This interesting and well-cited blog entry from Willem Post looks at the solar industry in Germany from an objective point of view, and tries to determine whether the money invested in subsidies has paid off for the German people.
German households and businesses are increasingly concerned and upset with the rising cost of electricity as a result of the energy policies pursued by their government. Whereas some people felt good about closing down nuclear plants, the estimates of capital and other costs of doing so are steadily increasing as energy systems analysts in Germany and elsewhere are becoming more aware of the magnitude of the various impacts.
Add to that the increasing capital and subsidy costs of building out the renewables capacities required to meet self-imposed CO2 emission reduction targets, the total price tag becomes about 1.7 trillion euros ($2.26 trillion) by 2030, as estimated by Siemens. Making these investments will have major adverse impacts on Germany's international competitiveness, high-wage job creation and economic future.
Additional estimates of capital and other costs are in these URLs.
German Energy Production and CO2 EmissionsTargets
In September 2010, the German government announced the following three targets:
- Renewable electricity: 35% of total electricity production, TEP, by 2020, 50% by 2030, 65% by 2040 and 80% by 2050
Renewable electricity was 16.8% of TEP in 2011 and 19.8% in 2011.
- Renewable energy: 18% of gross energy consumption, GEC, by 2020, 30% by 2030, and 60% by 2050
GEC was 14,044 pitajoules in 2010, of which 249 PJ from wind and hydro and 1,073 PJ from other renewables, i.e., renewable energy was (249 + 1,073)/14,044 = 9.4% of the GEC. It was 5.3% in 2005, 6.4% in 2006, 7.9% in 2007, 8.1% in 2008, 8.9% in 2009. See reference 14 in this URL
- Energy efficiency: Reduce national electricity consumption, NEC, 50% below 2008 levels by 2050.
Efficiency measures, (more efficient light bulbs, appliances, HVAC systems, etc.) that reduce the NEC by about 1.07%/yr, which compounded over 38 years (2012 to 2050), would reduce the NEC by 50%. However, if the long-term growth of the GDP is 1.8%/yr, the NEC will double by 2050 thereby completely offsetting the reductions from efficiency measures. To have an NEC reduction of 50%, PLUS have 1.8%/yr GDP growth, efficiency measures that reduce the NEC by about 3.7%/yr compounded over 38 years would be required.
- Greater percentages of GDP growth would require greater efficiency percentages.
- Germany's electricity consumption per unit of GDP decreased by an average of about 1.7%/yr from 1990 to 2010. During that period the GDP grew, but the primary energy consumption remained about the same; 14,905 PJ in 1990 and 14,044 PJ in 2010. See reference 14 in this URL.
- One way to “manage” the NEC and CO2 emissions is for Germany to build energy consuming plants abroad, instead of domestically; Germany’s GDP would increase, but not its NEC and CO2 emissions.
See reference 14 in this URL.
Is PV Solar Energy a Success Story in Germany?
Capital and Subsidy Cost: At the end of 2011, Germany had about 1.1 million PV solar systems installed with a total installed capacity of 24,820 MW at a capital cost of at least 100 billion euros.
Under Germany's Renewable Energy Law, EEG, each new system qualifies for 20 years of subsidies. According to the Rhine-Westphalia Institute for Economic Research, RWI, the systems connected to the grid in 2011 will cost electricity customers about 18 billion euros in subsidies over the next 20 years. RWI expert Manuel Frondel states: "The demand for subsidies is growing and growing. If all commitments to pay subsidies are added together, we have already exceeded the 100 billion euro level."
Solar system owners collected more than 8 billion euros ($10.6 billion) in subsidies in 2011 (5.1 billion euros in 2010), but the electricity they generated was just 3 percent of the total energy production. Solar energy has no dispatch value to a grid operator, because it is variable and intermittent; it has a daytime scheduling value that is a very small percentage of installed capacity.
