Coal to survive German renewables push

THE role of fossil fuels in Germany’s power generation will be the same in 2023 as it was in 2013, despite the country’s “ambitious” renewables targets, a new report from World Energy Resources’ executive chair Hans-Wilhelm Schiffer says.

Anthony Barich

He points to the country’s complete phasing out of nuclear power capacity by 2022 as the fundamental reason.

He forecasts that the total capacity on the basis of renewables is expected to be about 173 gigawatts by 2034, which is twice as much as the peak load in Germany.

“However, a conventional capacity of 82GW will still be needed [compared to 100GW in 2012] to cover the demand when the wind is not blowing and/or the sun is not shining,” he said.

“The required flexibility to meet the fluctuations is being fulfilled just as well by coal-fuelled as by gas-fuelled power plants.

“These plants are being made increasingly flexible, ensuring that they can continue to serve their important role in Germany’s electricity market.”

German energy policy has provided guaranteed feed-in tariffs for renewable electricity for 20 years from plant commissioning, along with a number of other benefits, to build up the industry to take over from nuclear.

The complete phasing out of nuclear capacity for the end of 2022 will be the end result of what has been a “profound change” that Germany’s energy policies have undergone since its government launched the Energy Concept in September 2010 – a central component of which was to extend its nuclear power plants’ operation time as a “bridge technology” to renewables.

That all went out the window following the March 2011 Fukushima nuclear disaster, with Germany’s conservative-liberal government coalition making an abrupt U-turn by mandating the complete phase-out of 8.4GW of nuclear capacity immediately, with the remaining 12.1GW to be decommissioned between 2015 and 2022.

According to Schiffer, the total capacity on the basis of renewables is now expected to be about 173GW by 2034, twice as much as the peak load of Germany. However, a conventional capacity of 82GW will still be needed to cover demand when the sun is not shining and the wind is not blowing.

That’s where coal and gas-fired power plants come in. The fossil fuels have been, and will continue to cover peak consumption when renewables are not viable, according to Schiffer.

Germany is targeting a nearly carbon dioxide-free power supply by 2050.

Of course, the country’s big renewables push is not without considerable technological and financial challenges, though it did manage to increase its renewable capacity for power generation from 12.33MW in 2000 – less than 10% of capacity – to 84,404MW by the end of 2013.

Schiffer said the effectiveness of the funding system for renewables has been proven by the fact that within just the last five years [between the end of 2008 and the end of 2013] the capacity increase was 29,828MW for photovoltaics and 10,845MW for wind energy.

However, the growth of renewables in Germany has come at a cost. Schiffer noted that the total feed-in amounts based on subsidized renewables in Germany stood at 125.7TWh in 2013; while the remuneration paid to plant operators and premium payments totalled €20.4 billion ($A30.68 billion) in 2013.

Deducting income from marketing, on balance, net subsidy payments were about €16.2 billion in 2013.

The subsidies are financed via a reallocation charge that is paid by electricity consumers through a mark-up on the grid-access fee. Starting on January 1 2014, this reallocation charge was increased to €62.40/MWh, and has now reached a level at which it is twice as much as the wholesale price of electricity.

“A comparison between electricity prices reveals the dilemma facing Germany today,” Schiffer said.

“Power prices for industry are on the same level as those in Japan. In fact, private customers in Germany pay even more for electricity than private consumers in Japan.

“Within the EU, Germany’s private consumers pay a higher price than any country except Denmark. Electricity prices in Germany are more than twice the OECD average and three times as high as in the US.”

What does all this mean for coal? Power producers are now faced with feed-in intermittency, adding a new source of fluctuations that Schiffer says are at least the same magnitude as those from charges in consumption.

The required flexibility to meet load fluctuations must be predominantly managed by existing national power plants, which are all designed to cater for flexible operation – which is where coal fits in.

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