Industry complaints “hardly worry German public”

A recent study (PDF) published by the Heinrich Böll Foundation, which funds this website, describes the debate surrounding the Energiewende. One of the arguments confused Craig Morris, but he was happy to read the author’s description of who’s complaining – and who isn’t.

(Photo by sramses, CC BY-NC-ND 2.0)

The German power sector will have to undergo structural changes to accomodate renewables. The paper Energiewende 2.0 discusses possible strategies. (Photo by Stefan Ramsaier, CC BY-NC-ND 2.0)

The author is Gerd Rosenkranz, known in Germany as the journalist who left Der Spiegel after it posted an incredibly misleading article against wind power (if you read German, I rebutted it at the time here). Rosenkranz is now at Berlin-based think tank Agora Energiewende.

He calls for a coal phaseout, saying that Germany cannot be simultaneously known for its coal consumption and its Energiewende. His solution to the problem is bigger than Germany, however: stricter emissions trading, which is an EU platform.

Like practically all German proponents of renewables, he points out that we cannot meet our current energy demand from renewables; the transition requires lower consumption through efficiency. He also points out that the Energiewende is currently almost exclusively a transition in the power sector alone; more attention needs to be paid to heat and transport.

Nonetheless, he is forced to spend most of his time talking about problems in the power sector simply because that’s what the general debate revolves around. He shares the concern of other experts that Germany might be drifting towards a new oligopoly, though he defines it differently. Robert Werner, the former head of green power provider Greenpeace Energy and now with the Hamburg Institute, recently pointed out that transmission grid operators sell the green power paid for by feed-in tariffs, thereby turning these operators into power sellers – although grid operators are otherwise prohibited by law from selling power. The result, Werner argues, will be a return to an oligopoly as the share of renewable power continues to grow. He calls for more “direct marketing” to solve the problem and believes that aggregators should step in as power sellers, bundling Germany’s numerous distributed systems.

Rosenkranz argues the opposite, saying that these aggregators themselves will become the oligopoly: “those who have a large number of systems spread across Germany (or abroad) in their portfolio will offer the lowest costs… and be able to compensate for weather deviations.” He points out that the biggest aggregator as of the beginning of 2012 was the subsidiary of Norway’s Statkraft, which had already aggregated 8.5 gigawatts of green generation capacity at the time.

Unfortunately, Rosenkranz’s solution is one not even being considered: state control of the grid. Denmark has arguably facilitated its energy transition by putting control of the grid in state hands in 2005, and many Germans have dreamed of a single state grid in Germany since then. But as the study puts it, this option “seems to be off the table” at present, probably because the Germans have great faith in markets and do not believe the government can solve all problems.

Energiewende popular despite cost

The paper confirms my understanding of general complaints about the Energiewende. Rosenkranz speaks of “alarmist reports and massive PR work by the losers – actual or otherwise – of the Energiewende.” Here, Rosenkranz is referring specifically to industry complaining about high energy prices when, in fact, retail power rates are high but industry power rates are stable to down – and low prices for fossil fuel are not a goal of the Energiewende. I have written elsewhere about industry’s preemptive complaining and pointed out that there has still not been a single popular demonstration against the Energiewende. Rosenkranz adds that “while the barrage of complaints has grabbed the attention of politicians, it has hardly worried the general public.” Recent figures suggest popular support may finally be waning, however.

The study provides a few reasons for the continued public support. First, Germans are happy, even economically; 79 percent of those surveyed in a poll mentioned in the study stated that they were doing “well” or “very well” in a recent survey for German television – the highest level in 16 years. And while energy prices are up, they still make up a small share of German income.

The VIK’s index of industry power prices shows that the current level is equivalent to the one 9 years ago without being adjusted for inflation. Note, however, that taxes and surcharges are not included here. Source: VIK

The VIK’s index of industry power prices shows that the current level is equivalent to the one 9 years ago without being adjusted for inflation. Note, however, that taxes and surcharges are not included here. Source: VIK

Finally, the study seems to tacitly support a recent proposal to solve the cost problem simply by not paying for it today. Feed-in tariffs are a pay-as-you-go system; ratepayers cover all of the costs today. But a growing number of decision-makers and experts like the idea of passing on the charges at least partly as a tax, which does not have to be paid today. Rosenkranz says that a number of decision-makers are keeping the idea “in their desks” in case the cost debate does not die down.

Of course, one of the strong points of renewables has always been that we cover the impact today and pass on as little as possible to future generations. I would like to remind everyone in the debate of a paper (PDF) written by one of the co-authors of the original Renewable Energy Act of 2000, Hans-Josef Fell, entitled “Feed-in tariffs for renewable energies: An effective stimulus package without new public borrowing.”

Craig Morris (@PPchef) is the lead author of German Energy Transition. He directs Petite Planète and writes every workday for Renewables International.

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