Germany's Glut of Electricity Causing Prices To Plummet

WIth an interesting followup to the recent news that Germany's power production by at least some measures was briefly dominated by solar production, AmiMoJo (196126) writes Germany is headed for its biggest electricity glut since 2011 as new coal-fired plants start and generation of wind and solar energy increases, weighing on power prices that have already dropped for three years. From December capacity will be at 117% of peak demand. The benchmark German electricity contract has slumped 36% since the end of 2010. "The new plants will run at current prices, but they won't cover their costs" said Ricardo Klimaschka, a power trader at Energieunion GmbH. Lower prices "leave a trail of blood in our balance sheet" according to Bernhard Guenther, CFO at RWE, Germany's biggest power producer. Wind and solar's share of installed German power capacity will rise to 42% by next year from 30% in 2010. The share of hard coal and lignite plant capacity will drop to 28% from 32%.

Comments

Another misconception bites the dust

[AmiMoJo]

People here keep saying that Germany is adding coal capacity to make up for the closure of nuclear plants, but actually they are reducing it over time. Yeah, in the short term there are more plants, but that is just so they can get running before taking the old ones off line. After that the total capacity will be lower.

Re:Another misconception bites the dust

[Anonymous Coward]

Except that Germany mostly uses brown coal in it's coal plants which pollutes the environment the most. It's the dirtiest form of energy production. Lot's of CO2 and Sulphur products.

Re:Another misconception bites the dust

[K. S. Kyosuke]

Except the sulphur (and fly ash) gets scrubbed. I believe that may even be a legal requirement in Germany.

Re:Another misconception bites the dust

[Andreas Mayer]

Except that Germany mostly uses brown coal in it's coal plants which pollutes the environment the most. It's the dirtiest form of energy production. Lot's of CO2 and Sulphur products.

Plants in Germany are filtered. I don't know of any problems with sulfur. In fact, sulfur in the air is a lot less than in the 1980s.
(According to Wikipedia, modern plants filter out 99.5% of ash and 90% of sulfur dioxide.)

Though you are correct in that they produce more CO2. (Wikipedia says typically 850–1200 g CO2 per kWh compared to 750–1100 g CO2 per kWh for black coal.)

Obviously we need to move away from fossil fuels. Hence wind and solar.

Re:Another misconception bites the dust

[Savage-Rabbit]

In what year is it predicted that Germany will generate fewer kWh of power from coal than it did in, say, 2005? Will we have to wait until 2050 or something for this long-promised decrease?

I don't think anybody can give you am exact date on when coal power will be phased out but the energy transition effort enjoys fairly broad support among the German public even if it is expensive so I expect it will continue. Also, there is now a strategic security/economical/political dimension to the energy transition for Germany much like there is for the USA concerning Oil independence that has only been reinforced by the Ukraine crisis. The Germans also tend to think in terms of decades rather than fiscal quarters like many Americans seem to do. Germany has gone from renewables being 6.3 percent of the national total in 2000 to about 25 percent in the first half of 2012. That's an increase of about 20% in 12 years so if we are insanely optimistic and assume a linear progression they should be at 50% renewables in c.a. 2028-30. The future of the energy transition project depends on several factors (apart from politics and economic issues of course), chief among them are things like the speed and extent of the transition to electric vehicles and hydrogen fuel cell vehicles, how the transition to wind and solar goes and perhaps most importantly the level of progress on projects to store excess energy. The last time I checked the Germans were planning to store energy initially by producing hydrogen which will be used to supplement natural gas (which in turn requires modifications to the gas mains) and how much success they have with projects to store energy by producing methane from carbon dioxide (which a Nature article I read claimed they plan to eventually scrub from the atmosphere) and the hydrogen generated with excess solar/wind energy (see http://en.wikipedia.org/wiki/P...). I seem to remember there are already a couple or so industrial scale P2G methane plants on line but they are still somewhat experimental.

Re:Another misconception bites the dust

[Rei]

But of course, that difference is way outweighed by the fact that the new gassification plants are about 40% efficient, versus 25%-ish for the plants they're replacing. Also the new plants are designed for rapid ramp up/ramp down. That means that while they're baseload for now, the more renewables in the future come to dominate the grid, the more they'll switch over to being peaking plants. I actually don't think it's a bad strategy at all. I think it makes a lot more sense than relying on Russian NG. It's lower carbon, but more expensive, and it leaves you reliant on a country that tries to use its market dominance as geopolitical blackmail. And the extra money you spend on NG could instead be spent on increasing your renewables deployment.

On the other hand, if some of the European nations that are interested in fracking end up going that route, perhaps they get low carbon *plus* low cost and geopolitical stability. It's really hard to know what NG prices are going to be in the EU in the long term. If EU does go the fracking route, Russia's going to be in a world of hurt. Before the US fracking boom, US and EU NG prices were about the same. Since then, EU prices have doubled while US prices have halved; US prices are now a quarter of what they pay in Germany. If the EU could get gas prices even close to what they are in the US, the Russian natural gas industry will pretty much collapse, there's no way they can afford that sort of pricing.

Re:Another misconception bites the dust

[Rei]

Hydrogen doesn't just require "modifications to the gas mains", it requires a complete reconstruction, and it'd probably be a really dumb idea. Hydrogen embrittles metals. You put it in any sort of regular pipe, and your system will start springing leaks everywhere from distribution to end-user consumption. It also leaks through almost everything, but especially things not specifically designed for it. But it gets worse, because after it leaks it tends to pool in explosive mixtures under overhangs. Also, if you have multiple pipes running parallel, and there's hydrogen in the lower one but not in the upper one, part of the hydrogen leaking out of the lower pipe ends up in the upper pipe, where it can follow it to its destination and pools there. Beyond that, H2 has combustible fuel air mixtures way, way wider than of methane, 4-75% in air. And unlike methane, it can readily undergo deflagration-to-detonation transitions under STP conditions. NASA safety guidelines require any facility handling more than a dozen or so kilograms of hydrogen to have a roof designed to be blown away in an explosion. And hydrogen ignites with a tenth the ignition energy of methane. We're used to fuels that require a visible, audible spark to ignite, but hydrogen ignites with the sort of tiny static or electrics discharges that you don't even see in everyday life; ordinary electronics are not designed to be safe in an environment where a combustible hydrogen mix might leak into.

Beyond that, producing hydrogen then burning it is a ridiculously wasteful approach. Even using it in a SOFC after producing it is still ridiculously wasteful. And it's also a very expensive process. Producing methane from atmospheric CO2, however, is so bad it makes even hydrogen look efficient by comparison.

Obviously, the efficient way to store electricity is batteries. Given DC and not too fast of a charge rate, li-ions, for example, can be over 99% efficient. But obviously the price for storage would be way too high. There's various cheaper techs on the market, including some forms of flow storage, with radically cheaper ones in development, and there's talk of using used EV batteries for grid storage; we'll have to wait and see how that plays out. Also far cheaper and more efficient (~75% net) than hydrogen production is pumped hydro, with or without a river present. Compressed air storage is relatively cheap, but inefficient (~10-30%); however there's some lab-scale attempts at isothermal storage which might get that signficantly higher.

Sometimes you see claims on hydrogen or compressed air production that are higher efficiency, but that's just PR flak; they get those numbers by assuming you make use of the waste heat for some other industry that would otherwise have to burning something to produce said head. But you can say that about every system on earth, because everything has waste heat. The number that matters is how efficiently you can store your electricity.

WTF?

[Anonymous Coward]

Lower prices???? In what world?
The prices per kW/h have risen year after year in Germany. How do I know this? I'm living in fucking Germany and get a higher bill each and every year.
RWE is one of the greediest bitches in Germany. They even have the audacity to ask the government to pay for the save destruction of their own nuclear plants, after receiving subsidies to operate them and extracting as much money as possible for their own pockets.

Re:WTF?

[brambus]

I'm afraid it's a bit more complicated than that. The EEG is currently running a dangerous experiment with a highly questionable outcome with the German electricity grid and economy. The EEG guarantees renewables a feed in tariff for the next 20 years to make them appear to be ultimately profitable and forces grid operators to take the electricity regardless of the spot price on the market. Grid operators must then direct traditional plant operators to either throttle or even shut down to keep the grid stable. This is a problem for plant operators, because power plants are forced to operate fewer hours of days (prolonging amortization and ROI on the plants) and are forced to operate less efficiently (you know what it takes to restart a brown coal plant?). And what if at some point the grid operators get too much energy from renewables? More than they need or can handle? Well, they transport or even sell it abroad to the Netherlands, Poland and the Czech republic, often at negative prices, meaning, Germany pays for the others to take it. But if you remember, they were forced to purchase the energy at the renewable plant operator (solar or wind) at a guaranteed feed-in tariff, so who's paying for the difference? Partly the taxpayer and partly the grid operator, which is also one of the a reasons why their profit margins are thinning. Sooner or later this mix will blow up into German's faces, but unfortunately, the political elite is in denial, the media fuels an anti-corporatist frenzy and common people who don't know much about how electricity generation, distribution and marketing work such as yourself are simply taken along for the ride on the lie train. And unfortunately, there is no practical solution in sight.

Re:WTF?

