(Updated!)Energy Transition in Germany, 2017–18
Trends in the nation once again shows that a coal phase out is no longer in question; when to retire most of the fleet, however, remains in debate.
This is a Sequel of Energiewende in Germany, 2016–2017
Some Monumental Achievements Recently
The year 2017 once more witnessed a drop in coal consumption in Germany and the surge of renewables. The total carbon emission of the nation probably have fallen slightly because of this trend, though this is still not quite enough for the 2020 goals.
The annual electricity generation from wind now come very close to the production from lignite, and will probably surpass in a year or two. The total electricity generation of renewables in 2018 will probably surpass that from lignite and hard coal combined. It is very likely that renewables share in gross electricity production surpasses 35% this year.
During autumn and winter of 2017/18, wind energy broke historical high records. On the early morning of first of January renewables provided nearly 100% of domestic load demand. Negative residual load events will probably happen soon.
The first signs of a “undeclared” coal phase out are also coming out: currently about 2.7GW of lignite is mothballed, and the amount is to be increased as more policy and market measures will be implemented.
The General Election and the New Climate Target
The parliament election in September 2017 was a distratous victory for CDU/CSU union, and after three months of negotiating, another grand coalition with SPD is finally formed.
With 2020 drawing close and a lack of will to implement radical changes in the next two years, the coalition promised only to minimize the target gap as much as possible.
On the other hand, mid-term goals are probably still achievable since renewables have been growing much faster than expected. The coalition has thus renewed the renewable goals by 2030, increasing it from 50% to 65% share of electricity generation.
Effects of Market Design, VRE, and Policies on Residual Load
In Germany, hard coal plants have long replaced gas plants to provide most of the residual load flexibility the system requires. This is mostly due to a failure of a carbon pricing and the lack of capacity market that promotes flexibility. Interconnections with neighbor nations also reduces the relative advantages of flexible power plants or mechanisms to coal power plants.
All of which resulted to a marginalization of gas in the electricity market.
In addition, the characteristics of solar and wind affected other conventional plants differently.
Both wind and solar have highly accurate predictability for their short term power output and long term energy yield.
However, solar tends to have a fixed daily power output characteristic, while the daily power output characteristic of wind is more random but also smoother throughout the day.
Solar in Germany usually reduces the residual load in midday in a daily routine, and the corresponding flexibility requirement is largely provided by hard coal power plants. The peak generation of solar in summer is about 25GW in Germany currently, which contributes to slightly more than a third of the peak load on weekdays. Such amount of solar usually cannot directly affect the operations of lignite power plants. Only on weekends will it be possible to affect lignite power output.
On the other hand, wind power in Germany usually surges and stays high (with daily average up to 30GW) for two to three days, affecting both hard coal and lignite power plants.
Policies also have an impact on the residual load. Since some lignite power plants have been mothballed in the beginning of January, hard coal plants has replaced the power output of some of the lignite plants. This should have a positive impact on carbon emission reductions.
Will the Renewable Capacity Growth Continue to Surge?
2017 marks the beginning of auction-based floating premium for large renewable projects. As a result, many projects were done at the end of 2016, causing a boom of wind capacity in 2017.
Although auction did go hand in hand with price decrease (with some cases achieving zero premium), whether it is more efficient than FIT is actually not guaranteed.
Furthermore, the current auction system sets a cap of the amount of total installations. If projects are delayed in the future, this will decrease the actual installed capacity than planned.
All of the above makes predicting the total costs and capacity of renewables to the grid and consumers more uncertain. There is however a general recognition that once the first FIT projects are retired in about 2022, the total cost of renewable surcharge will drop dramatically.
Electricity Surplus Soon to End?
Electricity export of Germany is still increasing, but as more nuclear and coal power plants are getting offline, generation surplus caused by the inflexibility of these power plants will become less in the future.
However, without proper policies on flexible capacity reserves, this situation of overgeneration may soon turn to the opposite by 2023. Some conservative estimations has warned an insufficiency of reserve margin in the mid 2020s.
Biogas or other dispatchable renewables sources probably wouldn’t increase much in the next years, neither will other options such as CHP and storage. So conventional gas might still be needed to replace the retiring coal in the decade. But as previously noted, conventional gas power plants are still being largely marginalized in the electricity market. Reforms will soon be needed to deal with this situation.
