Following up on a Credit Suisse report stating that ~85% of US energy demand growth would come from renewables by 2025, we thought it would be good to take a look at the energy trends in Europe as well. Actually, one of our readers pitched this idea prior to the publishing of that article, and did most of the research for this piece. I then had the pleasure of putting it together to create the primarily positive (with one notable hiccup) non-fiction story below. Enjoy!
Let’s start with the broad overview. UBS analysts in 2013 reported that utilities in Europe need to shut down 30% of their gas, coal, and oil-fed power capacity by 2017 — not necessarily to fight global warming, cut pollution, or cut fuel imports, but because the renewable energy revolution is pushing fossil fuels off the grid.
In other words, increasingly cheap and fast-growing renewables are killing fossil fuels in Europe.
“Producers must close 49 gigawatts of capacity to stabilize profits at 2012 levels, analysts led by Paris-based Per Lekander wrote in an e-mailed report,” according to Rachel Morison of Bloomberg. “That includes 24 gigawatts of ‘mainly cashflow positive capacity’ on top of the 7 gigawatts that utilities already plan to shut and an additional 18 gigawatts of closures expected to be announced.”
“The most important driver has undoubtedly been the remarkable increase of renewable capacity, and in particular solar, mainly in Germany,” Lekander said.
Credit: Nuclear Energy Agency and the Organisation for Economic Co-operation & Development, via @SamHamels
Unfortunately, the most closures are projected to be of natural gas power plants. Coal power’s big exit is projected to get rolling in 2015.
However, that’s not to say no coal power plants are being closed or kept off the grid until 2015. Back in August 2013, it was announced that a coal power plant in Finland would shut down due to its failing competitiveness. “Finland’s largest utility, Fortum, is closing a coal-fired power plant in Inkoo, west of Helsinki,” yle wrote. “Built in the mid-1970s, the 750 MW plant has rarely been used in recent years, only supplying backup power to the Nordic grid during periods of peak demand. It has long been a loss-maker. This is partly due to falling electricity prices in Europe, driven by Germany’s shift toward renewable energy.” The Finnish government, in the meantime, has committed itself to transitioning to a clean, renewable energy future — only logical, right?
And in the center of much of the clean energy revolution, Germany, dozens of coal power plants have been canceled or closed in recent years, with others on the edge of the plank.
It’s true that coal power production increased in Germany in 2012, but you have to put that into some context to understand why. What many people don’t know is that many coal power plants were previously planned for Germany. The renewable energy revolution hasn’t increased the need for coal power plants, as many misinformers would have you believe, but has resulted in the majority being dropped. Closing of nuclear power plants, combined with high natural gas prices in Europe, however, did result in a slight rise in coal power production.
Natural gas is clearly the fossil fuel getting hit hardest in Europe at the moment. As Tino Andresen and Tara Patel of Bloomberg wrote in March 2013, “Three years ago, Germany’s largest utility spent 400 million euros ($523 million) building a natural gas-fired power station. Later this month, the company may close the plant because it’s losing so much money.” EON’s Irsching-5, the power plant in discussion, only operated 25% of the time in 2012! The factors for the quick death of such an expensive plant were varied, though: “As Europe’s weak economy holds back electricity demand, cheaper coal, requirements to buy renewable energy and the collapsing cost of carbon permits are undercutting gas-fired plants.”
But it’s not only happening in Germany. “Gas-fired plants are stopped three days out of four,” Gerard Mestrallet, chief executive officer of GDF Suez, France’s former gas monopoly, said at a briefing on Feb. 28. “The thermal industry is in crisis. There is overcapacity.” The story is essentially the same in the Netherlands, Spain, the Czech Republic, and other European countries.
In the end, the story is actually rather simple: as more renewable energy comes on line, something has to go off line. Aside from nuclear power plants that are being shuttered due to old age and citizen demand, the big loser at the moment is natural gas. However, coal is on its way out too, just a bit more slowly. Of course, if there was a higher price on carbon, or other fossil fuel market dynamics changed, we could see those two switch places on their way out the door.
Anything more you’d like to add? Chime in below.
Keep up to date with the hottest cleantech news by subscribing to our main cleantech newsletter, or by stalking our homepage. We’re not Kim Kardashian’s Twitter feed, but I think we’re more interesting.
I don't like paywalls. You don't like paywalls. Who likes paywalls? Here at CleanTechnica, we implemented a limited paywall for a while, but it always felt wrong — and it was always tough to decide what we should put behind there. In theory, your most exclusive and best content goes behind a paywall. But then fewer people read it! We just don't like paywalls, and so we've decided to ditch ours. Unfortunately, the media business is still a tough, cut-throat business with tiny margins. It's a never-ending Olympic challenge to stay above water or even perhaps — gasp — grow. So ...
Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!
Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.