04.07.2013
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Grid reliability

Industry mood about Energiewende worsens

German Energy Agency Dena released the findings of its quarterly Energiewende Index last month and found that the mood among German industry and grid operators is at an all-time low.

The index collated by Ernst & Young is not to be confused with the one created by McKinsey – but clearly the coexistence of two such indices is a sign that attention is being paid to what business leaders think. In the most recent index made by Ernst & Young for the German Energy Agency, the score has fallen to an all-time low of 94.2 points, though we have to take "all-time" with a grain of salt as the index was only created last year.

The most interesting finding for me concerned grid reliability. As I have been pointing out in my recently launched series on German industry allegedly fleeing the country, the cost of wholesale electricity is going down, so as long as grid reliability remains among the best in the world, industry in fact has no reason to leave Germany.

Dena’s Index found (press release in German with link to PDF), however, that 50 percent of the firms surveyed said that "short grid outages lasting less than three minutes would have considerable consequences for them," and that figure rose to more than 70 percent in the energy-intensive sectors. Here, the question focuses on whether Saidi – a way of quantifying grid outages – is the appropriate standard; it disregards power outages lasting less than three minutes.

We then read that "16 percent of all firms suffered from power outages over the past 12 months." The survey also says (see the PDF in German) that "seven percent of the firms surveyed are considering moving production abroad because grid reliability could worsen." And because that figure includes grid operators themselves, who cannot leave, the figure actually rises to 25 percent when those firms are filtered out.

The question, of course, is whether these numbers are any higher than they were, say, three or 10 years ago – and whether they are any higher than in other countries. We have seen figures tossed about for the number of poor households having their power cut off because they can no longer pay their bills in Germany only to find that the numbers are relatively low when we start comparing Germany's performance to other countries. Unfortunately, the survey does not seem to have asked this question before, so we have no way of knowing whether the figure is higher than usual. (The author did not respond to our request for clarification.)

The best figures I can come up with for the US, for instance are from a report (PDF) published in February 2011 based partly on data that was already several years old at the time (again, we are able to complain about Germany's performance because the Germans provide us with data not always available in other countries). Here, we see that Germany had 23 minutes of downtime as defined in SAIDI in 2007 (the figure had fallen to less than 16 minutes last year), compared to 240 in the United States as a whole. While Saidi is not to be taken as the sole indicator of great quality, it is nonetheless counterintuitive to expect a country with 10 times the number of outage minutes to suddenly be better if we simply tweak the definition of "outage."

As recently mentioned, the claims that BASF is leaving Germany for the US are based on cheap gas in the US, not high power prices in Germany. Another recent report from the UK points out that the firm is indeed setting up a new plant in my home state of Louisiana because of the low price of natural gas, and once again the author seems to take the new plant (which is creating a whopping 20 jobs) as an indication that Germany cannot keep its industry.

I certainly hope BASF will be bringing its own gas turbines, however, for power reliability in the states is far below the average at 320 minutes (South Atlantic) according to same report mentioned above – that's 20 times more downtime minutes than in Germany. Unfortunately, none of my personal sources in my home state were able to provide me with statistics on power outages within the states – not even a legal expert who monitors the local power monopolist. Louisianans lack hard facts about how reliable their grid is. (Craig Morris)

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2 Comments on "Industry mood about Energiewende worsens "

  1. heinbloed - 07.07.2013, 02:24 Uhr (Report comment)


    Lamenting grid operators in Germany are the big 4 utilities. They have a problem, losing money with their power plants and with their electricity turn-over:

    http://www.bloomberg.com/news/2013-07-05/nuclear-cuts-vindicate-merkel-as-rwe-profit-dips-energy-markets.html

  2. heinbloed - 07.07.2013, 02:12 Uhr (Report comment)


    Lamenting grid operators in Germany are the big 4 utilities. They have a problem, losing money with their power plants and with their electricity turn-over:

    http://www.bloomberg.com/news/2013-07-05/nuclear-cuts-vindicate-merkel-as-rwe-profit-dips-energy-markets.html

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