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Germany: “Decline of fossil fuel power generation is irreversible”

March 5, 2014

Solar hot water heater. Source: EnergyBible

While we here in the United States face such grossly backwards energy policies as those that enable fracking companies to place shale gas operations 300 feet away from schools, daycare centers and playgrounds — inspiring the launch of the Protect Our Children campaign — they’re getting it right in Germany.

In Germany the transition to renewable energy and energy efficiency, called “energiewinde,” is surging forward with such force that German energy giant RWE has posted huge losses and admitted it should have focused more on renewable energy. Read all about it in today’s post by Giles Parkinson on RenewEconomy:

Germany: Decline of fossil fuel generation is irreversible

German energy giant RWE has taken a massive loss of €2.8 billion – it’s first loss in 60 years – after admitting it got its strategy wrong, and should have focused more on renewable and distributed energy rather than conventional fossil fuels.

RWE, like other major German utilities, has spent much of the past decade fighting against the country’s “energiewende”, the energy transition that is seeing it dump nuclear energy and transform the electricity system of Europe’s biggest manufacturing economy to one dominated by renewables.


Peter Terium

Last night, Peter Terium, who has been CEO for less than two years, conceded that the company had got it wrong. He admitted that the change in electricity markets, which has seen earnings from conventional generation gutted by the impact of solar and wind energy, was “unstoppable”. It was now time to change strategy, and focus on what the electricity market will look like in the future.

“I grant that we have made mistakes,” Terium said in a prepared speech to a media conference accompanying his result. “We were late entering into the renewables market – possibly too late.”

Analysts have been pointing this out for years. Indeed, the big three German utilities have accounted for just 7 per cent of the renewable energy installations that now account for more than one quarter of the country’s generation, and which have transformed the market. Most renewable capacity has been installed by home and industrial consumers, and smaller and smarter energy companies.

Instead, RWE ploughed on with coal and gas. Now, Terium says, it is making  less and less money from its conventional power stations, and it is closing nearly 7GW of capacity. “This trend will continue in the next few years and it is irreversible,” he says.

Conventional power stations are being driven out by solar PV, particularly during peak load, and the huge expansion of renewables has pushed the market price of electricity to less than €37 per megawatt-hour, where it is virtually impossible to operate conventional power stations economically.

The question is what to do now. Terium says it is not all bad news, because much of the new plant that has been installed is highly flexible; designed to fit in and around a renewables-dominated grid. For instance, he said, the entire 10,000MW capacity of power stations in the Rhenish region can be reduced and increased again by about 5,000 megawatts within 30 minutes. (Interestingly, RWE cut is Co2 emissions from generation by 9% in the last year).

However, to secure its future, RWE – as was revealed in this insightful piece by Energy Post’s Karel Beckman – is going to focus more on future technologies: renewable energy, distributed generation and smart, enabling systems.

Terium says centralised generation is losing its primacy and the decentralised energy world needs an ‘integrated energy manager’.

They are looking at “decentralised energy bundles” for small and medium-sized municipal utilities and sees electric vehicles as a core element of the energy system, because of their ability to serve as decentralised energy storage units.

The company is offering solar PV systems and wind turbines to allow local energy communities.

Read the full story here. Thanks to an alert protector on the Pipeline Protectors list for this news.

  1. March 6, 2014 2:33 am

    Reblogged this on E C O L O G I S T I C A L.

  2. March 12, 2014 11:36 am

    This enterprise upon which we are embarked (a sustainable energy future, a livable planet for future generations, the end of fossil fuels) is an exceedingly complex one. Sometimes it can overwhelm the mind. Yet we cannot be naïve about what it will take to get there.

    My reading today has included the following two articles. The first explores the question: Does energy efficiency reduce the demand for energy, or instead increase its consumption? The Jevons Paradox explained. Never heard of it before today. This article first published in the New Yorker, but nicely made available by the author as a PDF.

    The second speaks of Germany’s grand experiment to move toward an 80% renewable energy grid by 2050. Even their efforts are driving their industries to come to America for cheaper natural gas fired energy. Yet the people overwhelmingly support paying more for carbon-free energy. And they are building sustainable communities of human scale. Their experiment belongs to all of humanity.

    How very much I would like to say we have the answers to our energy and sustainable planet quest. Do we?
    PS: Jerry Silberman has sent me the following excellent comments about efficiency and renewable energy systems:

    “Jevons Paradox” has indeed frustrated many efforts at conservation, misunderstanding efficiency. Efficiency, itself is not a goal we should consider of great value. “Efficient” procedures — for example monocultures of genetically modified corn — are rarely really efficient when you consider energy inputs, and are also very fragile, so many things can upset their balance and make them very unproductive. Diverse systems, which have many ways of solving the same problem and restoring balance or even improving overall function, and never efficient, but they are ultimately much more productive and sustainable….compare our mixed hardwood forests of PA (when not fracked!) to that cornfield.

    Germany’s goal will only happen if they use far less energy, per capita than they do today — and they only use about 25% of the energy per capita as Americans.

    The principal sources of renewable energy are water power, wind power, and solar electric, are intermittent, the last very much so in Germany’s climate and latitude. The saturation point of wind and solar renewables in a grid system committed to providing constant levels of power available on demand is about 25% –Germany is almost there. To go beyond this requires exorbitant investment in generating capacity or energy storage systems which are themselves very wasteful. The baseline of the grid must be maintained by power sources that can be regulated without dependence on the vagaries of the weather, which means fossil fuels or non-fossil combustibles (e.g. wood). Remember also, that electricity accounts for less than half of energy consumption, and that most of the rest comes from direct combustion of fossil fuels, for space heating, transportation, and industrial applications.

    Reducing the base level of power available, or accepting that electric power is available only on an intermittent basis, partly scheduled and partly at the whim of nature, and developing systems which are much more localized and diverse, in place of regional or national grids are among the solutions available, but every solution involves using LESS.

    That’s where our effort has to start. We need to think of all of our non-renewable energy consumption from the perspective that our use today prevents its use in the future, and reduces our options in the future for using fossil fuels to cushion the transition. This should lead us to constantly reduce our own energy consumption year on year, as a pre-requisite for personal credibility to argue for system changes. A healthy by product of this is that it forces us to make choices in favor of being with people instead of with the massive amounts of stuff we are conditioned by advertising to think we need. If we choose to spend evenings with friends and families without turning the TV on, we then have to engage in human communication, and are at the same time fencing ourselves off from the media blitz which feeds our addiction to stuff.

    Think about it.

    (Comment to Jerry – “I am.”

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