Monday, November 11, 2013

Germany: Cheaper when free energy isn't

Some recent articles on Germany compiled from an Ontario perspective - because of subsidies that pay renewable energy sources (RES) by output, there is a rather bizarre relationship that makes consumer pricing lower the less productive the RES is.
Perhaps a structure where it's beneficial to have efficient technologies would be better.

Germany plans steep wind cuts -Recharge News:
Germany’s incoming government is likely to steeply cut support for wind power and lower its target for offshore deployment – to the dismay of renewable energy groups.
Environment minister Peter Altmaier, and Hannelore Kraft, the Social Democrats’ (SPD) representative in energy coalition talks, over the weekend unexpectedly announced an agreement on the rough outline of the still-to-be-formed new coalition government’s renewable policy.
The expansion of onshore wind power in the future should be limited to “good locations” – meaning windy areas in northern Germany – according to the agreement.... 
There's a number of issues here, some of which related directly to Ontario: limiting installations to "good locations" could be seen as partially a rejection of the idea of geographic smoothing - it seems more of a rejection of the idea that very week renewable resources make sense close to loads.
A recent German Energy blog article showed the EEG deficit decreasing in recent months - good news for holding down the renewables surcharge/ bad news for production from renewables.

The surpluses for the months of September and October are due to fewer biomass, solar and wind power input compared to the same period last year, while input from other sources increased, but only slightly. In September 2013 480 GWh wind power were fed into the German grids (2012: 666 GWh), 2,419 GWh solar power (2012: 2,751 GWh), 1,481 GWh biomass power (2012: 1,909 GWh) and 282 GWh from other renewable energy source (2012: 244 GWh). In October 2013 the grids received an input of 771 GWh wind power (2012: 776 GWh), 1,624 GWh solar power (2012: 1,859 GWh), 1,469 GWh biomass power (2012: 1,950 GWh) and 339 GWh from other renewable power sources (2012: 242 GWh).
For 2014 the EEG (a.k.a. renewables surcharge) is set to rise to 6.24 Euro cents/kWh; add on the value added tax and account for $1.40 CDN:$1 EUR exchange; it equates to 10.4 CDN cents/kWh.

Production form renewables look to be trending similar to 2012's production, which was primarily from (as a share of total generation): 4.2% solar, 8.1% wind, and 6.2% biomass (for Ontario there's a danger in this final number, which Tom Adams seems to be getting at his recent "Digging the Hole Deeper for Ontario Ratepayers").

Having reached the heady heights of 12.3% of generation from wind and solar, the Germans look to be pulling back and re-evaluating both.

Meanwhile, a European Union commission report rejects traditional, German-style, feed-in tariff (FIT) mechanisms:
With the increasing maturity of renewable energy technologies and declining costs, RES have to be gradually subjected to market forces, the Commission says, adding that “any support that is still necessary should therefore supplement market prices, not replace them, and be limited to the minimum needed”. The Commission goes on to explain what this means in practice, i.e. “phasing out feed in tariffs which shield renewable energy producers from market price signals and move towards feed in premiums and other support instruments, such as quota obligations, which force producers to respond to market prices”. It also invites Member States to grant support through genuinely competitive allocation mechanisms such as tendering procedures.

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