Germany´s Energy Future – part 2

One year ago Germany decided to quit producing nuclear energy by 2022. Since nuclear power plants are a central pillar the German energy mix, contributing some 22.5% to the entire electricity output in 2010, this means that until 2022 the equivalent of 140.6 TWh (2010) has to be replaced by other sources. This is a minimum estimate ignoring increase in consumption.

Already at this moment Germany begins to face the consequences of last year’s decision. As nuclear plants are successively being phased out, more strain is put on other sources, in particular renewables. In addition, the power grid is experiencing severe tensions as more controllable sources of energy are being replaced by less controllable (and predictable) ones. Especially the latter is a constant, or rather growing source of trouble.

One the one hand, it’s a clear goal of German policy to increase the share of renewables substantially. On the other hand, it seems implausible to be able to replace the entire nuclear bloc by wind and solar capacities only. Thus, it appears inevitable to commission a number of conventional, i.e. thermal power plants which are supposed to act as a backup for the fluctuating input from e.g. wind farms.

In my view, it is pretty obvious that wind will be the main source of renewable energy in the future, considerably outnumbering all other renewable sources taken together.

In 2010 the total capacity of German wind farms amounted to some 27190 MW which produced some 36.5 TWh. Taking into account the average specific output of wind farms as calculated in one of our previous postings we may estimate the extra capacity needed in order to fill the gap. Then we could show that the average output of wind power installations amounts to some 1600 MWh annually per MW of installed capacity.

Having these figures at hand we may easily estimate how much extra wind capacity is needed in order to replace nuclear in its entirety. Thus if wind power is supposed to be the only substitute (which is certainly an oversimplified approach) it would mean that Germany needed almost 88000 MW of additional wind power by 2022, thus an extra three times as much as was installed up till 2010. This in turn would mean that the country needed more than 115000 MW in wind turbines by the time the last nuclear power station is decommissioned.

Between the year 2000 and 2010 an average of 2000 MW was commissioned annually, in total some 20000 MW of wind power. Extrapolating this trend to 2022 implies that some 24000 MW of new capacity could be added to the grid until D-day. However, what is needed is almost four times as much. Thus the annual growth rate should be close to 7800 MW. Even if we assume that wind will only replace half of the nuclear output, a growth rate of about 4000 MW annually would be necessary, i.e. twice as much as has been the case during the boom period 2000-2010.

The figure below shows two different scenarios for Germany´s wind power capacity. The business-as-usual scenario (BAU) is based on the assumption that wind capacity will grow at a rate of 1900 MW per year, which is equivalent to the increase in 2010. The Target scenario on the other hand assumes an annual growth of 7800 MW which would theoretically be sufficient to replace Germany´s entire nuclear production as seen in 2010.

Total installed wind power in Germany.

Given that there is considerable resistance among the population against onshore wind farms, it is indeed hard to see how this can be achieved. In addition, as  subsidies for renewable energies are becoming a serious burden for consumers, they are likely to be reduced in the future. This in turn may jeopardize further investment in wind power, and thus even the more conservative BAU scenario may, in fact, be too optimistic. As a consequence, other energy sources are desperately needed if Germany wants to maintain her standard of living. We will come back on this issue in another posting.

Fuel Poverty in the UK

This time I would like to cover a very different aspect of energy and its usage in everyday life. So far there is  no apparent lack of energy, technically speaking. Energy is available in abundance, and the only restriction to using it is the price we are asked to pay for it. Thus big users will eventually find themselves paying a huge bill. But it´s not only big consumers who might face a hefty burden from their energy bill. More and more people are using a substantial amount of their available income in order to  buy the energy they need. In particular, this is true for heating which is also one of the biggest parts of private energy consumption.

The UK statistical office is collecting data on fuel poverty. The term refers essentially to energy needs for heating purposes and the relative amount of household income people have to spend in order to “maintain a satisfactory heating regime”, i.e. 21 °C in the main living area and 18 °C for other rooms. In particular, people are considered to suffer from fuel poverty if they have to spend more than 10% of the household income on fuel for heating.

The figure below gives a sketch of the situation in the recent past (2003 and 2009).

Number of fuel poor households in millions. Abbreviations: dc – dependent children, hh – household.

The first observation we make is that the number of fuel poor households has apparently dramatically increased between 2003 and 2009. During that period the number of households concerned has, on average, more than doubled. Thus, fuel poverty in the above sense is definitely increasing and showing a severe social impact. Energy is becoming a scarce and to some extent even luxurious commodity.

Another observation is that specific groups are particularly hit by this phenomenon. People without dependent children are more likely to suffer from fuel poverty than those having kids. Moreover, persons older than 60 years are also facing a greater risk of getting fuel poor. The same is true for single persons when compared to couples.

The causes for this are manifold. Energy prices are on the rise. They climb faster than the average income, especially for retired people. Another factor is certainly the economic crisis which hit a number of European countries in 2008. So far we are still far from a sustainable recovery. Therefore, we may well assume that the situation has aggravated in the meantime.

Yet another factor coming into play is related to economic circumstances: Many elderly people may not be able to afford refurbishing their houses such that they consume less energy, especially for heating. Renovating old houses is a costly undertaking which may simply go beyond many people´s financial capabilities.

Fuel poverty is a critical issue not only in the UK. Also other countries like Germany encounter the same problem. However, most of those countries do not collect the respective statistical data as is the case in the UK. Therefore, it is extremely difficult to assess the severity of fuel poverty for other countries. Taking into account that energy is of critical importance to the functioning of our societies, it would be highly desirable to collect those data in order to tackle the problem as soon as possible.

Energy and Transport

Transport is one of the big consumers of energy. As we have seen in some of my previous posts, there is a clear tendency to become more energy efficient. Does this also apply to energy used for transport purposes?

Eurostat provides a collection of data on this issue which may give us an answer.  Let us look at the transport energy per unit of GDP. This is certainly a sensible measure since we may consider a link between economic activity on the one hand and transport (of both people and goods) on the other. So whenever the economy is growing (or shrinking) transport is likely to follow suit.

We consider here the case of Germany, France and UK, i.e. the biggest economies of Europe. The figure below shows how energy demand for transport per unit of GDP has developed since 1995. The curves are indexed with 2005 = 100.

Energy demand for transport purposes per unit of GDP.

The message behind this figure seems to be obvious. Over the past 15 years there has been a certain decoupling of economic performance and energy demand for both passenger and goods transport. Thus per unit of GDP less energy is used for transport. We are becoming more energy efficient.

Having a closer look at the figure we may also observe that the downward trend is still unbroken, i.e. there is no flattening tendency. This leads us to the conclusion that there is room for further improvement of energy efficiency in the transport sector.