I think, in why we seem to stick with so many systems that are not really working, but we all sort of know they won’t change until they break. I think at some point in the future, folks will be laughing, probably bitterly, saying “You mean they just BURNED it?! What the hell else did they think they would make chemicals and lubricants from?” The thing about a solar panel, is that you use some energy, and some resources to make it, but in the long run, you get it all back, plus some, and then it can be mostly reused. You do a wonderful job of pointing out the obvious linkages between energy and silver, but they also exist, in a very similar fashion, between energy and indium or tellurium. All of these hypothetical discussions also implicitly assume that we have an open system to use any amount of hydrocarbon mix for as long as we want. In a few decades, I think the ‘valuations’ will be quite different.
Another informative article.
No matter how you want to slice the data, at the end of the day this is a story about the death of the neo-liberal globalized “core and periphery” resource extraction model….
aka… Imperial EuroMerikas’ long march outwards in search of pillage, plunder, and the rest of the perks that go with technologically advanced military might. Draw in cheap resources to use in the manufacture of expensive ‘value-added’ added products which can be distributed back to ever-growing new markets, and use the profits to fund a social agenda by which the core elite develop systems to entrench their dominance over the populations in their own and every other country.
aka…the neo-serf model of citizenship for a new millenium…ever eroding personal liberties, privacy, financial independence and quality life, as the STATE becomes arbitrator of cradle to grave daily life behind a tattered facade of ‘free market’ capitalism.
All coming a cropper as the implications of industrial over-capacity start to make themselves felt, and the formerly ‘peripheral’ Eurasian nations rebel against the hegemony of a bankrupt west.
What does this have to do with the “price of energy” you ask?
The barrier to widespread adoption of ‘alternative energies’ lies in the distributive model, not in the technological or economic limitations of the source methods themselves. Solar, wind, bio-fuels etc., are all fundamentally localized, downstream technologies… feasible only when applied by INDIVIDUALS…and/or in COMMUNITIES of de-centralized common interest…
not corporate finance behemoths looking for the next big ENRON STYLE scam by which they can defraud the society around them via scams pushed into legislated legality by their governmental hirelings and puppet media enforcers. BIG ENERGY, whether it’s BIG OIL, BIG NUKE, or BIG BIO is the same hyrdra-headed monstrosity which sacks other countries of their wealth while bilking the folks at home at every turn.
In 2012 average price for European household consumers was11.9 euro cents (15.5 US cents) per kWh in 2012 – pricing electricity at around $248 per barrel of oil equivalent! A BARGAIN… when you read(source:Andrew Mckillop)that GERMAN household electricity prices are around 25 euro cents per kiloWatthour in early 2014, pricing their power at an oil equivalent (1600 kWh per barrel) of around $540 per barrel equivalent!!! That’s BEFORE Putin lowers the boom…
If you want to live a lifestyle carefree of the costs of your every waking decision as it relates to ENERGY… you are increasingly going to be paying for the privilege of having somebody equivalent to Homer Simpson in the control room acting as the caretaker of your ‘carefree’ lifestyle…thousands of Homers and hundreds of pork-fed bureaucrats to guide them, so as to carefully control the delivery of energy to your home, workplace…and refueling depots.
Merikans, in relative terms, are still paying peanuts for their energy carefree lifestyle… little do they know it. They say that solar installations are up sharply stateside… but solar manufacturers in China are in freefall mode…
Suntech Power shutting down an estimated 25% – 33% of its capacity, with Trina Solar reported to be engaging similar cuts to its capacity in coming months…less than a hundred of the 500 companies active in the field expected to survive, as government subsidies are sharply cut. When the supply glut is shaken out, and prices rise again to sustainable levels for panel manufacturers, the opportunity to convert will have been missed for most whose disposable income will have continued to shrink in the meanswhile: largely due to the rapidly rising costs of …energy!
Options for retaining the status of ‘FREE PERSON’ currently still in play are gradually[or not so] going to disappear. If you are not ‘off grid’ and outta Dodge by now, your chances of every being so are dwindling daily.
So, umm, like… what’rya sayin…in thirty words or less…i gotta get back to my twitter account man!
If you hold the metals without holding your energy supply in the same close n clammy paws…
at the end of the day you gonna be lookin a lot less like Scrooge McDuck… and more like some kinda cross tween Jasper Beardly, Cap’n Lance Murdock…and the CAPITAL CITY GOOFBALL…
than you ever imagined possible!
As to WHERE you might wanna hold the above… well, that’s a story for another day!
Rogue,
Excellent points. It is true that a good percentage in the decline of solar power prices over the past few years was due to the Chinese dumping solar panels on the market. I am surprised analysts point to this supposed fall in total installation solar costs without factoring in glut of solar panels.
Even though Solar-Wind works better on a more localized basis, Globalization allowed metals, minerals and materials to be extracted and imported to allow the manufacture of solar on a large scale at inexpensive costs. Without Globalization… solar would become less commercial than it is presently…even on a local basis.
steve
Not bad RF. Certainly one of the best things about solar is its inherently decentralized nature. Of course, I live in AZ, and it makes perfect sense. Quality solar panels here are, like silver, too cheap. I bought another kilowatt of sharps for $.65/watt. Personally, I think of doing so as energy insurance, given price trends in my lifetime. But I agree, Americans are going to get a very rude surprise at some point. Perhaps something akin to the ‘energy crisis’ of 1973, but with all forms of energy, not just gas.
