In Germany as 20 years of wind subsidies comes to an end in 2020, half to three quarters of the industry may disappear.
So many parallels with Australia. The Germans have had wind subsidies for 20 years, but even after two decades of support, the industry is still not profitable on a stand-alone basis. In 2016, some 4600MW of new wind plants were installed, but that may drop to one quarter as much by 2019 as subsidies shrink. According to Pierre Gosselin (August 31st, 2017) there are more wind protests, electricity prices are “skyrocketing” and “the grid has become riddled with inefficiencies and has become increasingly prone to grid collapses from unstable power feed in.”
Pierre Gosslin writes that “Germany is more in the green energy retreat mode”.
German flagship business daily “Handelsblatt” reported … how Germany’s wind energy market is now “threatening to implode” and as a result “thousands of jobs are at risk“. José Luis Blanco, CEO of German wind energy giant Nordex, blames the market chaos on “policymakers changing the rules“. Subsidies have been getting cut back substantially. The problem, Blanco says, is that worldwide green energy subsidies are being capped and wind parks as a result are no longer looking profitable to investors. The Handelsblatt writes that “things have never been this bad“.
CleanEnergyWire reports that the end of subsidies threatens the profitability of nearly all wind plants due to maintenance costs:
Operating wind turbines in Germany will only be profitable for a small fraction of the installations once their 20-year support period via the Renewable Energy Act (EEG) has ended, consultancy Energy Brainpoolsays in a white paper. The first turbines in Germany will lose eligibility for support from the renewables surcharge that customers pay with their power bill in 2021 and “at the current [wholesale power] price level, only a few installations can be operated at a profit” after that due to maintenance costs, the consultancy says.
Maintenance is one of the big hidden costs of trying to collect low density energy from a vast area. All those gears, bearings, and long transmission lines are, by definition, subject to extreme weather. Who builds a wind “farm” in a calm location?
“The situation in the wind power industry is coming to a head much quicker than we feared,” trade union IG Metall recently said in a press release. IG asked dozens of turbine manufacturers and their suppliers about their business prospects. 40 percent expected market conditions to deteriorate in the near future. The German Wind Energy Association (BWE) says companies now have to rely entirely on existing orders, and that “a reliable projection for expansion over the next years is scarcely possible.”
According to Windresearch’s analysis, a worst-case scenario would see just 1,000 mega-watts (MW) of new capacity in 2019, compared to the 2,800 MW set by the EEG and auctioned off. That’s less than a quarter of the onshore wind power capacity added in 2016.
Another hidden cost is complexity
The artificial rules and auction system are being gamed and rorted by the big players:
Gsänger says a lax definition of citizens’ projects has enabled larger bidders to secure a substantial chuck of the tendered volume for themselves, while no truly citizen-led initiative was granted a licence through the second auction. “There’s a great deal of frustration in the citizens’ energy scene,” Gsänger says.
This is always the price of complicated government schemes. No matter how carefully rules are crafted, where there are billions of dollars involved, there are billions of reasons for the top brains in an industry to find the loopholes.
Even socialists in Germany are talking about coal being essential:
Yesterday at the East German Energy Forum in Leipzig, both the centrist CDU and the SPD socialists were in agreement: brown coal (lignite) must remain a part of Germany’s energy mix, the online Lausitzer Rundschau writes. Speaking before 400 industry representatives, Brandenburg’s Minister President Dietmar Woidke (SPD) complained that green energies are foremost “unreliable energy sources“.
The Germans appear to be way ahead. The socialists in Australia still talk about coal as if it were an anti-christ-dinosaur.
H/t reader kevin a.
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