Monday, March 18, 2013

Renewable Energies - Enjoy the Decline Edition!

Well, actually, this post did promp the title and my article that will follow. Mr. Mungowitz seems to have gotten something wrong along his comment. First of, I am certainly not pro-subsidies for renewables, but perhaps I misread him. It might be that he is pro-subsidies and thus critisizes my view as "laughable" and irrational.

You can judge yourself here. I am still not entirely sure whether he intentionally misread my post or is upset about something I said. I even think the both of us are pretty much on the same page. Perhaps it is even that: The closer your view is to someone else, the more easily they see only the differences.

To clarify my point of view, I want to dig a bit deeper into subsidies. I did this in several German posts, especially point to energy markets (For the EU its in Leipzig) and the consequences of using renewables.

Germany actually has a two-pronged subsidy for renewables. One side is credits and tax breaks for wind and solar power (wind being exclusive for businesses / solar power also for home owners). They also guarantee feed-in tariffs for solar power and wind power up to 2020. Originally they tied a yearly quota, but then the feed-in amount increased exponentially, and they didn't put a cap on it. Only in 2012 did they finally consider putting a stop to it. In 2011 we spent a total of 16.7 billion euros just on the feed-in tariffs (1). Of course, feed-in volume also increased.

And what is the result? The energie mix by way of generation didn't change much:

And if we reduce it to only renewables, the distribution is as follows:
As you can see Germany has a huge dependancy on solar, wind and biomass power. Water power which is one of the best renewables, because it can be used in cases were quick power supply is necessary and is not used for base electricity generation. We usually distinguish between three different kinds of electricity generation:

  • peak power - emergency energy generation that can be activated within minutes
  • base load
  • mean load

Base load are usually coal power plants and nuclear power plants. Except for geothermal power plants there are no reliable base load power plants with renewables. I am specifically saying "reliable" here. We will see why later on. Usually in Germany we have a mix of bituminous coal and Lignite (Braunkohle). The latter has a lower energy density and is harder to transport. This is why Germany consumes most of the lignite domestically and preferable to other higher ranking coals.

Mean load is a mix of wind, solar, bio mass, gas and coal power plants depending on the reaction time. If consumption patterns change quickly those reserves will be added to satisfy peakish power situations.

Peak power in itself can consist of solar or wind power if available and water power, which can be added within minutes (in between frequency modulation will be used to regulate the network if possible). Especially water is a very important renewable as it allows quick reaction times in both loading and releasing of electric energy. This is the reason why it has been around for a long time.

Now most of the time in the 80s and the 90s power utilities tried to keep supply steady and get demand to be less volatile. In the 90s ideas like intelligent power grids, smart grids, consumer information revolutions were already in the pipe line. Many a power producer had its eyes on these ideas and hoped to be the first to introduce them. It would have allowed to level demand supply so that they fit more evenly. You could have, f.e., allowed prices to change depending on demand and thus push people to use more energy when industry is scaling back in the evening.

This all changed when the Green "Save-The-Earth" movement took off and tried to save Germany by moralizing economically inefficient power sources. Renewables that weren't ready were pushed by the Greens and subsidized by the government starting as early as 1991. These sources are volatile and NOT reliable. Solar and Wind power are highly dependant on daily environmental factors that can change any minute or under-perform at any given day. This results in variability on the demand and consumption side. Variability always means more risk and less utilization. The result is that you need more power sources to satisfy the same demand.

And so we can observe that when wind and solar power increased, coal power plant plans were sped up and new ones started. They have to back up renewables in case of emergencies. Nuclear power of course was the lone child left alone. It was specifically targeted by the Greens as early as the 1980s, even more with Tschernobyl and then finally with Fukushima. This resulted in the most stupid decision that was ever done solely based on uncritical emotionism: The German rejection of nuclear power.

The problem is nobody knows what will replace nuclear power, when we pass 2020. Nobody knows how renewables or CO2-emitting coal power plants are to satisfy consumer demand, especially as new power plants are bogged down in local court rooms, where local greenies combat any new reactors.

But this is not even the beginning, at the same time necessary land lines are delayed or even rejected because of law suits accumulating lead by local "concerned citizens", farmers and Greenies. All kind of hogwash is used to prove that land lines are a problem. It's either bird genocide or some local special animal or outright property rights debates. Most ridiculous is that most of the people now suing are the same ones that don't want other alternatives like nuclear power or coal power to be built. It is a vicious circle of personal interests vs. ideology of the greater good.
The problem is that renewable energy produced in the north can not be distributed in the south, because line capacity is limited. The same actually is also true for foreign sources like France. Transmission lines over the rhine are already running on their limits, especially during cold winter nights.

Even sadder is the calculation that underlies the whole project. The environmental department of the Merkel Government actually assumed a reduction in electricity consumption due to energy efficiency in heating and other household appliances. During the crisis year it even looked like as if Germany did satisfy the criteria. However, once growth kicked in again, electricity consumption did too. This shows that energy consumption cannot be regulated by using it more efficient. The only way to stop the growth would be to stop growth overall, which would be suicide for any nation.

Compare this with GDP growth.

You can easily discern that energy consumption and gdp growth are linked. Energy growth roughly follows GDP growth. This will not stop, except if our current economy crashes. This is why we have a problem and we won't be able to solve it with renewables. They just don't allow for much security and efficient energy generation on this scale.

Ultimately this is the main reason why subsidies are a big problem, they distrot the market. They distort what our economy and thus our modern society will face in the future and how to prepare for it more efficiently. It also shows us that if you need subsidies you are probably financing something that is wasteful and will hurt us in the long and short run. A pretty bad deal in my opinion.


(1) Wikipedia on EEG

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