Examining Thoughts On Germany’s Clean Energy Push

Germany’s renewable energy transition, the “Energiewende,” has long been a subject of scorn among conservatives, who have argued that it is a massive ratepayer-subsidized boondoggle that has harmed Germany’s economy and imposed significant regressive costs on poor and working class energy consumers. But the last several months have seen growing skepticism about the Energiewende from the center-left as well. Both Der Spiegel and Slate have published lengthy investigative pieces raising troubling questions about the costs and the environmental benefits of Germany’s headlong pursuit of an all-renewable energy future. Salon recently published an article criticizing Germany’s transition from nuclear to coal. Even left-leaning Dissent Magazine recently published a long expose about the failure of the Energiewende to reduce carbon emissions, concluding that Germany’s enormous investments in renewables, together with plans to phase out its nuclear fleet, would cost the nation a generation in the fight against global warming.

At stake are not simply public perceptions of the Energiewende, but the future of efforts to rapidly expand deployment of wind and solar power elsewhere. Environmentalists and renewables advocates have long held up Germany’s example as one that the United States and other nations ought to emulate. To the degree to which the Energiewende is instead perceived as a cautionary tale, efforts elsewhere to expand subsidies and deployment mandates for renewable energy, and to dismantle the present day utility sector in favor of a much more decentralized electrical sector are clearly at risk.

It is a measure of just how serious the new center-left criticisms of the Energiewende have been, and how threatening they are to the long-standing green climate and energy agenda, that prominent clean-tech thought leader Hal Harvey, long a powerful behind-the-scenes player in efforts to expand deployment subsidies for wind and solar power and transform the utility sector, has stepped out publicly and issued an extended defense of the Energiewende against its growing chorus of environmentally minded critics.

germany solar power

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As the head of the Energy Foundation and Climate Works and the director of the Hewlett Foundation’s climate and energy programs, Harvey aggregated and spent more money on climate and clean energy policy development and advocacy than any other philanthropic institution over the last two decades – between 2008 and 2010 alone, Climate Works and affiliated philanthropic institutions spent over a half billion dollars on climate and energy policy and advocacy according to one recent study. America’s overlapping mash of renewables subsidies, deployment mandates, and regional cap and trade programs is arguably as much Harvey’s legacy as anyone else’s. For this reason, Harvey’s defense of the Energiewende is revealing, both for what it acknowledges about the real costs and slow progress and for what it attempts to deny and downplay.

Harvey acknowledges the enormous costs at which renewables innovation has been achieved in Germany, writing that escalating costs of the Energiewende “need to be controlled” and that Germany’s large direct subsidies for renewables represent only a portion of their total cost. “One still has to pay for transmission and distribution, for taxes, and for system resources to balance the variability of solar output,” he notes.

And he recognizes the enormous challenges that still must be overcome in order for a transition from fossil energy to renewables to begin in earnest. “There is no doubt that the accelerated phase-out of nuclear power combined with the strong carbon targets for the utility sector make for a complex transition,” he concludes. “Germany will have to reinvent power markets, build more transmission lines, and think deeply about a new business model for its utilities.”

But he also obfuscates many inconvenient facts, particularly those that suggest that current problems facing the Energiewende represent more than temporary setbacks, associated with a cold winter, rising natural gas prices, and the nation’s decision to accelerate the phase out of it’s aging nuclear fleet, and rather are likely to represent endemic and persistent problems associated with efforts to achieve high penetrations of intermittent renewable energy sources given present day technologies in Germany and beyond. A basic reality check on Harvey’s claim follows:

Harvey claims that most of the impressive sounding 24 percent share of electricity that Germany generates from renewables comes from wind and solar. But in fact only about half does. The rest comes from hydropower, biomass, and trash incinerators. As The Economist recently reported, “the largest so-called renewable fuel used in Europe is wood.” Biomass has proven to be an increasingly dubious source of carbon-free energy before even considering the broader environmental implications for forests and habitat of returning to burning wood for energy at significant scale. The situation in Germany is not as bad as in some other European nations. But like the rest of Europe, Germany has relied heavily upon burning trees and trash in order to meet its renewables targets, a fact that is rarely mentioned by Energiewende boosters. Harvey is no exception in this regard. Of Harvey’s 24 percent, wind and solar represent about 5 and 7 percentage points, respectively, leaving less popular forms of renewable power to carry fully half the lift of the Energiewende.

Harvey claims repeatedly that Germany has successfully decarbonized its electricity sector through the Energiewende. In fact, the carbon intensity of Germany’s economy has seen little change since 2000, when the nation embarked on the Energiewende. More recently, emissions have been rising. As the latest numbers from Germany’s BdeW utility consortium show, Germany’s greenhouse gas emissions rose 1.6 percent in 2012, the increase mostly coming from carbon dioxide emissions by coal-burning power plants. Anthracite coal carbon emissions rose 3.4 percent, while emissions from lignite rose 5.1 percent. Emissions are projected to rise again in 2013.

Harvey claims that Germany’s nuclear phase-out has not resulted in increased coal burning, but the evidence he cites contradict the claim. To support his claim, Harvey argues that no new coal plants have been approved since Germany announced plans to accelerate its nuclear phase-out after the Fukushima accident. Harvey is correct when he states that Germany’s current coal building binge has been long planned. But so has its nuclear phase-out, which was initiated over a decade ago. One can reasonably surmise that the long planned expansion of coal facilities has been, at least in some part, in anticipation of the long planned phase-out of aging nuclear facilities. Harvey chooses not to entertain this possibility.

Harvey claims that recent increases in emissions from coal plants are temporary phenomena, relying entirely on analysis lifted whole cloth from a recent blog post by Amory Lovins to suggest that rising emissions were the product of a cold winter and rising natural gas prices. In fact, they are in significant part a direct result of renewables policies. German policy mandates that the grid take renewable energy first and fossil energy second. This results in what is known as the merit order effect. As more intermittent renewable energy enters the grid, it displaces the most costly type of fossil power generation, natural gas. As a result, natural gas generation decreased last year while coal’s share of electricity rose from 43.1 percent to 44.7 percent.  And lignite – the dirtiest form of coal – increased from 24.6 percent to 25.6 percent.

Moreover, as the Energiewende continues, carbon emissions from coal will likely continue to rise. The confluence of a priority grid access for renewables and a low European carbon price have squeezed flexible natural gas out of the market, adding to the gains coal has taken from nuclear power. In 2012 Germany commissioned 2.9 GW of new coal-fired power capacity. According to BdeW, Germany will add another 4.6 GW of coal power in 2013. Of a planned 42.5 GW of major power plants to be built by 2020, two thirds will be new coal and gas generators.

Harvey claims that Germany’s low wholesale electricity prices, due to increasing competition from renewables, cancel out much of the cost of the renewable energy surcharge that retail customers pay to underwrite Germany’s feed in tariffs. Yet his own numbers belie this claim. Harvey acknowledges that the renewable energy surcharge constitutes one sixth of the retail electricity rate, adding approximately five cents per kilowatt-hour to the price of retail electricity. He then cites German government estimates that higher renewables penetrations have driven wholesale electricity prices down one cent per kilo-watt hour, saving ratepayers about $5 billion Euro per year. At best, then, lower wholesale prices mitigate less than a quarter the cost of the renewables surcharge. While lower wholesale rates will save ratepayers about $5 billion in 2013, Financial Times reported recently that in 2013 the feed-in tariffs will cost ratepayers €20.4 billion ($27 billion).

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