Germany Has Obtained 31% Of Its Electricity From Green Sources This Year (Through July)
Originally Published in the ECOreport
Germany’s wholesale electricity prices have been declining for years. Look at the graph above and you will notice they have not been this low since 2002. If that appears to contradict some of the stories the media has been circulating, that is because those stories are based on retail prices. A recent study stated EU electricity prices have fallen 35%-40% since 2008, but those savings have not been passed on to consumers. The data from Frauenhofer ISE gives a very different perspective from what you find in Bloomberg or The Wall Street Journal. Germany’s grid appears to be getting more more stable, and Germany obtained 31% of its energy from green sources July YTD.
There has been a marked increase in the amount of renewables (wind, solar, biomass) used and a corresponding decrease in conventional fuel usage. Brown coal use is down 4% and hard coal about 11%, compared to last year. The biggest reduction is in the gas sector, where the numbers have been halved during the past four years.
The transition to renewable energy has been challenging.
Unexpected surpluses or deficits of electricity can cause wholesale spot prices to spike or sometimes plummet below zero.
This is not a “German” phenomenon. It happens in other countries, such as the US. According to the EIA:
“In 2011, InterContinental Exchange (ICE, a widely-used, internet-based, bilateral trading platform for matching buyers and sellers) reported 84 instances of negative prices, 80 of which were in the Pacific Northwest. Each of these 84 instances was for ICE’s off-peak product for power delivered during the periods of time when electricity demand is lowest (including a block of eight hours overnight as well as all day Sunday).”
The interesting thing about Germany is that these spikes do not seem to be as extreme since 2009. (The direction of the spike has also changed, and spot prices are now more likely to drop than rise.)
The German grid has not lost more than 16 minutes per customer a year during that same time period, which is pretty good compared to the +4 hours in the US and Canada.
A great deal has been written about Germany’s power surplus. It is the World’s fourth-largest economy and has been exporting power since 2003.
By way of comparison, the world’s largest economy, the US, has been carrying an electrical energy trade deficit for years. It imports millions of megawatt-hours from Mexico and Canada every year.
Germany did not adopt a feed-in-tariff program for solar until 2004. Seven years later, Germany adopted Energiewende as state policy. Coincidentally, that is the year that last downward dip in electricity prices began (top of page) and also when energy exports really took off.
The German people are also paying some of the highest electricity prices in Europe. One of the reasons is a surcharge, currently amounting to about 6.24 euro cents per kWh, which is used to fund the adoption of green energy. Discount that from some of the other prices below, and Germany’s prices look more competitive.
Some of the negative stories currently circulating in the media arise from the fact that German industries that produce their own energy will no longer be exempt from paying the surcharge. They will have to pay 30% of the surcharge in 2015 and 40% by 2017.
According to the Berlin-based think-tank Agora Energiewende, Germany’s wholesale prices are actually lower than France’s! So even with the surcharge, Germany’s rates could be cheaper than half the prices on that chart.
(This is an area where the US beats Germany. Electricity is very inexpensive in North America. Translating June 2014 rates in the Lower 48 into euro cents, the spread was from 7.61 to 13.71 per kWh.)
Thanks to that surcharge, Germany is now allocating roughly 157 euro ($210) for the necessary upgrades that will allow its grid to derive most of its energy from more-intermittent sources like the wind and sun.
That surcharge has also enabled Germany to build the infrastructure that used 31% renewable sources during the first 7 months of 2014. (The US is running at 14.3% so far.)
It is obvious that Germany is facing some tough challenges, but they need to be examined in perspective.
Germany is well on its way to reaching its goal of deriving 40% of its electricity from renewable sources by 2020 and 80% by 2050.