Great article. I think the centralized model for clean renewable energy is the problem. If renewable energy were distributed locally we might see a significant impact. I’m thinking mass distribution of solar panels and wind energy at the home and local business level. You would not need to replace conventional energy, just augment it and lower the demand. The problem with this model is a political one. Fewer taxes, less dependency on the regional grid, and more importantly less centralized control. This is just conjecture on my part. I have been considering the local solution for my own needs. It makes sense in a lot of ways especially when Energy costs continue to increase.
Petedivine,
The notion of de-centralized renewable is a good one at face value, however, Globalization allowed solar to be affordable. The globalization of the supply chain system of metal and mineral extraction, transportation for manufacturing allowed Economies of Scale to bring down the cost of solar. This does not include the Chinese dumping solar panels on the market to depress price — a factor many analysts who point to lower solar installation costs fail to address.
It takes upwards of 50 countries (supply chain) to produce a SMART PHONE. Again, people don’t realize how much globalization pushed the costs of technology lower… for a brief period.
The Peak of world oil production, the falling EROI and the decline of Net Oil Exports will destroy the principle of ECONOMIES OF SCALE… and along with it a great deal of technology such as Solar & Wind.
steve
There always seem to be a major factor or two left out of the equations that consider costs if they do not address post purchase costs. After BTU is burned is not calculated in. It is fatal to the nuclear industry, who can’t find anywhere willing to bury their dead fuel rods, so they hide them upstairs at the reactor. Coal waste may not be amenable to any kind of clean up. Fossil and nuclear cleanup goes on forever, causes disease, pollution et al. Using solar there is no waste after the fact, nor clean up. This is a huge factor in real cost of operation.
But we are getting the story from politicians that may have bought the gear from a friend of the government that already had the contract and the profit margin agreed to so that the reelection contribution could be calculated to the politicians that supported the deal.
Solar works, even in Germany. And we are still using ancient battery technology. Fossils go up in price and pollution is well, like China. We can’t pay the nuclear price.
What nuclear price? Given coal kills thousands per MONTH and nuclear power has saved hundreds of thousands of lives while being cleaner and certainly cheaper than coal if they are just switch back on! Can’t believe the fear and ignorance of renewable clowns – we all want it guys, but it ain’t there yet. Turn the reactors back on!
The sensational headline is how can I say, typical od a group that seems to think big oil are guiltless. got Corexit ? Exxxon and their ilk are completely subsidised by carrier battle groups paid for by guess who? Nuclear power, does that uranium come out of the faucet? Or does it come from public lands, that you and I own?
Chomsky,
Actually, BIG OIL is just as guilty as BIG COAL. The reason I focused on “Wind & Solar” has more to do with the EROI – Energy Returned On Invested rather than singling out renewables, as a lessor viable energy source than fossil fuels.
My contention is that there really is no PLAN B for energy going forward. The world looked to Germany as the HOPE of a workable renewable energy policy.. and as we can see, it’s a failure. Furthermore, the world looks to the USA for the GREAT SHALE ENERGY HOPE… which will also turn out to be a huge FLOP here in the not so distant future.
Again, my goal of this article was to show that Renewables are not a viable energy source in the future.. because the FULL CYCLE EROI is too low and the energy too expensive.
This does not change the fact that OIL, NATGAS, COAL and NUCLEAR are not viable alternatives either.
steve
In the never ending debate surrounding renewable energy, the most important point hardly ever comes up: the obvious fact that the sun and wind are intermittent. Various methods of electrical storage designed to flatten out the peaks and troughs are inefficient, and always will be, which is why solar and wind are USELESS. The base load has to be available at all times to keep the lights on and the factories running, a blindingly obvious fact that those with a vested interest in renewables conveniently forget to mention. They should all be locked up for crimes against humanity. Wave power is different. It has the potential to provide a CONSTANT SUPPLY and if the technical difficulties can be overcome this may come good in the future. Likewise Thorium Reactors and Fusion. In the meantime we need King Coal. Get over it.
I am really dissapointed by this one-sided and distorted reporting. The fact is both solar and wind is economically viable without subsidies. Even small scale on your own roof.
In Germany during daytime wholesale electricity prices drop due to renewables. It is hardly a total failure.
Further expansion surely has big problems, but that does not mean it is a total failure.
blackvoid,
Sometimes a TITLE can bring in more readers. However, when the Govt says their Renewable Energy Plan is on the VERGE OF FAILURE… my title is not too far from the truth.
Furthermore, I have seen many CASH FLOW STUDIES from Jerry Graf’s website:http://jerrygraf.wordpress.com/, and you will see that NONE of the Wind and Solar Projects pay back the initial investment over the 20-25 year depreciated lifespan of the projects.
The only way they make sense if part of the construction is subsidized by the Govt including forcing regional utilities to pay 2-4 times the wholesale electric rate for solar generated power.
steve
Wow! People, do the math! news.harvard.edu/gazette/story/2010/04/an-addiction-to-fossil-fuels/ renewables alone is theoretically possible … With boatloads of money and country-sized tracts of real estate.