[Luckyo]

Actually the prices are rising because government has made some pretty insane requirements of those companies. They are basically building a completely new power grid in the country which is costing them billions upon billions, on top of building up renewables and coal and gas needed to provide hot reserve for the renewables.

They certainly are posting good profits on all of this, but they're not in a good spot right now with massive investments they have to make and all the subsidy mess that is going on with renewables and grid buildup.

So not a total ripoff anymore?

[Skylinux]

So instead of extremely high prices we are going to get high prices? Awesome!

http://de.wikipedia.org/wiki/S...
Lists an average price of 26,4 ct/kWh for 2012 in Germany. RWE.de gives me a current price quote of 25,72 ct/kWh.
The average in Europe is 18,4 ct/kWh.

Power may be cheaper on the exchange but the consumer is still getting shafted.
The only people who will profit from this are energy traders and power hungry corporations. They currently pay ~15 to ~12 ct/kWh.

Re:So not a total ripoff anymore?

[Luckyo]

I live in Finland and pay around 10 eurocents.

We have a sane energy policy though, and rely heavily on nukes and hydro.

http://www.investinfinland.fi/...

Increased production, or reduced demand?

[LordLucless]

The production figures in this article are all given as percentages of demand - not the actual amount generated. There's two reasons Germany could suddenly be producing an excess of energy: supply has increased, or demand has dropped. A quick Google shows German production has dropped 6% in the period 2004-12 ( http://en.wikipedia.org/wiki/E... ).

So the reason isn't that Germany's renewable plants are producing an abundance of power - it's that people are demanding less power; presumably because they cannot afford prices that are among the most expensive in the world ( http://www.contactenergy.co.nz... )

Higher prices for me...

[Anonymous Coward]

Funny, I just got a letter stating my (Baden-Wurttemberg, Germany) energy prices will rise on August 1st to 27.42 cents per kWh. That translats to 37.43 US cents per kWh. This price will remain in effect until December 2015. Nice.

Re:Aluminium

[itzly]

Abrupt power glitches are a (different) problem, but I'm sure that can be solved, and/or that plants can be upgraded to handle them better. The article is also talking about the rolling mill snagging, where I was hinting at the aluminium electrolysis, which is very much insensitive to these glitches.

Re:This just illustrates

[DemoLiter3]

The average household electricity prices in Germany were at ~29 eurocents per kWh in 2013 and they are rapidly rising 5-10% per year. The "price drop" the article describes is the drop in the electricity exchange market (EEX) prices, which indeed went down from something like 5.5 cents to 3.75 cents in the last years. The reason is the massive influx of highly subventioned solar, wind and biogas-generated electricity. At times when the renewables production spikes, the electricity is "sold" at negative prices - i.e. whoever takes it, gets paid.

For the end user, the falling market prices are pretty much irrelevant, since the end price contains the averaged difference fee ("EEG-Umlage") between the subventioned price and the market price - the lower the market price, the more the end users have to pay to get the subventioned price to the level defined by law. The more renewable energy is produced, the more they have to pay in total.

The other side of the issue is that the commercially operated conventional power plants cannot competitively operate against prices deflated by subventions, so many operators announced to scale down their capacity and close many power plants. In many cases, brand-new gas-fired plants with very high efficiency are affected, of all things, because of the rising gas prices. This however plays against the renewable energy plans, since exactly these gas-fired plants are direly needed to keep the grid stable in presence of highly fluctuating renewable inputs. Currently there are talks about introducing subventions for the conventional gas- and coal-fired powerplants in order to maintain their generation capacity. The subventions of course will be forwarded to the end user.

some don't agree with that

[wm2810]

http://srsroccoreport.com/germ... :
Since the introduction of the Renewable Energy law in 2000 aimed at replacing coal and gas-fired as well as nuclear power generation by so-called renewable energy sources, the household price for electricity has jumped by more than 200%. German customers now pay the second-highest electricity prices in Europe. At the same time, the task of stabilizing the grid against the massive erratic influx from solar and wind power plants that produce without regard for actual need has pushed the operators to their limits.

One of the major problems with wind and solar is that the projects aren't commercially viable without huge Govt subsidies including long-term contracts by energy utilities to pay 2-4 times the going wholesale electric rate for solar and wind generated power.

Re:Aluminium

[nojayuk]

Storage costs money. Lots of storage costs lots of money. Storage wastes energy too -- pumped hydro, the cheapest form of bulk energy storage has an input-to-output efficiency of about 65 percent. Baseload coal, gas and nuclear generation doesn't need storage to be useful and meet demand 24/7/365 unlike intermittent renewable generating capacity, but no-one ever adds the cost of storage to the cost of renewables when comparing prices.

Re:This just illustrates

[Anonymous Coward]

Just a quick FYI, because you keep using that word: "Subvention" is subsidy in English.

