Quotes + Notes | “Understanding Germany’s Energiewende” – Alexander Franke
I just got back from an amazing talk by Alexander Franke about Germany’s transition to renewable energy, organized by IPSEC. Here’s what I learned:
Background on Germany’s energy history
- Contrary to popular belief, Germany’s energiewende did not start in response to Fukushima; instead it started in the 1970’s after Chernobyl, when people were more opposed to nuclear energy. Even now, mushrooms in some German forests are inedible due to continued contamination of the soil.
- In 2001, Germany began to phase out nuclear energy and expand its renewable energy, from about 6-7% in the 1990s to 27% in 2014, and may exceed 30% renewable this year. Due to “economies of scale,” this also led to lower costs for renewables. Their goal is to have 80-95% renewable energy by 2050.
How does the transition work?
- In addition to increasing the amount of energy generated by renewables, they also needed to reduce demand.
- While the United States uses net metering, Germany uses feed-in tariffs. In this case, people who install solar are paid back a set amount for 20 years for every kWh bought into the grid. Some of the advantages of this system are:
- These are fixed payments: people know exactly how much money they will be paid for kWh for 20 years.
- The government can set a different tariff for each type of technology; for instance, when solar was more expensive, the government could incentivize its use by paying more for it.
- At the same time, they could adjust these tariffs over time for new installations, ensuring that they don’t overincentivize technologies as they start to become cheaper. For instance, they could decide to provide an ROI of 6%; newer systems would get paid a lower rate than older ones to maintain this same ROI, even as the prices of the technology drops.
- People would have “guaranteed grid access.”
- In the United States, the same company often owns both the production facilities and the grids; on the other hand, in Germany, the grid is often owned by a different company than the production, preventing a conflict of interest where the utility company wants to keep new people from joining in production of renewable energy.
- In some cases, people choose to follow a self-consumption model in which they just use their electricity themselves instead of receiving a feed-in tariff. They may choose to buy battery systems for storing electricity.
- One of the perceptions of German energy is that residents pay much higher power prices; however, people pay less per month than in the United States. Although the price per unit of power is more expensive in Germany, households are much more efficient than in the U.S., using 1/3 less energy due to more efficient appliances, etc. Electricity accounts for 2.2% of a household’s spending and green energy is 0.4% (the money for the feed-in tariff is collected from everyone who consumes power); while these costs are not insignificant, the prices for gas and oil have increased at a higher rate relative to energy costs.
- One issue with the surcharge that funds the feed-in tariff is that residential consumers pay a lot more compared to industrial consumers, who enjoy some of the lowest energy prices in Europe.
Benefits of Energiewende
- Energy independence – and avoiding buying from countries that may have human rights or national security issues – is one benefit of locally produced energy; coal, petroleum, natural gas, and uranium have to be imported from other nations like Russia and Columbia.
- Over the past twenty years, while the amount of renewable energy, the economy has continued to grow, along with the number of local jobs available.
- Renewables allow ordinary people to have control over their power generation; 47% of installations are by individuals and coops, with “over 1 million people in Germany [owning] renewable energy installations.” In some cases, there are campaigns to buy back the grid from companies. This transition is “small-scale, bottom-up.”
- In a co-op, people can pitch in to own an installation together, which is useful for people who may not have their own home or roof space.
- When people own a share in power and are receiving a direct benefit from it, they’re less likely to think that it is unappealing.
- A much higher percentage of people (67%) are willing to live close to renewable plants than nuclear (4%).
- Germany has about 15 minutes of outages per year vs. 2 hours per year in the United States.
- Germany exports more electricity than it ever has before, mostly to France and the Netherlands. France needs to shut down its nuclear power plants during the summer due to heat, and doesn’t have enough energy to cover the winter demand for electric heating; Germany is a cheaper source of electricity.
- Renewables go “beyond electricity”: they’re more than just a way for people to get energy. In some cases, the presence of wind, biomass, etc. has “reinvigorated rural communities.” Particularly where coops are concerned, renewables “give a community a shared vision they can work on together.”
Challenges of Energiewende
- The baseload is the energy that is available 24/7 (vs. the peakload, which is turned on only when there’s high demand). In some cases, there’s so much renewable energy available on the grid that other energy production plants need to be turned off. However, coal and nuclear energy can take a while to shut on/off.
- There is a need for more flexible sources of energy that can “react in minutes.” Natural gas is one example, but biomass could work well if it was properly incentivized. Germany started out by subsidized corn-based fuels, leading to the growth of monocultures for the purpose of burning. Instead, biomass from the waste products of food production, etc. would be more favorable.
- Demand management is another strategy; companies can be paid to use less energy at certain times; this will be especially effective in industries that use a lot of energy, like for cooling.
- Storage may become more affordable over time; because Germany shares a grid with other European countries, nations may also be able to import electricity from each other.
- Germany has not been able to reduce the amount of coal used (and therefore carbon emissions) as much as it would like because natural gas continues to be more expensive than coal, due to issues with the cap and trade system. Generally, the type of fuel that is used to generate electricity depends on the amount of demand; at lower levels of demand, the cheapest sources of energy (renewables) are used, and as more energy is needed, more expensive sources start coming on the line. Unfortunately, because coal is cheaper, it is used to generate electricity for a longer time than natural gas. As more renewables come on the line, more expensive options like natural gas are used even less.
- Phasing out coal is controversial because of job loss; there need to be more efforts to come up with a plan for coal industry workers and determine how to create a future where communities don’t become poorer as the country transitions away from coal.
- In Germany, all parties agree that climate change exists, but there is disagreement on who will act on it and profit from it (utilities or homeowners?). The feed-in tariff helped get communities started with renewable energy, but while utilities may not be against renewables in general, they aren’t always thrilled with renewables that they don’t own.
- New infrastructure, such as powerlines, may be necessary, but can be controversial. For example, new powerlines may be needed to transfer wind energy from one area to another. It’s tricky to figure out the balance between placing powerlines that people dislike, or laying powerlines underground, which can be more expensive.
Some thoughts for the United States
- Concerns like how we’re going to generate baseload electricity if we’re 100% renewable are decades away; at this point, we need to be focusing on how to ramp up the amount of renewable energy used.
- More than half of the new energy installed around the world last year was renewable. In the future, the question won’t be “are we going to renewable energy or not, but who’s profiting off it.”
- There are so many convincing benefits to renewable energy besides mitigating climate change: “job growth, energy independence, lower power prices.”
- We should focus on the growth of renewables, not just the phase out of nuclear and other forms of energy.
- Community power is essential; people need to be invested in the transition, “not just bystanders.”