Nuclear phase-out: Germany faces ‘Herculean’ task with move to renewables

This spring, as the German government was preparing its landmark decision to phase out nuclear power by 2022 and replace it with renewable energy, the head of the country’s second-largest utility gave a speech in which he noted he knew of no industrialised country that was “even rudimentarily able to rely on renewable energy”.

Jürgen Grossmann, chief executive of RWE, seemed to speak for the German industry – generators, power-plant builders, and transmission companies – when he warned the government was confronting Germany with a “Herculean task”.

Most fundamentally, the accelerated nuclear phase-out – brought forward from 2036 after the nuclear accident at Fukushima in Japan – challenged the country to replace its 17 nuclear power stations, which produce about a quarter of its total electricity, in just over a decade, while at the same time reconfiguring transmission networks.

Chancellor Angela Merkel in the summer sketched out how Germany would succeed. It could replace 20GW in nuclear capacity by building at least 10GW in wind and solar plants and at least 10GW in highly efficient modern gas-fired power stations.

This, she argued, would increase the share of green energy in electricity generation from about 20 per cent today to 35 per cent by 2020. She also added a commitment to reduce electricity consumption by 10 per cent, and pledged Germany would still meet its 2020 aim of reducing CO2 emissions by 40 per cent compared with 1990.

But what looked solid in blueprint appeared more rickety as experts started picking over it.

Power companies were already planning a new generation of offshore wind farms, but would they get them built in time? Would Germans allow pylons to be built in their back yards? And who would build new gas-fired plants?

Among the chorus of doubters, perhaps the wind farm builders best summed up the sceptical attitude.

Sven Utermöhlen, head of climate and renewables central Europe for RWE’s rival Eon, this summer called Ms Merkel’s goal for renewable energy capacity “a bit too ambitious”. He said the country would probably need two to three big wind farms under construction in any one year. “How many are being built at the moment? Two.”

But with the government working to change a whole plethora of incentives – for building gas-fired plants, for example and other rules, he cautioned it would take another five or six years to predict reliably whether Germany could reach its goal.

Indeed, Mr Grossmann himself is currently perhaps the most high-profile person trying to make the government’s blueprint come to life. He is negotiating with Gazprom, the Russian gas producer, about forming a joint venture to run and build gas-fired power stations in Germany – and also the Benelux countries and the UK.

But it is this fossil-fuel component of what the chancellor calls Germany’s “energy switch” that has environmentalists worried. As numerous power company heads have pointed out, it is hard to replace low-emission nuclear power with fossil-fuel sources – even if only in the interim – and still expect CO2 emissions to continue to fall.

Ms Merkel’s environment minister Norbert Röttgen vehemently disagreed. He recently reminded that the government was “adamantly” sticking to its plans to reduce CO2 emissions by 40 per cent between 1990 and 2020, rising to 70 per cent by 2040.

He noted that one reason to build so many new gas-fired power stations was to make it easier to take older ones out of service.

“If you replace technologically outdated power plants with an efficiency factor of 30 per cent with plants that are 60 per cent efficient, then this will quite logically have a positive impact total emissions.”

This argument – and the belief that Germany will reach its renewable energy target – do appear to have persuaded some of the country’s leading environmental groupings.

“If the conversion to green energy works as planned, we could even see Germany hit its target early,” says Ann-Kathrin Schneider, a climate expert at Bund, the powerful eco-group.

“Having said that, there are other reasons to worry that Europe’s largest economy may not in the end reach its emissions target over the next decade.”

According to Bund, Ms Merkel’s ambition to cut electricity consumption by 10 per cent over the next decade is not backed by serious component targets.

While it is all well and good providing incentives for homeowners to insulate their houses better: “The big problem for Germany with a view to its targets is getting better commitments from heavy industry, as well as the energy-producers themselves,” Ms Schneider says.

This, as Bund argues, could probably only happen through higher standards at European Union level. European governments are discussing a widening of the region’s CO2 emissions reduction from 20 per cent to 30 per cent between 1990 and 2020, under which “major emitters” would agree to “take on their fair share” of cuts.

Despite his caution, even Mr Grossmann admits that Germany’s “Herculean task” is still a work in progress that could fail – but, equally, could succeed.

“Maybe it’s because I’m cheery by nature that I’m not in despair,” he said. “But I’m also a rational optimist. I believe it’s possible to make progress and to make the future.”

Financial Times