In Germany, the scenario concerning the power transition is simply getting worse – what’s the purpose?
From the MANHATTAN CONTRARIAN
Francis Menton
Many exemplary places (New York, California, the UK, Australia) want to compete for the title of “climate leader”. But let's be honest: at least among places with a significant population, no one can outdo Germany. In Germany, the massive expansion of wind and solar power generation began as early as the early 1990s. By the end of 2023, they had a total capacity of 148 GW of wind and solar power generation, which is about 2.5 times the average demand (of about 60 GW) and about 1.5 times the peak demand (of about 100 GW). So the days of fossil fuels in Germany are probably numbered.
Time for another update on Germany's progress toward energy nirvana. The bottom line is that Germany, like the Red Queen, is running ever faster to stay put. In the meantime, it's destroying its economy.
My last update from Germany was on June 15th and covered the then-latest data for the entire year of 2023. The news was that Germany had finally passed the milestone of getting more than 50% of its electricity from “renewables.” This news was excitedly announced by several news outlets, including Reuters with the headline “Renewables share of German power grid to reach 55% in 2023.” Did that headline fool you into thinking the 55% came from wind and solar? In fact, as I noted in my June 15th post, of the 55%, 8.4% came from “biomass” (i.e. wood chips, mostly imported from the US) and 3% from “hydro” and “other,” leaving only 43.6% from wind and solar. By the way, the capacity of biomass and hydroelectric plants was only 12.9 GW, which means that they produced about 25% as much electricity as wind and solar plants, using less than 10% of the capacity. This is no surprise.
The figures for Germany for the first half of 2024 are now available, and other relevant economic news continues to come in. Let's check back for an update.
Clean Energy Wire from July 18th publishes data on electricity consumption in the first half of 2024 from the German Federal Environment Agency (UBA). The share of “renewable energies” has increased again and is now at 57%!
Renewable energies covered around 57 percent of Germany's gross electricity consumption in the first half of 2024. This is according to preliminary figures from the Federal Environment Agency. Generation from renewable sources reached 147 terawatt hours (TWh), an increase of nine percent compared to the same period last year.
And once again, of course, they have mixed “biomass” and hydropower into “renewable energies.” Should we exclude these?
In the first six months of 2024, wind power had the largest share of renewable electricity generation (around 51%), followed by photovoltaics (24%), biomass (15%) and hydropower (8%).
Thus, biomass and hydropower accounted for 23% of the 57%, or 13.1%. This leaves a maximum of 43.9% coming from wind and solar energy, an increase from the 43.6% for 2023. Basically, the percentage from wind and solar energy increased due to a rounding error.
The problem is that in the meantime, Germany has greatly expanded its capacity to generate electricity from wind and solar. According to a graph on this page, also from Clean Energy Wire and sourced from the UBA, German solar power generation capacity increased from 67.6 GW at the end of 2022 to 79.2 GW at the end of 2023 – an increase of more than 17%; and wind power generation capacity increased from 66.1 GW to 68.8 GW, an increase of over 4%. That's a pretty enormous amount of additional capital invested in wind and solar to gain an additional 0.3% market share of electricity generation.
And now let's look at the big economic picture for Germany. First, how do electricity prices compare to other countries? Here is a very useful chart from the Energy Policy Research Foundation comparing consumer electricity prices in the second half of 2023 in EU countries and US states:
At the top of the list is Germany with over 38 cents per kWh, well over double the US average.
Next, here is German GDP data from the St. Louis Fed. The peak was reached in the third quarter of 2022 at $770.6 billion, with slight declines since then. Some would call it a recession, and a pretty long one at that. The most recent quarterly number (Q2 2024) was $766.4 billion. That's serious stagnation. In contrast, U.S. GDP has been growing in the 2-3% range annually in the mediocre Biden-Harris economy. Had the German economy grown just 2% over the past two years, it would now be around $800 billion per quarter, instead of the reported $766 billion.
Let's say high energy prices may not be good for an economy known for its large manufacturing sector. You may have seen the recent news about Volkswagen. From Reuters, September 2:
Volkswagen is considering closing factories in Germany for the first time. This step highlights the increasing price pressure that Europe's largest carmaker is facing from its Asian competitors. VW considers a large vehicle plant and a component factory in Germany to be obsolete, the works council explained, announcing “vigorous resistance” to the board's plans.
In a related message, a German-speaking friend sent me an English translation of this article from the Welt on August 12. The headline is “Germany's Electrical Mistake.” Excerpt:
Clean and cheap electricity was the great promise of the energy transition. For years it was said that there would be a “job miracle” at no cost. But now demand is collapsing. . . . [In the first half of 2024]The Central Association of the German Motor Vehicle Industry reports a 47 percent drop in orders for electric cars. The Federal Association of the German Heating Industry reports a 54 percent drop in sales of heat pumps. What is increasing, however, is the demand for combustion engine cars and oil heating systems.
“Will the energy transition now be cheap? Yes. Period,” promised Patrick Graichen, later chief planner of the German government and head of the think tank Agora Energiewende, in an interview with WELT in 2017: “The harvest years of the energy transition are in sight.” Fossil fuels would soon be unaffordable, while green electricity would become cheaper and cheaper. … But the narrative that has been circulating for many years is met with increasing skepticism, and not just among consumers. … “The supposed certainties of older forecasts that electrification of the industrial, transport and building sectors would be economically preferable and that a steady increase in renewable energies would reduce end-customer prices are now fragile,” says Constantin H. Alsheimer, CEO of Thüga Aktiengesellschaft.
“Fragile”? I would say that these old “certainties” are completely shattered. But maybe that’s just a question of translation.
Let me close with the message from Dirk Messner, head of the UBA, as quoted in the Clean Energy Wire article of July 18 (emphasis added):
“It is a success that the share of renewable energies in electricity generation continues to grow,” said UBA boss Dirk Messner. However, in order to achieve its climate and energy goals, Germany must accelerate the expansion of renewable energies.especially in the field of photovoltaics (PV), he warned. Messner called for planning security and a careful further development of the funding mechanismsas well as for a possibility to limit network charges in areas with a high level of renewable energy development.
Build more and more wind and solar power, increase subsidies once again and drive Germany into the economic abyss. This will continue until the voters finally wake up. I have no idea when that will be.
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