RWI expects the EEG surcharge on electricity bills to increase. It is currently 3.59 eurocents/kWh. Because of recent developments (decommissioning nuclear plants), Mr. Frondel predicts that the surcharge will soon increase to 4.7 eurocents/kWh. For the average family, this would amount to an additional charge of about 200 euro/yr. German households complain about having the second-highest electricity prices in Europe; 26.3 eurocents/kWh. Denmark, another renewables maven, has the highest; 30.1 eurocents/kWh.
Germany’s solar systems are mostly located in southern Germany; it is more sunny than northern Germany. On sunny summer days, especially around noontime, solar generation is well over 12,000 MW which exceeds what can be used to serve the demand of southern Germany. If France needs it, the excess energy is usually exported to France at low prices, because economically viable, utility-scale, battery-type storage does not exist. If France and others do not need the energy, it is fed into the ground, i.e., wasted.
Solar energy has the potential to become the most expensive mistake in German environmental policy. Berlin energy economist Georg Erdmann, a member of the monitoring group on the energy transition appointed by Chancellor Merkel, views the expansion of solar energy as a threat to the planned nuclear phase-out, because it is using capital that could be more efficiently used for other renewables and energy efficiency.
Solar Energy Production: Germany’s national PV solar capacity factor for true-south-facing, correctly-angled, single-axis systems is about 0.115, but the actual CF is about 0.95, due to roofs being not true-south-facing and not correctly-angled, and because panels are aging (about 0.5%/yr), being partially shaded, and dust and snow covered.
Due to varying cloud cover, solar energy is intermittent and variable. It is minimal in the morning, maximal at noon about 3-4 hours before peak demand, minimal in the evening, minimal on cloudy days, minimal with snow on the panels, and zero at night.
During the dark, cloudy, foggy, shorter days of the German winter, solar energy production is on average less than 4% of installed capacity. Germany has successfully demonstrated to the world it is unsuitable for solar energy. A report by the German Physical Society states. “Essentially, solar energy cannot replace any conventional power plants.”
Backup Plants: Solar energy is useless to households and businesses, unless it is backed up by quick-ramping gas turbine plants that ramp down when solar energy increases and ramp up when solar energy ebbs. This part-load-ramping mode more quickly wears out equipment resulting in shorter useful service lives and is inefficient resulting in increased Btu/kWh and CO2 emissions/kWh; the increases mostly offset the fuel and CO2 emissions solar energy was meant to reduce. See URLs.
Solar Energy Compared With Other Renewables: Solar energy subsidies, $/kWh, are the highest of all renewables. For comparison: If solar is set at 1, then, per dollar of subsidy, energy production by hydro is at least 6 times solar, wind 5 times solar, biomass 3 times solar.
Another comparison: To avoid a ton of CO2 emissions, one needs to invest 5 euros in insulating the roof of an old building, or 20 euros in a new gas-fired, 60% efficient CCGT plant, or 500 euros in a PV solar system.
Joachim Weimann, an environmental economist in the eastern German city of Magdeburg: “From the standpoint of the climate, every solar system is a bad investment.”
Hans-Werner Sinn of the Munich-based Ifo Institute for Economic Research: “Solar energy is a waste of money at the expense of climate protection.”
Economics Minister Rösler wants to cap subsidies for solar energy systems. Under his proposal, further expansion would be limited to 1,000 MW this year, about 6,500 MW less than was installed in 2011.
Repeal the EEG Law?: A proposal by the Monopolies Commission, which is supported by the German Council of Economic Experts, goes even further. The economists want to eliminate the subsidies for solar energy under the Renewable Energy Law.
They argue that energy providers should be required to satisfy a green electricity quota, but without specifying in detail what they should do to fulfill the quota. This would stimulate competition to come up with the best technology.
According to the experts, the advantage over the current system is obvious: Money would no longer be invested in places where the highest subsidies are paid, but where the most green electricity can be generated.