The Coal Paradox: Germany Divests from Fossil Fuel while Planning on New Coal Infrastructures
As of the first season of 2018, eight German cities and one German University has declared themselves “fossil free”; that is, they no longer invest their funding on infrastructures and companies directly related to fossil fuel extraction.
While that seems to be a signal that these industries are starting to lose the generous support from the governmental sector, large amount of subsidies still actually go to the operation (not the retiring and recovery) of the fossil fuel extraction sites. The controversial mining permission given to RWE in the Hambacher Forest was yet another proof how powerful the industry remains.
This self contradicting behavior makes one wonders: how does the German government really think about coal industry in Germany? Is it a dying industry that no longer worth a penny of investment in it, or is it something that would thrive for the next few decades, such that excavating more mines make economic and environmental sense?
What Can be Done to Save the 2020 Target and Beyond
To achieve the 40% reduction goal by 2020, Germany must reduce 156 million tonnes of annual carbon emission in the next three years.
The Green Party and other environmental groups have called for the closure of the 20 most dirtiest coal power plants in Germany by 2023 and a final coal phase out before 2030. This could fill around one third of the gap (50 million tonnes). Other measures includes energy efficiency measures in building sector (14 million tonnes), further expansion of solar and wind capacity (10 million tonnes).
Even the conservatives and the FDP agree that a coal phase out is eventually inevitable. However, some of them suggest a phase out date as late as mid 2040s, which most researchers have concluded that coal will die out by then with or without a phase out plan.
The continual increase of emissions in the transportation sector is also a key issue. But many policies regarding the “Verkehrswende” are still in the cradle, and might face greater obstacles than the electricity sector. A good example for this was how the coalition denounced plans for diesel bans in cities.
(Update: in late May Hamburg became the first German city to adopt a diesel ban, followed by other cities.)
Parallel Examples to Energiewende
Energy transition is also going on across Europe and the world. Below are some of the examples which I think Taiwanese might feel more related to:
As a nearly isolated island, Ireland has already reached a VRE share of 20% in electricity generation. Its coal power fleet are now ramping up and down almost at a daily routine.
The same applies for UK’s coal power fleet. Since 2016, the replacement of most coal generation to gas in UK has increased the system’s flexibility and also largely reduced the carbon emission intensity of electricity.
Scotland, in order to demonstrate its independence from Great Britain, announced more ambitious goals apart from UK. Wind has been providing abundant amount of electricity there.
Another example of isolated grid ongoing energy transition is Hawaii. The electricity generated by renewables is now more than 25%. Electric vehicles are now playing an important role in providing the flexibility for the power systems. The case of Hawaii sheds light on how an island grid can cope with high penetration of solar.
Belgium has reconfirmed to phase out nuclear by 2025, as proposed back in 2011. In addition, it will also increase its wind capacity from 0.9GW to 4GW by 2025. The similarity between Belgium’s energy policy and Taiwan’s is quite interesting and should provide some vivid lessons as both nation struggle simultaneously for a low carbon society in the post nuclear era.
In regions which historically rely imports from neighbors such as California and South Australia, the growth of renewables also increased self-sufficiency by reducing the amount of electricity import.
The French has long been relying nuclear as their main source of electricity. However, nuclear generation of electricity dropped to 71% in 2017. By 2019, there will be four nuclear plants under economic assessment in addition to the highly controversial Fessenheim. The undeclared phaseout is somewhat similar to Germany’s strategy of mothballing coal power plants.
France also plans for 20GW of solar capacity and 26GW of wind by 2023. This gives good reasons for a more flexible power system, from increasing their interconnection with Spain to decreasing their more than sufficient inflexible capacity. Although long perceived as the very opposite of Energiewende, the energy policies in France are now actually converging with those in Germany.
Key Lessons Learnt from Advanced Nations in Energy Transition
- Flexibility from conventional power plants is important, but the necessity of building new ones should take into account of cost effectiveness, environmental impact and system integration of more VRE in the future. This is where demand response, storage, and energy efficiency policies should be considered prior to new conventional projects.
- Successful coupling of many ongoing policies (transportation, national development, etc …) with the transition of the power sector can also ease the obstacles ahead
- The price of module installations of RE is initially high, but once much experience is gained, it will drop significantly. FIT provides the certainty required for early deployment, and later on we can let larger utilities go for auction to ensure competitiveness while guarantee FIT for community and cooperative scale projects.
- Public support remains a key condition for the success of a transition. Participation before and during the processes are just basic.
