Germany's phaseout puts a spotlight on the cost of its renewables strategy

Germany's decision to phase out nuclear energy by 2022 will transform Europe's largest economy into a multibillion-dollar laboratory experiment on the rapid deployment of renewable energy and smart grid technologies, supporters of Chancellor Angela Merkel's shutdown decision say.

Or, if these initiatives fall short, it could leave consumers exposed to higher power prices and make German industry less competitive and the nation more dependent on fossil fuel sources and imports from France's nuclear plants, Merkel's critics say. The former option would undermine Germany's performance on climate goals; the latter would be heresy for the country's ardent nuclear opponents.

In either case, lessons from Germany will begin arriving as it tries to replace 20 gigawatts of generating capacity from the 17 existing nuclear plants that supplied nearly one-quarter of Germany's electricity supply prior to Japan's nuclear disaster in March. Although there are profound differences between the American and German electricity sectors and political environments, the lessons can illuminate the stalled U.S. energy policy debate.

Antonella Battaglini, program director for the Smart Energy for Europe Platform in Berlin, says that new offshore wind power can replace much of the energy from shut-down nuclear plants. Merkel's government is aiming at boosting renewables' share of electricity capacity from 16 percent currently to 35 percent in 2020.

"There is not a definitive answer" on a pathway to that goal, she said. "But lots of studies demonstrate that Germany can be even 100 percent reliant on renewable energy if it is well connected with the rest of Europe. By 2022, obviously, this will not be possible, but it will be possible to develop a large amount of renewable sources," said Battaglini, who supports the nuclear phaseout decision.

Germany will have to invest in smart grid technologies needed to tie more rooftop solar units, small municipal wind farms and electrified vehicles into the grid. It will have to build pump storage facilities and deploy advanced battery systems, and find strategies to blend more energy efficiency and demand response programs into its power system.

Most critically, it will have to construct extensive new offshore wind farms in the North and Baltic seas, and a new network of marine and land cables to move the power south from the coast to the industrial and population centers to the south, says Battaglini. "That is where the majority of the load is," she said.

A study last year by the German Energy Agency (known as Dena) concluded that between 3,400 and 7,000 kilometers (2,113 and 4,350 miles) of new lines would be needed, at costs ranging from €1 billion and to nearly €3 billion ($1.46 billion to $4.37 billion) annually for conventional technology options.


No smart grid, no expanded renewables

Battaglini heads a support project for grid expansion and says that while new power lines provoke citizen opposition in Germany as in the United States, there is a growing recognition in her country that the end of its nuclear power industry will mean a larger, stronger grid. "Without this, the expansion of the renewables is not guaranteed."

"The grid cannot become the bottleneck of the energy shift," Dena President Stephan Kohler said in a statement. "Wind and solar power won't do any good if we can't transmit it to where it will be used or stored."

Some industry leaders warn that the nuclear phaseout, imposed before compensating strategies are in place, represents a reckless gamble.

"Germany has not enacted an energy plan. It has adopted an ideological preference," said John Ritch, director-general of the World Nuclear Association in London. "It is based on what I see as a fantasy -- that wind and solar and other so-called renewables can power a modern economy. In practice, I don't think they will find it either affordable or reliable.

"Believers in Germany's green ideology think that any gap in capacity created by this anti-nuclear fait accompli will close itself automatically. By cutting off nuclear, they believe they will animate a process of innovation that will augment wind and solar capacity, and so on. This may prove more problematic than their theology imagines," Ritch said.

R. Andreas Kraemer, director of the Ecologic Institute, an environmental and energy think tank in Berlin, argues that Germany's grid is operating well now, with 13 of its 17 reactors not in service. (Merkel ordered a temporary shutdown of eight older units after the Fukushima Daiichi accident in Japan, and five others are down for maintenance.)

"There was wind. Germany has lots of interconnections with other countries. There was never a risk of a blackout at any time," he said. "The transmission system operators had to react to this new situation. But the stability of the system has been maintained."

Arne Jungjohann, the program director for Environment and Global Dialogue with the Heinrich Böll Foundation in Washington, D.C., makes the same point. Today, four nuclear plants are supplying 5,400 megawatts of power, just over one-quarter of the nuclear fleet's original capacity. "Are the lights still on? Are the trains still going? Are the car factories still humming? Yes, yes, and yes," he wrote recently.

The far harder test, however, comes in winter months, when Germany's electricity demand peaks and cloudy weather shrinks the contributions of solar units.

High nuclear standards, low political base

Commentators in Der Spiegel and other German publications say Merkel had no choice but to reverse policy and order the phaseout of nuclear plants once the political and emotional waves from the Fukushima accident struck in Germany. For a population whose mistrust of nuclear plants has links to the nuclear armaments on its soil throughout the Cold War and fears of radiation after the Chernobyl nuclear accident in Ukraine, the Japanese catastrophe was the last straw.

"After Fukushima, German Chancellor Angela Merkel had no other choice than to abandon nuclear power," wrote Roland Nelles, political editor of Spiegel Online.

Germany's E.ON, the world's largest utility and owner of six German nuclear plants, said it was obliged to bend to the decision.

"Despite the high safety standards at the nuclear power stations across Germany, confirmed recently by the reactor safety commission, E.ON accepts the will of the political majority to secure an early phase-out of nuclear energy," it said.

"At the same time the company expects to receive due compensation for the financial damages associated with these decisions, which is expected to amount to billions of Euros," the company said, indicating that its lawyers were preparing to back up that demand in court.

Kraemer said that while the operations and finances of Germany's largest utilities will be hit hard, the transition away from nuclear opens opportunities for the many small municipal power companies that are the predominant distributors of power to local customers.

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"The more we invest in distribution grids, making them smart, the less the demand for new generation and high-voltage lines," he says.

Recent press reports describe plans by municipal power suppliers in Munich and Baden-Württemberg to expand gas-fired power plants that could offset the output of four nuclear plants.

"At the local level, people tend to cooperate across party lines" on energy, Kraemer said. "They tend to be pragmatic. It just gets done."

But the expanse of still-uncharted terrain is clearly daunting, some analysts say. Integrating Germany with renewable energy sources along the Mediterranean coast will require a major expansion of inter-Europe transmission lines and close collaboration among national energy agencies.

The European Climate Foundation, in its "Roadmap 2050" assessment of decarbonization strategies, estimates that achieving a nearly carbon-free power sector by midcentury would require annual capital investments of about €30 billion currently, rising to €65 billion a year in 2025. Overall transmission capacity would have to triple.

This will have to happen at a time when pressures on the euro currency are fraying European unity.

David Campbell, director of trade policy at the Representative of German Industry and Trade in Washington, notes that Germany has been the banker of last resort during the ongoing financial crises that followed the 2008 market crash. "But that's a drain on Germany, period," he said. At some point, does German support for a new energy environment run into German aversion to debt?

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