Re:This just illustrates

[AmiMoJo]

A whole house backup battery costs a few thousand Euros and will last decades. Electric vehicles are pushing the price down further as used packs become available and production ramps up.

Re:This just illustrates

[Shadow of Eternity]

Here in america my power bill consists of only one part, and I have the choice of whether to go fuck myself or allow the regional monopoly to price gouge me for electricity.

Re:Aluminium

[by (1706743)]

...pumped hydro...has an input-to-output efficiency of about 65 percent.

I think that's a pretty low number, perhaps typical of older designs. Newer designs can have efficiencies upwards of 80%: http://en.wikipedia.org/wiki/P...
http://people.duke.edu/~cy42/P...
http://www.colorado.edu/engine...

...and nuclear generation doesn't need storage to be useful and meet demand...

I believe nuclear tends to be quite bad at load following: http://en.wikipedia.org/wiki/L...

Of course, it is excellent for always-on power, but not ideal for surges or lulls. In certain cases -- L.A. in the summer, for instance -- solar power, although intermittent on the whole, is intermittent in the most useful way: on a nice clear hot day, there's the biggest demand for A/C and the best solar power production.

...but no-one ever adds the cost of storage to the cost of renewables when comparing prices.

Well...staunch proponents with an ax to grind may not include such costs, but then, staunch proponents of coal with an ax to grind will ignore any externalities related to airborne toxins. Any legitimate study of renewable energy should really include storage costs.

With all that said, I really think Germany did the wrong thing with the whole anti-nuclear energy thing. To paraphrase that quote about democracy, nuclear is the most dangerous form of energy generation, except for all those other sources we've tried ( http://physics.kenyon.edu/peop... ).

Re:This just illustrates

[kenaaker]

Sure, the inverter/ATF is a Xantrex SW4048. The model has been replaced with other models. I've never had a problem with it, although I've heard some complaints about components in the newer models. The main service tie is a 30 amp 110 circuit, and there's a secondary input that I can drive with a generator or other 15 amp 110 source.

The batteries are Fullriver DC310-6 gel-packs which are supposed to deal with hydrogen out-gassing. I think the model number translates to 6 volt, 310 Amp hours. They're connected in series to yield 48 volts DC to the inverter.

The system was sized to run the critical circuits in the house for 3 days. (Critical being the heating boiler (LP), some lights, the kitchen (except the electric oven), a sump pump, and a circuit for the living room and master bedroom.

Re:This just illustrates

[Luckyo]

The grid is a pool. While "location matters" if there is only one source, it is wholly irrelevant if all power companies have clients across the nation, and actual distribution of what how much power is fed and taken is handled by exchanges.

That is how Finnish energy markets have worked for many years now, and that is in part why we enjoy some of the lowest electricity prices in the EU.

Re:This just illustrates

[Anonymous Coward]

You're not thinking this through. Two points:

A) Electricity is not water + arbitrary pipes of infinite width: you don't (and can't) just channel it all into a massive reservoir somewhere in the middle of the country and redistribute it at will.

B) If everyone selects collectively most remote source X, requiring capacity Y, but source X can only supply Y/2, you have a source which i) is extremely inefficient in terms of transmission losses; ii) is only giving you ~50% of your power needs.

The same problems are apparent with several sources, unless those sources are distributed carefully and run well under capacity. In reality, the input of various power stations vary with time of day, season, maintenance cycles, etc., and it would be extremely inefficient to keep a constant balance of inputs based on the decisions made by the layman about which generator quotes the cheapest rate.

Or do you seriously think that a nuclear power station can suddenly undercut a hydro station by a few pence, causing everyone to switch and leaving the hydro station running into a dummy load for the next few months?

There are various reasons why Finland has cheap electricity - it has the highest per capita nuclear production in the world; it has local firms investing sensibly in renewable energy; it (as a net importer of electricity) has invested in Russian suppliers and been hesitant to align with NATO; &c. The woowoo that the customer has the power to determine where his electricity comes from is misleading.

Re: This just illustrates

[evilviper]

San Onofre was decommissioned for political pressure.

"both reactors had to be shut down in January 2012 due to premature wear found on over 3,000 tubes in replacement steam generators"

You've got a funny definition of "political pressure".

France did nuclear and it works just fine.

Japan did nuclear, and it worked out just fine... until they had problems. Today, with the benefit of hindsight, nearly everyone would say it didn't work out quite so well.

Worldwide, there are over 400GW worth of nuclear generating capacity, while solar+wind worldwide is what, less than 10% that ?

PV panels didn't exist in the 50s. Solar and wind haven't had remotely as long to scale-up. They are now being installed at a break-neck pace, and will eventually dominate.