Sources for comparison of select retail prices
- (a) wikipedia http://en.wikipedia.org/wiki/Electricity_pricing
- (b) Shrink the footprint http://shrinkthatfootprint.com/average-electricity-prices-kwh
- (c) Vaasa Global Energy Think tank http://www.vaasaett.com/wp-content/uploads/2013/05/European-Residential-Energy-Price-Report-2013_Final1.pdf
- (d) EU Energy History http://notalotofpeopleknowthat.files.wordpress.com/2013/10/image28.png
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The other thing that the WSJ etc fail to register, though it has been explained to them repeatedly, is that the EEG surcharge and the low wholesale price are two sides of the same coin. Here’s the explanation (link): “An EEG surcharge, equal to the feed-in tariffs paid by utilities for
renewable energy, minus the revenue from that energy fed into the grid,
is added to the electric bills of almost all households and businesses.” High renewable output drives down the wholesale price, so the surcharge goes up to compensate the conventional generators who would otherwise run at a loss. Since retail rates are the sum of (wholesale price + EEG surcharge + distribution charge), they have hardly changed at all.
The whole thing is really an elaborate scheme to subsidize German export businesses, who get the benefit of the low wholesale prices and are exempt from the surcharge. If the WSJ was at all interested in defending free-market competition, and not merely the rents of plutocrats, this is what they would be complaining about.
Keep also in mind:
Germany spends a €100 billion on fossil fuel imports, which is over €60 billion more than what it spent a decade ago: http://www.deutsche-handwerks-zeitung.de/hohe-quote-an-energie-importen-aus-putins-machtbereich/150/3095/236182 (But those extra €60 billion are apparently not worth mentioning by WSJ and cohorts, despite the fact that Germany receives less for triple the price).
Just 2 years ago the profits of only 2 German utilities were higher than the entire EEG surcharge: http://www.iwr.de/news.php?id=21810
Thanks to the renewable energies Germany has not only reduced emissions it has also reduced its fossil fuel imports by €10 billion per year, added value at home (instead of spending it on oligarchs), generated 378,000 jobs and is exporting renewable technology: http://www.unendlich-viel-energie.de/features/good-reasons
The Wall Street-Caused Financial Collapse Cost $12,800 billion and WSJ is complaining about a few billion Euros which actually produce dozens of clean, independent Terawatthours as opposed to just abominably enormous debt and horrendous bonuses for con-artists: http://www.corporatecrimereporter.com/news/200/costofwallstreetcollapse09122012/
Nice context. Thanks. I really don’t understand if such outlets and people ignore these things because they 1) can’t think beyond 1 + 2, 2) are too lazy or overworked to dig a little bit beyond the surface, or 3) simple have an agenda. i guess it’s a mix.
There are over 4 times more PR people than journalists:
http://www.theguardian.com/media/greenslade/2014/apr/14/marketingandpr-usa
Articles are often written by PR people and journalists just copy paste them.
Only 0.2% of all PV power in Germany belongs to the 4 big utilities (Page 12, ‘Abbildung 28’):
http://www.ise.fraunhofer.de/de/veroeffentlichungen/veroeffentlichungen-pdf-dateien/studien-und-konzeptpapiere/aktuelle-fakten-zur-photovoltaik-in-deutschland.pdf
So the big utilities have obviously no interest in any growth of distributed renewable power, which is why they have been running huge PR-campaigns against renewable energies. On the other hand the small companies which sell and install distributed renewable energies have no PR consultants writing articles for them.
Lastly, some conservatives dislike anything which they think liberals appear to like (which includes renewable energies and efficiency measures). So they enjoy any articles which supposedly proof that ‘liberal-stuff’ doesn’t work.
(Sometimes it’s quite paradox: For instance, Swiss conservatives are all about independence. At the same time they fight any renewable energies and efficiency measures vigorously, which means Switzerland will have to keep its huge energy dependence).
What proportion of those fossil imports are for vehicles? What proportion of the coal is used to generate electricity for export, as Germany is a large net exported of electricity.
Totally agree, we spent trillions on wars, and banker robbery, we spend many times as much taxpayer money on fossils and nuclear, but we only hear the corporate media complain about renewable gov breaks.
Why are there data discrepancies between this article, Bloomberg, and TWSJ when pulled from the same source?
What data discrepancies are you referring to? Can you give us some links to Bloomberg and WSJ showing different data?
today breaking news was that Germany had a balance surplus of 16 billion Euros. first since 1971.
this is profit of Solar and Wind. Locally produced and invested profits
16 billion clean and easy.
It is just a part of the story. The key were Hartz I – IV reforms which helped a lot. But renewables investments works in a great synergy with them.
Very nice article, good information. Thank you Roy.