William Tucker: The Perils of Giving Up Nuclear
By William Tucker
The word coming out of Germany these days is what everything is going swimmingly with the effort to give up nuclear and transitional to the renewable generation of electricity.
“German Power Exports Peak Despite Nuclear Phase-Out,” says one headline. “German renewables beat forecast,” says a second.
It’s only when you read behind the headlines that you start to see the underside of all this.
Germany has indeed created a headlong rush into windmill and rooftop solar collector construction by subsidizing each with wild abandon. There’s no surprise about this. Subsidize anything enough, people will respond. If you subsidized people for grazing goats on their roofs instead of solar collectors, you’d have the same response. The important thing is the effect these subsidies are having on the rest of the economy.
First off, the idea that Germany is “exporting” all this electricity is deceiving. “Dumped” would be a better word. One thing that becomes immediately clear about windmills is that they overproduce much of the time. The grid can’t absorb this surplus power and so it becomes necessary to thrust it onto neighboring grids. Denmark has done this forever. Fortunately, its Scandinavian neighbors to the north have large installations of pumped storage and are able to store some of this capacity for future use. Germany doesn’t have this kind of option and so much of its excess capacity is being dumped into Central and Eastern Europe. The Czechs and Poles don’t like this because it threatens blackouts on their grids. They are now moving to disconnect their power lines from German on the windiest days. Of course the problem will only become worse as Germany builds more windmills and will become impossible if everybody builds windmills and starts trying to dump their excess output on each other. Wind only works for first movers.
Windmills and solar panels the same disruptive impact on other generating stations as well. In order to maintain grid balance, dispatchable sources of power such as nuclear, coal and natural gas must be kept operating in case the wind dies down or the sun disappears behind a cloud. With nuclear this is virtually impossible because reactors can’t easily be ramped up and down, so the task generally falls to coal and natural gas.
But now there is a new problem. Wind is so cheap when it is available that it quickly drives everything else off the market. This means that although coal and gas must be kept available for back-up, it is also unable to sell its power about one-third of the time. This makes running them hugely unprofitable.
As it has turned out, coal is better suited than gas to play this on-again-off-again game. As a result, the outcome of building those thousands and thousands of windmills in Germany has been Germany is now burning more coal. In fact, the two major utilities are now building new coal plants in order to prepare for the introduction of still more wind and solar. In July the government even announced that it will dig into a pot of money extracted from the nuclear industry and intended for the development of renewable energy to build more coal plants.
All this is taking its toll on both the utilities and the public. Last month Germany’s four primary grid operators announced they will be charging a 47 percent increase in rates next year in order to cover the costs of accommodating renewables. Prices will rise from 4.5 cents per to 6.7 cents kWhr. The German steel association estimates the increase will cost the industry $337 million next year. This week EON, the nation’s largest utility, announced the worst profit drop in twenty years, directly attributable to the conversion to renewable sources. Its stock dropped a stomach-churning 12 percent in one day. And now the International Energy Agency has warned that European countries that are pushing up the cost of electricity through renewables are putting European industry at a severe competitive disadvantage in relation to the US and China.
So you can see where all this is leading. If electricity becomes too expensive, the government will start forcing down the price of electricity, which will cut even further into utility profits. Eventually the government will take over the utilities, socializing the losses even further by trying to dilute them across the general public. Of course that’s what Greece and Spain have already done in trying to subsidize domestic solar industries. You saw where that led.
So don’t be fooled by all those pretty pictures of the windmills and solar collectors now coming out of Germany. The country is already paying a high price for its nuclear phobia and the biggest hurdle hasn’t even been reached yet – the day when the reactors finally shut down.