Ignore the Smears: Germany’s Green Energy is 1/3 of its Power, Price Falling, Coal Down

By Roy L Hales

Originally Published on the ECOreport

Germany’s renewable sector (RE) is flexing its muscles, with solar production up 28% and wind up 19% during the first half of 2014. As a result, the renewable sector accounted for 31% of the nation’s electricity. If this trend continues, this may be the third year in a row that Germany sets a record for energy exports. The increase in renewables has also been accompanied by a decrease in fossil fuel usage. Gas-fired power plant production is down 25%, compared to last year, and hard coal production fell 11%. Only lignite power usage rose. So what does solar energy mean to Germany’s utilities?

Typical Solar Installation

Typical Solar Installation (in Germany) – Courtesy Tim Fuller, the Timchannel, CC by SA 2.0

In the video Birthing a Solar Age, Jerry Rifkin points out that so much renewable energy was fed into the grid one day last month that the price of electricity fell below zero. He predicted there will be more days like this, and in the future Germany’s utilities will not want to sell electricity, as they lose too much money!

Max Hildebrandt, renewables expert at Germany Trade & Invest, points out that it is important to distinguish between the wholesale spot market price and the consumer market price, and to note that utilities in the EU have seen gradual unbundling into grid-side and generation and supply operations.

“Negative prices on the EPEX spot exchange are a relatively rare but not unusual phenomenon,” he said. “They occur only during short peak periods – usually around noon when solar radiation is highest – and not for entire days. They are merely a signal for the large-scale spot market participants and do not have an immediate effect on the more rigid prices in the consumer market.”

Solar-powered parking meter in Berlin – Courtesy Thomas Quine, CC by SA 2.0When spot prices are negative, power generators can choose whether to cut production or briefly accept negative prices for their electricity. Although there is a general tendency for greater fluctuations in demand and supply with an increased share of renewables, Hildebrandt notes that this can be countered “by expanding the grid so that it is more flexible geographically, by increasing energy storage capacity to increase flexibility in terms of time, and by employing demand response approaches. Germany does all of the above and there are large business opportunities in these areas.”

There are more than 1.4 million PV systems in Germany, according to figures from Germany Trade and Invest. The transformation of the German energy market, now known as the Energiewende, began with the first EEG legislation and has seen PV prices drop from over EUR 0.50/kWh in 2006 to around EUR 0.15/kWh in 2014. PV systems have nearly no operational costs meaning that once the initial capital investment has been paid back they produce power extremely cheaply. German legislators and regulators are currently revising their approaches toward the energy market as new business models evolve.

“Some utilities have entered the renewables business themselves, especially in capital-intensive offshore wind, which benefits from near constant and stronger wind than onshore systems thus providing a more stable supply,” Hildebrandt noted.

In his book Sun Above the Horizon, Meteoric Rise of the Solar Industry (pp. 452-57), Peter Varadi suggests that the corporate culture of Germany’s four big utilities is much more amenable to wind than solar energy.

They have only recently come to terms with solar energy’s existence, and Varadi suggests this is because the utilities are both centralized and largely reliant on fossil fuel plants. As of 2011, they had not contributed a penny of the $80 billion invested in Germany’s solar sector. Now they have all launched solar arms that encourage customers to install solar plus battery.

Hildebrandt said, “a lot of industry players expect a boom in solar storage system sales as modern and cheaper battery technology becomes available. Additionally, virtual power plant business models are already generating and storing electricity in Germany. Under this model, owners of small-scale storage systems allow a certain percentage of their storage capacity to be controlled remotely and bundled with capacity from other systems. This combined capacity can then be auctioned on the primary control market and is used to provide balancing energy as required.”

“Promising grid-scale solutions are being experimented with by leading German SMEs. Younicos, for example, is focusing on lithium-ion, sodium-sulfur and vanadium-redox-flow storage systems. Biogas and wind-to-gas applications, for example RH2-WKA in Mecklenburg-Vorpommern, also show great potential. Compressed air is another area being investigated.”

Vauban Solar Garage in Freiburg – Courtesy Jute Marketing, CC by SA 2.0

Vauban Solar Garage in Freiburg – Courtesy Jute Marketing, CC by SA 2.0

Varadi suggests the utilities may have mixed motives for promoting battery storage for rooftop solar. One of RWE HomePower solar’s ads (Varadi, p 475) points out that most home owners are not getting the full benefit of this technology. It is produced during the day, when most of the family is at work or school, and most of this electricity is fed directly into the grid!

“What you should have is a solar electricity storage that makes it possible to utilize the solar electricity exactly when you need it. This Independence offer you as of now the RWE HomePower Solar.”

Is this an attempt to move Germany’s solar users off the grid, where they will be less disruptive?

Those coal and gas fired power plants would not have taken such a hit during the first half of 2014 if homeowners had stored their surplus energy rather than feeding it to the grid.

Varadi suggests there will soon be 3 million German solar owners, but notes (p 457) that none of the big four utilities have expressed plans to be among them.

Mirrored from CleanTechnica

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Related video:

Ruptly TV: “Germany: Country smashes solar power record”

5 Responses

  1. Thanks for a very interesting report. Some complementary information : renewable energy isn’t only produced by solar and wind energy. It is also produced by hydrolic energy. Switzerland has a lot of dams retaining waters and this kind of electric energy is a lot more flexible than power plants fueled by fossil energies. We used to export energy at high cost during peak times, especially around midday when homes are cooking. (And to import energy when the prices were lower (with some of that energy used to repump water up to the dam for selling energy at peak time again).
    Now, as described, the highly subventionned solar/wind energies produced at reduced cost and flooding the market around 12 am is disrupting the hydroelectric companies here : some are encountering financial difficulties right when they should invest more in precision of the Swiss decision to get out of nuclear energy.

    I’m quite convinced that the future favors green and decentralized energy. But the traditional renewable hydro electric energy has a place too. In particular, it should replace nuclear energy within one or two decades. But the very consequent subventionning of green power is creating a big problem for traditional hydroelectric companies at the worst moment.
    Further what about the lithium resources needed to store solar or wind energy ? A dam is able to store a lot of water, aka clean renewable energy without resting on precious mining products like lithium etc.
    climate change however will be a problem in the long term : at first melting glaciers will product a lot more of water/energy, but then what when they have completely melt and dried out ?
    There is a lot of different aspect to consider in this energy question : it would be a quite a paradox if the increasing decentralized green energy production was hitting the traditional producers of hydroelectric energy, of the only clean and renewable energy for a long time.

  2. Watching conservative fossil-fuel companies and their proxies smear alternative energy for being too cheap is a hilarious proof of how fake our established “free markets” are in every industry. We’ve never had free markets; we’ve always had social status hierarchies in which new money battles old money for unmerited power over how people think and act.

  3. Negative electricity prices are a sign that electricity storage is not keeping up with generation. Battery fabrication has a long way to go if alternate sources ever really replace fossil fuels for all uses. Or is the future in hydrogen technology? That was a fad for a while but nobody talks about it anymore (it is energy storage, an alternative to batteries, not an energy source).

  4. Pumped storage hydroelectric generation should be looked at as a way to store solar energy. The daytime surplus solar is used to pump the water to the upper reservoir during the day. It can then generate hydro power during the afternoon peak and into the night.

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