The Cost and Unreliability of Renewable Energy may give Nuclear Power a Reprieve in Germany

Posted by PITHOCRATES - June 24th, 2012

Week in Review

Thanks to global warming the Germans have an expensive future ahead of them (see Don’t mention the atom posted 6/23/2012 on The Economist).

WHEN Germany decided a year ago, after the Fukushima disaster, to phase out nuclear energy by 2022, economists were worried. Would the country be able to replace its 17 nuclear plants, which supplied 23% of its electricity in 2010, with renewable forms of energy? Would electricity prices go through the roof? Would the move endanger Germany’s industry?

It will be years before the answers are known for sure. But the Energiewende, as Germans call the energy U-turn, has already produced one certainty: the country’s four giant power companies, which were already compelled last year to shut eight of their nuclear plants for good, are among the big losers. And their fate may revive heretical thoughts of a reprieve for atomic power…

In the meantime, thousands of subsidised wind farms and solar arrays are hobbling the earning-power of conventional power stations. The midday peak, when the giants used to command premium electricity prices, is undercut by solar power. Winter winds whip away the margins that big, inflexible plants used to enjoy.

To add insult to injury, consumers and power-hungry industries still expect the power utilities to take up the slack when sun and wind are idle. Last February, with all the active nuclear plants working at full capacity, Germany’s energy producers were only just able to keep the lights on…

Various estimates say the U-turn will push up consumer prices by between 20% and 60% by 2020. What is more, to encourage investment in new conventional power stations, extra subsidies may be needed to reward standby capacity or stored power reserves.

Subsidized wind farms and solar arrays are eating into the profits of the big power producers by providing power at peak times that the big power producers used to charge a premium for.  Yet in February with all active nuclear plants working at full capacity they were barely able to keep the lights on.  So wind farms and solar arrays are producing so much power that it reduces the amount of power the conventional plants can sell.  Yet these same plants working at full capacity can barely keep the lights on in February.  Interesting.

When 23% of their power production goes off line it will take an enormous expenditure to replace that power with clean renewable energy.  So much so that electric rates will increase between 20% and 60%.  Interesting.

Because of the unpredictable nature of the wind and the sun they will have to build standby power capacity and power storage facilities.  Presumably to produce and store a surplus of electricity when the wind blows and the sun shines so they can use it when the wind doesn’t blow and the sun doesn’t shine.  Interesting.

Poor Germany.  To save the planet they will have to reduce their citizens to serfs.  Their government will tax them so much for all of this renewable energy that they will leave little for the German taxpayer to bail out the Eurozone.  Let alone leaving anything for themselves.  The Germans are an industrious people used to sacrifice (they paid a heavy price to join East Germany with West Germany after the fall of the Berlin Wall).  But there must be a limit to their self-sacrifice.  Just how much more will their government ask of them?

Even if they suck it up and pay most of their income in taxes they will have little left to engage in economic activity.  Which may result in a recession.  And growing budget deficits.  For as economic activity falls so does tax revenue.  Because there’s just less economic activity to tax. 

Energiewende.  This current path cannot end well for Germany.  Or Europe.


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