Germany’s great gamble

If politicians in Berlin were as sensitive to economic risks as the dangers of nuclear power, they would abandon their radical energy experiment now, writes industry insider Walter Hohlefelder.

In no industrial nation in the world has the peaceful use of nuclear energy been so controversial for so long as in Germany. Practically no other political issue has aroused such heated debate. