Clean Power bakke

Published on January 26th, 2016 | by Giles Parkinson

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Solar & Wind Have Won Energy Technology Race, Says Germany

January 26th, 2016 by  

Originally published on RenewEconomy.

The minister responsible for Germany’s ambitious Energiewende, or energy transition, from coal and nuclear to renewable energy says it is clear that solar and wind energy have won the technology race.

bakkeIn an interview with RenewEconomy in Abu Dhabi last week, special minister of state Rainer Baake said the task now for Germany was to focus on integration, “digitising” the electricity grid, and on storage, efficiency, and other energy uses such as transport and building and industrial heat.

Baake, attending the International Renewable Energy Agency annual summit, said renewable energies were becoming cheaper and cheaper. “They are taking over,” he told RenewEconomy.

“So far nobody else has supplied the industrial economy with secure and price-effective electricity from solar panels and wind turbines. I am confident we can succeed and that we will have a superior energy system.”

Germany created its renewable energy support scheme in 2000, and Baake says the purpose has been about testing technologies. And it is clear which technologies are the winners.

Hydro had risen incrementally from 4 per cent to 4.1 per cent, and showed no possibility of further increase; geothermal did not work; and while biomass worked, its expansion has other environmental and food production issues.

“So there are two clear winners, and they are wind and solar,” Baake said. “We have learned how to produce electricity with wind and large-scale solar at the same cost level as new coal or gas generators.

“The question about the Energiewende is not a question about technology anymore. We have them.

“It is not a question about costs, because these new technologies produce at same costs as the last ones (technologies). And, I should point out, they are much cheaper than nuclear.

“The question now is whether we will be able to reinvent the power system so it can operate efficiently at reasonable cost and security with growing penetration of wind and solar.

“We want this Energiewende to be economically efficient – not just an ecological success story, also an economic success story.

“If it is not an economic success story, then nobody will follow us and we will lose support in Germany.”

There is no doubt that the Energiewende has had its critics. Most, unsurprisingly, are associated with the fossil fuel and nuclear industries who have so much to lose if Germany succeeds. And most of this criticism, as Craig Morris has so patiently documented on the Energy Transition and Renewable International web-sites, does not stand up to scrutiny.

Otherwise, Baake says the Energiewende still enjoys strong political and public support.

“There is a strong national consensus. There is not one party in parliament that opposes the goals of the Energiewende. Of course we have debates over how to do that. But that is healthy, because there are always alternatives.

“Yes, some people in business community and media and say the old world with nuclear and lignite (brown coal generators) was much nicer. But that is our democracy.

“We know that the public wants the Energiewende. Recent polling shows 87 per cent want their electricity to from solar, and 78 per cent want their electricity to be from wind. 8 per cent want their electricity from nuclear.

“That is very clear. I personally believe that the process is irreversible. But there is a lot of potential to make mistakes. That is why we need careful political decision making and deciding on the smartest options.”

Baake’s own decisions have also come under scrutiny, particularly his push to replace the feed-in tariff regime which had been the basis of the Energiewende since 2000, with reverse auctions.

Baake argues this will help reduce costs and ensure the cheaper prices. Others are not convinced, and are concerned that the auction mechanism will make it difficult, if not impossible, for small and community-based projects to compete.

They point out that it is community ownership that has underpinned the Energiewende and its popular support.

Baake seems unfazed by these criticisms. His focus is on digitisation and on new market mechanisms to ensure that the variable output from wind and solar can be incorporated into the grid and underpin a major industrial economy

Digitisation is critical for the communication and software that will drive the integration of renewable energy, storage and the emergence of new business models – only about 10 per cent of which have become clear.

The German government is looking to define a legal framework and industry standards for digitisation, and to address “public sensitivities” around the issue of data security.

“The roll-out of smart meters has failed in some countries because it wasn’t properly addressed. We will have highest standard that I know.”

These standards will enable focus on storage, interconnection, aggregation and trading.

“Once we have these new standards, there will be many new business opportunities,” Baake said. “Right now we might only see 10 per cent of the business models that will gain from that. I am confident that will be game changer for the future.”

Another focus is on flexibility, and designed a market structure that rewards scarcity. Baake is not in favour of price caps on the wholesale market, nor is he in favour of so-called “capacity” mechanisms.

“You have to reward flexibility. If someone has capacity needed only few times in the year, we have to be able to cash in on that scarcity. We have to remove price caps.

“And we decided against capacity market. The theory behind capacity markets is wrong. The assumption is there is market failure, that only kilowatt-hours are traded rather than kilowatts. But when you take a closer look, they asking for subsidies.

“If I deliver electricity to you it is in a contract in kilowatt-hours (kWh). I can only deliver that if I have the capacity (and flexibility) to produce it. The only one (market failure) we found was lack of price caps.

