GE complains as German wholesale power prices drop
Wholesale prices on the exchange dropped to a new low of 2.8 cents per kilowatt-hour in June. Nonetheless, complaints about the cost impact of renewables on industry continue unabated. GE’s CEO recently claimed that industry pays 20 cents.
In an interview with German economics daily Handelsblatt, GE’s CEO Jeffrey Immelt claimed that "Germany's energy policy is not feasible for the long term" (that is my translation of the German; I could not find a transcript of the original interview in English). But when he got into details, he tripped over his own foot, putting the price that a steel mill has to pay in Germany at 20 cents, compared to only five cents in the US.
But as Photon magazine writes today in their German newsletter, the average price on the wholesale exchange in June dropped below three cents for the first time ever. Firms that purchase wholesale power now only pay 2.8 cents on the average.
Of course, most large industrial power consumers do not purchase their electricity on the spot market, but rather in contracts for, say, 18 months. Nonetheless, a spokesperson for the EEX power exchange told Renewables International that the amount of physical electricity (as opposed to financial trading – the same kilowatt-hour exchanging hands multiple times before it is consumed) traded on the exchange made up around 40 percent of all of the power consumed in Germany in 2012 (262 terawatt-hours of the total of approximately 600 TWh).
Unfortunately for Immelt, the other 60 percent does not cost 20 cents either – and this is easy to look up. Over at Eurostat, we see an overview for the second half of 2011 showing that the average "electricity price for industrial consumers" in Germany was 12.4 cents, 1.3 cents above the average for EU-27 and a whopping 0.6 cents above the average for the euro zone. Only 6.6 cents of that was actual energy, however, with the rest going to "network costs" and non-recoverable taxes and levies." Even assuming that Immelt was talking about US cents, the 12.4 cents in Germany is only equivalent to 15 US cents – and again, that level is in line with the average in the euro zone.
(Note that France and Hungary are the only countries in for which no data are available aside from the "total price." No data are available for Austria because it is in the same grid zone now with Germany called Phelix. No data are available in France because the French government wants to protect its nuclear sector from an open market.)
In other words, Immelt overstates the cost of power for steel mills in Germany by a full third at least. What's worse, the trend in Germany is down, not up. Finally, power costs are not everything for steel mills; reliability is equally important. So while Bulgaria has the cheapest electricity in that list, Germany has the most reliable grid in Europe, if not in the world.
In short, Germany's energy transition is lowering rates for industry, not raising them. And as long as grid stability remains top-notch, Germany need not worry about its Energiewende is scaring off energy-intensive firms. (Craig Morris)