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

[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?

[Luckyo]

That is an apt summary of Energiewende. It's a "feel good" policy that came after Fukushima, and resulted in a massive build up of coal and gas plants under the guise of "get renewables".

And now you pay so much for electricity, that you actually have energy poverty in Germany - state where there are people who are too poor to afford electricity. In a modern Western country. It's a god damn insanity, but Greens get to feel good about being on the forefront of renewables. Poor be damned, as usual

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/...

Re:This just illustrates

[Anonymous Coward]

switch supplier

You mean switch bill-printer, right? The supplier won't change - that's one of the great cons of the privatisation of utility suppliers.

And any as multi-billion dollar corporation kno, the "risk" of being investigated for pretty much anything is part of business. The laws are phrased vaguely enough that all that really matters is the bias of the judge, which will be reflected in how he/she interprets the facts and the law. A good lawyer goes a long way to making a particular view easier to swallow, ofc.

5 people think: "We'd all remain more profitable and minimise our risk if we kept prices high." That's easy. Don't even need to meet up to see that's obvious. Market's captive, baby.

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.

Re:This just illustrates

[Luckyo]

That is incorrect. In many countries, such as my own (Finland) you can actually choose which power provider to use.

My bill basically consists of two parts. One comes from utility provider providing power transmission wires to my home (which I cannot choose for obvious reasons) and one comes from the provider of electrical power to the grid (which I can choose from anywhere in Finland).

I live in city of Tampere, and buy electricity from provider in Kouvola (https://www.kssenergia.fi/). The distance between our cities is several hundred kilometers, but this works because electric grid is unified, and what actually happens is that provider feeds a certain amount of energy into the grid, and whatever energy I take out is billed according to our contract. Provider is required to feed this much power (+ certain surplus for transmission) into the grid at its local exchange. This creates competition between electricity generating companies while transmission fees are monitored by government to ensure that they are in line with spending and do not abuse the monopolistic rights (since they are the only provider in the area for obvious reasons).

This system enables healthy competition for power providers without upending utilities.

Re:This just illustrates

[DemoLiter3]

Great idea, but it has too many mistakes:
1. Most people in Germany do not have their own house, but live in rented apartments. They have no possibility to install any kind of power generator, renewable or not.
2. Even if you have your own house, you cannot install for example a wind turbine or a biogas tank - these are only allowed at a minimum distance to living areas.
3. So, the only option is the solar power, but its output is fluctuating, so you need capabilities to equalize it, either:
- keep a connection to the grid (which brings you back all kinds of taxes and fees back, also see the next point)
- have a battery storage - for a househould it would require a battery the size of a shipping container and cost 1-2 million euros and wear out within few years. Remember, you need a storage capacity to last through the winter, where there is barely any solar output.
- have a backup generator running on diesel or gas - possible to combine with a heating boiler, there are solutions on the market like that, but then again you will need to pay additional taxes for electricity generation from gas, pay for gas, deal with the waste heat when you don't need it and I don't think any solution will readily run without grid connection
4. Starting from this year, the regenerative energy produced for self-consumption will be also subject to the EEG surcharge (the money that goes to the subventioning the renewable energy production) in Germany.
When you realize that it's cheaper for you to live off the grid you will realize that it's cheaper not to live here at all.

Re:This just illustrates

[Luckyo]

No. Energy generation is a very difficult thing in that entire grid must stay within certain tolerance levels. We're talking about gigawatts per hour, so your swimming pool would have to be a size of a large lake or two and would obviously not be worth the cost.

They used to pump electricity up into potential energy water storage in some places, but those have been in dire need of upgrades and for some fucked up reason (which is an apt summary of the entire Energiewende really) are not supported and are actually closed down. All while new coal and gas is being massively built up so that they have hot reserve ready to go for the renewables fluctuations.

Re:This just illustrates

[drinkypoo]

Ah, looks like we've run into another person who believes that human misery is the way to go.

Let me guess, you typed that while staring into a reflective, black screen. Permitting unchecked emissions of CO2 is what's going to cause us the real human misery. Keep telling yourself you can shit where you eat without getting sick, though, while desperately looking around for supporting examples.

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

[Mashiki]

Let me guess, you typed that while staring into a reflective, black screen. Permitting unchecked emissions of CO2 is what's going to cause us the real human misery. Keep telling yourself you can shit where you eat without getting sick, though, while desperately looking around for supporting examples.

So you're telling me that CO2 is what's going to cause the real human misery. Not poor healthcare, not food to eat, not ways to keep things from spoiling. Not having properly developed agriculture or sewage management. Okay there. Next you'll be saying that burning cow dung indoors doesn't cause lung cancer, and sleeping on the ground in a hut covered with shit doesn't cut your life expectancy in half due to parasites. You do realize that in my examples that not even 1/3 of the people on this rock are at this level. If you're lucky you might hit 20%

Re:This just illustrates

[dinfinity]

1. Most people in Germany do not have their own house, but live in rented apartments. They have no possibility to install any kind of power generator, renewable or not.

That is not really true. One of the things that is becoming more common is for the housing corporations to create projects where the renters pay an additional fee for using power from solar panels the corporations install. There are variants when it comes to the type of payment and ownership, but the general construction is quite viable. Basically, renters get to bet that their fees for the solar panels will be lower than what they would pay in electricity costs, feel good about supporting solar and have to do nothing otherwise. The housing corporations can (technically) provide better panels and prices due to the scale advantages.

It's obviously not a panacea, considering that housing corporations could really mess up their choices or try to become rich off of the projects, but in a way it is a much faster way to increase the number of installed solar panels than waiting for home owners to take the plunge.

Re:This just illustrates

[Temkin]

Some places, even here in the US, have a choice of electrical provider, it is VERY rare, but does happen.

Certain parts of Texas have fully seperated the generation market from distribution. Distribution is run by a monopoly called Oncor, and they get to leech from your bill at a mostly fixed rate. You then sign up for generation with a variety of providers offering various contract terms. When I lived there I locked in a 2yr contract, flat rate at 8.9 cents per Kwh, and tried my hand at bitcoin mining via dirty old coal. But I could have had 100% wind or 100% renewable at even lower rates, but they were seasonal and they tended to have short terms. 3mo then you get dumped on the market again when the 8.9 cent deal isn't available. Longer term renewables ran 11 - 15 cents per Kwh.

This is the system California was trying to set up, but the mistake they made was to not seperate distribution from generation. Now they're stuck with a politicized PUC making decisions that deem 1 Kwh used by a company has higher economic value to the state than 1 Kwh used at my house. So I get a form of rationing by tier, and if I leave my computers on and do too many load of laundry, they start charging me 50 cents a Kwh. Just who get s to keep the difference between that and the actual generation costs is lost on me...

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.