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Germany’s Green Energy Experiment: An Unmitigated Catastrophe

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Walter Russell Mead, The American Interest

The ups and downs of renewable energy production in Germany are causing big problems for the country’s grid. To even out this volatility, the world’s self-styled green energy leader is paying its utilities record amounts to adjust their contributions in real-time to help the country’s energy supply meet its demand. Bloomberg reports:

Twenty power companies including Germany’s biggest utilities, EON SE and RWE AG, now get fees for pledging to add or cut electricity within seconds to keep the power system stable, double the number in September, according to data from the nation’s four grid operators. Utilities that sign up to the 800 million-euro ($1.1 billion) balancing market can be paid as much as 400 times wholesale electricity prices, the data show.

Germany’s drive to almost double power output from renewables by 2035 has seen one operator reporting five times as many potential disruptions as four years ago, raising the risk of blackouts in Europe’s biggest electricity market while pushing wholesale prices to a nine-year low. More utilities are joining the balancing market as weak prices have cut operating margins to 5 percent on average from 15 percent in 2004, with RWE reporting its first annual loss since 1949.

Germany’s green energy experiment has been a catastrophe. To spur wind and solar energy development, it had to guarantee above-market prices to producers, and the costs of these guarantees—called feed-in tariffs—have been passed along to consumers in the form of green surcharges to their electricity bills. That’s bad for German industry, and has many businesses looking elsewhere (say, to shale-rich America) for cheaper prices.

But we’re not done yet with the litany of mistakes made in the name of Berlin’s energiewende. Just as it boosted renewable energy sources, Germany also phased out its nuclear reactors from its energy mix, nixing a zero-carbon, dependable source of baseload power over emotionally-charged fears of meltdowns in the wake of the 2011 Fukushima disaster. To replace nuclear, Germany is now burning more coal today than it has in more than two decades, hardly a proud accomplishment for a so-called green energy revolution.

And as today’s story shows us, there’s another obstacle German green energy policy seems incapable of overcoming: intermittency. Solar panels and wind turbines can only produce electricity when the sun is shining and the wind is blowing, and lacking cost-effective, large-scale energy storage solutions, that means renewables can only be counted on to supply peak energy demand. To supply baseload energy, Berlin must still rely on fossil fuels. But the constant dipping and surging of renewable energy contributions to Germany’s national energy grid is taking its toll, and utilities are being handsomely rewarded for “balancing out” the energy network.

Greens love to advocate for efficient and sustainable solutions, especially when it comes to energy, yet seem blind to the irony when they hold up Germany’s energiewende as some green success story when it is, in fact, neither.

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