WTI Crude

Loading...

Brent Crude

Loading...

Natural Gas

Loading...

Gasoline

Loading...

Heating Oil

Loading...

Rotate device for more commodity prices

Gaurav Agnihotri

Gaurav Agnihotri

Gaurav Agnihotri, a Mechanical engineer and an MBA -Marketing from ICFAI (Institute of Chartered Financial Accountants), Mumbai, is a result oriented and a business focused…

More Info

Germany Struggles With Too Much Renewable Energy

Germany Struggles With Too Much Renewable Energy

Since the 2011 Fukushima nuclear disaster, Germany has been one of the few countries that have successfully moved away from nuclear energy. Germany has so far successfully shut down its nine units that had the capacity of generating enough power for at least 20 million homes in Europe. In fact, the contribution of nuclear power in Germany’s electricity generation has now fallen to just 16 percent and renewables are now the preferred source of electricity generation in the country.


Image Source: http://us.boell.org/2014/06/06/german-coal-conundrum

However, Germany and its neighbors are now facing an unusual problem. With the dramatic increase in green energy usage, Germany is generating so much electricity from renewables that it is finding it hard to handle it. The excess electricity that is generated is being spilled over to its neighboring countries, thereby increasing the threat of a power blackout should there be a sudden supply disruption.

How much should Germany invest to solve this problem?

Although Germany has increased its renewable energy generation by almost five times in the last decade, it has failed to invest in building the necessary infrastructure to carry this energy. The excess electricity that is being generated by Germany is spilling over to Poland and Czech Republic, two countries that are investing close to $180 million to shore up their grids from Germany’s power spillage.

Related: Better Times Ahead For Oil, If You Can Believe It

“A huge accumulation of overflow increases the threat of a blackout. The root of the situation is allowing a huge amount of electricity to be generated regardless of the capacity of the grid,” said Zbynek Boldis of Czech grid CEPS AS. It is quite obvious that Germany needs to upgrade its network to accommodate the excess power. In fact, grid companies in Germany are set to invest close to $24 billion for upgrading their network and modify its existing high voltage power lines.

Is there a way that this excess power is stored?

Yes, there is an energy storage technology that has the capability of storing this excess power. The power to gas technology basically converts the excess electricity into gaseous energy by producing a zero carbon hydrogen gas. This gas can then be converted into renewable methane and used as an energy source in future. German auto giant Audi was the first to use this technology by setting up the world’s first 6 MW- ‘power to gas’ plant in its home country.

In fact, Audi’s E-gas plant is now directly contributing to the stabilization of the country’s power grid. German grid operators are welcoming players that can contribute to stabilize its fluctuating energy production. According to Germany’s second biggest grid operator, Tennet TSO GmbH, an energy-balance player must be capable of drawing close to 6MW power from the grid within a period of five minutes while operating on its standard load profile. Audi’s e-gas plant has been successful in meeting this criterion and has been able to produce more e-gas at the same time by increasing its targets.

Related: Are Big Oil’s Dividends Sustainable?

What is the price of this power?

The balancing power market has created a tremendous buzz in Germany as several new players are entering this market where utilities can end up getting paid 400 times more than the wholesale electricity rates. However, the increase in the number of new players has reduced overall prices.

“More supply means lower prices and that means lower costs for German end users,” said Armasari Soetarto who is a spokeswoman of the Bonn based authority. According to data from Next Kraftwerke, the price of power capacity that is available in the span of five minutes has reduced to around $1232 per MWh from $1,877 per MWh in January 2015.

However the biggest price drop is for electricity capacity with the capability of reducing output within 15 minutes. Those prices have dropped to $401 per MWh from the earlier $1,794 per MWh in January 2015. In 2014, companies operating in the balancing power market got close to $1.1 billion through direct payments. As Germany tries to double its power output from renewables by 2034, the balancing power market is set to grow in the next few decades.

Related: The “Thin Green Line” Holding Back U.S. Energy Exports

Can companies from neighboring countries gain from cheap German electricity?

Traders based in Austria have, in fact, gained at lot from cheap German electricity. These traders sell German electricity at higher prices to other countries at capacities that far exceed the planned figures. However, the German-Austrian market is now coming under scrutiny from European regulators and Austrian traders are now blocked from buying German power.

Cheap German electricity would indeed find a lot of takers, especially the companies and grid operators in neighboring countries Poland and Czech Republic. The price of German electricity is around 18 percent less than what is available in Poland, so it makes financial sense to buy cheaper electricity from Germany. “My boss keeps asking why we aren’t buying power from Germany, but this is practically impossible,” said Henryk Kalis who is an energy buyer for ZGH Boleslaw that is controlled by Arcellor Mittal.

In order to change this market outlook, it is extremely important that Germany invests in its energy infrastructure and brings it in line with its renewable energy generation. It is ironic that a country which produced around 78 percent of its power consumption from renewables in July 2015 still struggles to ship its cheap power from the northern region to its southern region.

By Gaurav Agnihotri for Oilprice.com

More Top Reads From Oilprice.com:


Back to homepage

Leave a comment
  • heinbloed on August 17 2015 said:
    The author seems to copy the news only from the tabloids who live on advertising from Vattenfall ....