This approach is being taken on to the European market, where the EU singed a common paper last June that agreed for no intervention in the market even in times of scarcity.

Scarcity is not something that Baake expects to see in fossil fuels. The implied carbon budget from the recent Paris climate change agreement means that nearly all fossil fuel reserves will have to be left in the ground.

“We won’t see peak oil, we will see very cheap fossil fuels. So we need an exit strategy (from brown coal) otherwise the good intentions from Paris are not going to work.

“My own country has got to discuss the exit from lignite, while other countries have got to look at oil or hard coal resources.” Australia might be included in the latter.

Baake says it is increasingly clear that big business is getting on board. The country’s two biggest utilities, RWE and E.ON, have chosen to split their businesses, and separate the “old energy world” from the new one.

That may have been driven by a desire to duck looming bills to finish the nuclear age – primarily the high cost of dealing with waste and other issues, but Bakke says the government has put a stop to that.

“The business community has understood that new business models have emerged and you have to be in it. There is no going back.”

Reprinted with permission.

 
 
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About the Author

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.



  • eveee

    What he said. Could hardly say it better. Add a value pricing for flexible sources. No sense in bailing out inflexible sources that are being closed. Is the baseload myth dead? Maybe not, but it’s getting there.

  • heinbloed

    @ Giles Parkison:

    Could you publish the censored posts of mine and others commenting this/your article in RE ?

    http://reneweconomy.com.au/2016/germany-says-solar-and-wind-have-won-technology-race-91713

    Baake is the henchman of the Energiewende – as the Solar Federation calls him.

    ” The strangulating noose ” he is officially called.

    Quotes and link to this? Publish the censored postings, it is all there.
    His Mafia connections are named there. Publish them, just open the censored postings.

  • JamesWimberley

    The German problem with utility capacity auctions is less (pace the admirable Craig Morris) the hurdles in the way of community projects than the small scale. Auctions are working well in Brazil and India to limit prices, because the volumes are high and expected to rise. Germany like the UK is acting as if renewables are a threat.

  • Matt

    Two thoughts:
    1) “geothermal did not work” I assume this is a statement about Germany lack of hot rocks. Since there are existing working geothermal plants around the world.
    2) “Hydro had risen incrementally from 4 per cent to 4.1 per cent, and showed no possibility of further increase” while Germany may have no room to grow traditional hydro. I would think they have spots for non-traditional pump hydro storage. Old mines, gravel pits, etc.

    • cros13

      Two types of geothermal for electricity generation really. The harnessing of natural liquid geothermal activity close to the surface like Iceland and the majority of current geothermal plants use. And the other is hot rock geothermal, where cold fluid is injected into a well. Hot rock is very new, has some negative results (minor earthquakes in test bores in the UK) and is the only option for less geothermal active countries like the UK , Germany and my own country (Ireland).

      Pump Hydro is no longer economically viable in most markets. If you start building a pumped storage facility today by the time it opens grid battery storage will have undercut it in price. Ireland has pumped storage and there were proposals for a number of massive pumped storage facilities. The month the first battery storage plant based on Tesla’s powerpacks was announced they cut funding for the feasibility studies on the pumped storage because the existing battery solutions were already cheaper.

      • neroden

        Much better to use geothermal for heating, which doesn’t have the same problems as geothermal for electricity.

        • Mike Gitarev

          Geothermal for heating use exactly same technology – hot rock and water pump, and in places like Latvia it can became not hot enough in a few yers, so we’ll need to drill deeper and waste more energy on water pump.

          • cros13

            Not really. The most common form of geothermal heating is ground source heat pumps not hot rock district heating.

          • Mike Gitarev

            Sorry, I’ve used wrong terminology. Sure, for private house it’s GSHP, but it’s drilling anyway, and I know few stories when efficiency decreases rapidly and homeowner drill new well for GSHP in 4-7 years.
            It can be fixed with evacuated tubes on the roof and reverse heat stream on summer, but it makes entire system more complex and much more expensive. With very stable grid and relatively cheap gas it’s not economically viable.

          • Bob_Wallace

            The ground cooled down enough to make the heat pump unusable after a few years? There are months between use for the ground/ground water to warm back up from the surrounding soil.

          • Mike Gitarev

            Yes, cooled down to change heat pump efficiency from 2.5 to 0.8 in 4 years, and it’s not a uniq case. Maybe they need to drill deeper (but pump will consume more electricity), maybe their site is almost not suitable for GSHP, don’t know.

    • Bob_Wallace

      Germany has hundreds of sites where pump up hydro could be installed.

      http://ec.europa.eu/dgs/jrc/downloads/jrc_20130503_assessment_european_phs_potential.pdf

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