Disruptive German wind + solar

This week, German power plant operators have announced plans to shut down an estimated 20 percent of generation capacity in Germany because prices on the wholesale exchange make them unprofitable.

The Breakthrough Institute (BTI) has published another article on the Energiewende, claiming that Germany's energy transition "shows why we need nuclear." If you are a bit surprised to hear that a country phasing out nuclear demonstrates why we need it, join the club. The most disappointing part about the article is, however, that it does not move forward in the discussion; the authors still compare the price of old, not new solar to nuclear – an error I pointed out here in the work of the Breakthrough Institute's Alex Trembath only recently.

Likewise, the article still claims that it will take Germany 10 years to replace its nuclear capacity with renewables (which, for the record, would suffice as the nuclear phaseout has exactly 10 years); yet, I only recently pointed out that Germany will only need seven years at the current rate. It all seems like a game of whack-a-mole; the BTI does not adapt its arguments to an ongoing debate.

Take the claim that solar is not "disruptive." Like Trembath, the authors of the new article claim in passing that "wind and solar are [not as] fully scalable and disruptive as some environmentalists claim" – and once again, there is no further discussion of why wind + solar are not disruptive.

Yesterday, Germany's Süddeutsche Zeitung reported that Germany's power plant operators are planning to shut down up to 20 percent of the country's roughly 90 gigawatts of dispatchable, conventional power capacity – primarily gas turbines and coal plants. Those shutdowns do not include the government's plans to shut down nuclear. Because Germany has peak power demand of 80 gigawatts and that peak always occurs on late November evenings when there is reliably no sunlight, Germany will always need roughly 90 gigawatts of dispatchable generation capacity in case there is too little wind, as I have repeatedly pointed out.

At present, roughly 15 plants are officially scheduled to be decommissioned in Germany, but the newspaper reports that a wide range of others are on the table, and even municipal utilities are complaining about low profits. RWE's CEO has said that profitability is not possible for conventional power plants at wholesale prices below four cents, which is roughly where we are now. And the culprit is easy to identify: disruptive wind + solar.

Critics, such as Greenpeace's Andree Böhling, point out that power firms are not passing on lower wholesale prices to consumers, but pocketing the profits themselves to produce greater margins in power trading and sales. Indeed, large corporations are generally not happy unless they get double-digit profit margins. For instance, Eon posted had a 16.5 percent profit margin (EBITDA) in 2009, compared to 26.3 percent for France's EDF and 25.1 percent at German giant RWE. For 2013, Eon expected (in January) its EBITDA to increase by 16 percent in 2013 year over year but announced in May – based on Q1 figures – that it might slightly miss that target, though its profit margin would nonetheless increase. Likewise, RWE saw its EBITDA increase by 10 percent last year, with earnings from power generation increasing by 13 percent in Germany. (Craig Morris)