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WILLIAM TUCKER: Germany’s Campaign to Dump Nuclear Runs Aground

By William Tucker

The first bills for Germany’s campaign to give up nuclear power have come due and they are not pretty.  

This week the country’s four major grid operators announced a rate increase of 47 percent, from 4.5 cents per kWhr to 6.7 cents per kWhr next year in order to cover the costs of buying from renewable sources.  In addition, consumers will begin paying a value-added tax and higher fees for network access by utilities. All this is going to cost the average family of four about $325 per year.  

And that’s just the beginning.  Renewables are barely halfway to the goal of getting 40 percent of its electricity from renewable energy by 2020.  (The current 25 percent figure is highly dubious since not much of the old stuff has been shut down and new coal plants are actually being added to keep the lights on.)  Germany already pays the second highest electrical rates in Europe, almost twice what France pays with its 70 percent nuclear.  (Just who’s #1 we’ll get to in a moment.)  German industries are already complaining they won’t be able to compete anymore in the world market.

How many times do we have to go through this?  It has become clear over and over that renewables are hopelessly expensive and will likely remain so for the foreseeable future and beyond.  The only way they can survive is through ham-handed renewable mandates and extensive government subsidies.  

Spain paved the way to its current financial meltdown by deciding to become the “solar capital of the world” in the middle of the last decade.  The government subsidized a huge homegrown industry, with whole new towns springing up around new manufacturing plants.  The whole enterprise lasted about five years until high electrical rates started driving industries to France and the government ran out of money.  The subsidies disappeared and the entire industry collapsed, leaving ghost towns in its wake.  By the time it was over, Spain was on the critical list of Europe’s ailing economies.

Denmark has littered the landscape with windmills so that it is hard to go anywhere in the countryside without being in sight of a 40-story whirling tower.  The country claims that wind to provide 20 percent of its electricity but this is deceptive.  Wind generates a 20 percent equivalent of Denmark’s electrical needs, but only about half of this is actually consumed in Denmark.  The rest is dumped into Sweden and Germany at giveaway prices, leaving wind’s actual grid contribution at only 5 to 10 percent.  All this is made possible only because neighboring Sweden has lots of hydroelectric power available for immediate backup when the wind dies.  Norway also has lots of pumped storage to handle Denmark’s surpluses.  The result of all this is that Denmark is the only county with electrical rates higher than Germany.

The U.S. wind industry has experienced a similar boom built solely around the production tax credit.  This subsidy makes it profitable for large companies to put up windmills even if no electricity is ever sold.  Enron was the nation’s largest owner of windmills until it collapsed.  Later the Marriott Hotel chain became a major player.  Wind has also proved the easiest way to meet state renewable mandates and 80 percent of the generation built to satisfy these requirements has been windmills.  None of this is economical, of course, and is simply forced upon grid operators.  

Any sane grid operator would charge a huge premium for wind’s unpredictability, but of course this has been disallowed.  In fact, it’s the opposite.  In many systems, grid operators are being required to buy wind in preference to anything else, despite the disadvantages and costs.  Fossil fuel boilers are worn out by revving them up and down in order to accommodate wind’s vagaries.  The Bonneville Power Authority has been forced to accept wind even if it means adjusting hydroelectric dams to the detriment of migrating salmon.  One environmental fad follows the next and all this is done because wind supposedly represents the future.  Yet the whole industry now faces collapse because Congress has finally refused to extend the production tax credit.

Our own domestic version of Germany and Spain is California.  The Golden State created the California Electrical Crisis of 2000 by refusing to build anything medium-sized small industrial co-generation plants and pitifully small renewable projects from 1980 to 2000.  Since then it has stampeded into natural gas, so that 45 percent of its in-state generation now comes from this one source, double the national average.  Californians pay twice as much for electricity as surrounding states and Governor Jerry Brown is now wrestling with an annual budget deficit of $30 billion and a total state debt of $1/2 trillion.   Spain, with a 25 percent more population, has an annual deficit of $46 billion and a total debt of $1 trillion.  

So is anyone learning a lesson from this?  Heck, no.  This week Secretary of the Interior Ken Salazar announced the creation of 17 “solar zones” in six Western states – California, Arizona, Colorado, Nevada, New Mexico, and Utah.  Over 400 400 square miles of land will be covered with photovoltaic panels and high-gloss mirrors to generate 23,700 megawatts of electricity – when the sun shines.  Hundreds of miles of transmission lines will be required to bring it to population centers.  The power will probably cost twice as existing sources but utilities will either be mandated to purchase it (they already are in California), passing the costs along to customers, or the government will step in with the inevitable subsidies.  It will probably require all of Mexico to keep these 400 square miles of mirrors and panels clean of desert dust and sand.  

The Germans are already beginning to wonder if their nuclear phobia hasn’t been exaggerated.  In the vast reaches of the Southwestern desert, it may take a little longer to learn the same lesson.

2 Responses to “WILLIAM TUCKER: Germany’s Campaign to Dump Nuclear Runs Aground”

  1. stevek9 Says:

    Most of this is right on the money.

    But, Spain’s problem originated with a trade deficit with Germany, loans from German (and France) banks that fueled a speculative housing market, which collapsed. Since Spain has no control over its currency it is in a bad place. Solar was a bad investment, but it is a blip compared to the housing bubble (it was similar in many ways to the US).

    California’s energy crisis was due to manipulation of the Private Sector (Enron) after they had influenced government to remove regulation.

    Notwithstanding that, unreliables are indeed a grim comedy story.

  2. Kournikovsky Says:

    Nice article. Especially the part about Spain and California. Nice places to visit, but neither one can buy a decent government.