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