    Poland is short on el. power, the entire system there is done. Every kWh is more than welcome:

    http://www.thenews.pl/1/10/Artykul/217253,Ukraine-to-open-power-exports-to-Poland

    Czechia - bordering Poland and Germany and connected via Austria with Switzerland - is short on power as well:

    http://www.praguepost.com/czech-news/49282-temelin-s-second-unit-offline-due-to-defect

    And Switzerland has no more atom power:

    www.swissinfo.ch/eng/power-plants_country-wide-nuclear-shutdown-due-to-repairs/41607338

    Austria is a net importer at most times since ever but east and west neighbours can't deliver. So Germany's 'non-existent North-South cables' deliver power to Austria, to Switzerland, to Czechia and further to Italy.
    ----------------------

    It was a media gig initiated by the Eastern-German grid owner 50Hertz, ordered by Vattenfall, to publish this rubbish in the tabloids.

    Sweden (Vattenfall) wants to sell surplus atom power to Poland but German power is cheaper since this year.
    Since this year short buys on the power exchange have a clear advantage.
    And German RE has the right of way in Germany.
    So Sweden/Vattenfall(a state run utility) is stucked with its surplus power from Swedish atom power plants and from it's lignite power plants in Eastern Germany. They can't sell against the rule of the market, want money to build more interconnectors.

    One check with Entsoe would have revealed the truth.

    Swedish power would be the cheapest provided the main competitor's market (Germany) isn't saturated:

    https://newzar.wordpress.com/2015/05/25/poland-imports-electricity/

    But with a permanent min. of 25% RE now in the German grid and an average of more than 30% of RE in the grid during the entire year 2015

    https://www.energy-charts.de/energy.htm


    Germany's power prices blow out not only foreign competitors but also national coal and lignite generators. Gas and atom anyhow.
    Poland buys what is available, similar to the UK any foreign power is cheaper for Poland than homemade power.
    And since German RE is more and more frequently the cheapest the others have to wait until darkness and calmness. More and more frequently this waiting is good for nothing, waiting sequences take longer and longer.

    Sweden's Vattenfall has to close 2 atomic reactors prematurely

    http://world-nuclear-news.org/WR-Vattenfall-prepares-for-shutdown-of-Ringhals-units-1307155.html

    since they can't export the power anymore. Poland buys in Germany for a better price.
    Only in situations like now with the drought

    http://af.reuters.com/article/energyOilNews/idAFL5N10N2PE20150812

    and the hot rivers

    http://www.bloomberg.com/news/articles/2015-08-10/poland-curbs-power-supplies-as-eastern-europe-sizzles

    Vattenfall's Swedish atom power or it's lignite power from Eastern Germany is acceptable for Poland.
    Once the weather situation gets better it is German RE-power they want. Because it is cheaper than anything else.
    Hence the lanced tabloid news : Germany has to much RE-power.
  • Zippy on August 17 2015 said:
    "the excess electricity into gaseous energy by producing a zero carbon hydrogen gas"

    What's the difference between "a zero carbon hydrogen gas" and normal hydrogen gas?
  • maria on August 18 2015 said:
    What a bunch of evil bastards. Don't you know that without developing renewables for all countries we are done for? Drilling for oil, Fracking and other nonsense has to stop and continuing with these old, outdated and highly dangerous methods is pure madness. Investing in infrastructure to support solar, wind and hydro energy is the way to go, not to continue destroying the planet and innocent lives.
    When the Last Tree Is Cut Down, the Last Fish Eaten, and the Last Stream Poisoned, You Will Realize That You Cannot Eat Money
  • ran bertrand on August 18 2015 said:
    >>When the Last Tree Is Cut Down, the Last Fish Eaten, and the Last Stream Poisoned, You Will Realize That You Cannot Eat Money

    But we need to cut down the trees and poison the groundwater with fertilizers and herbizides because we want to replace fossil fuels with biomass.
  • heinbloed on August 18 2015 said:
    @ zippy:

    Normal " hydrogen" gas is made from hydrocarbons, usually methane.
    This "normal" process releases carbon into the atmosphere and catches the hydrogen for usage.

    The electrolytic hydrogen gas is made from water.
    This process releases oxygen into the atmosphere (and catches the hydrogen for usage).
  • Roland on August 18 2015 said:
    I don't understand the problem. People say wind is too variable. That's a strength! A wind turbine can be taken offline in seconds. Just disconnect, de-energize the generator, and feather the blades. Almost as quick to reverse.

    And why is Germany burning so much coal? Doubly so for lignite! Yuck!
    If Poland wants to buy more watts, they can pay for transmission lines.
  • Mark Pawelek on August 19 2015 said:
    As a proportion of its energy mix, France has more renewable energy than Germany. The problem is, not too much, but the wrong kind. Germany has a lot of intermittent, unreliable solar and wind.
  • Ken Brown on August 19 2015 said:
    The article fails to mention that the non-carbon dioxide-emitting nuclear power plants were replaced with coal. All of the gains in reducing pollution with renewables was cancelled by a knee-jerk reaction of fears that Germany's nuclear power plants were going to melt down.

    While it's possible to electrolyze water into hydrogen and oxygen, it's horribly inefficient. The return on the investment is not good enough to make it worthwhile at a utility scale. Pumped storage systems are currently the best method available for storing energy in large quantities.

    To help overcome putting too much power on the grid, residential systems can be equipped with grid-tie inverters that can be disconnected from the grid by commands from the grid operator just as my AC can be shut off when the power company needs to trim some usage to keep from overloading the system. Home owners will lose some feed-in tariffs, but that better and cheaper than burning out components that are expensive to replace.
  • Jack morris on August 20 2015 said:
    Use the extra renewable energy to make carbon fibre from carbon dioxide!!!
  • Eugenia on August 25 2015 said:
    Taking on the Audi take on the extra energy, it sounds like a tremendous opportunity but I wonder how long it will take for other companies to take their bid and for distant markets to adopt the technology.

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News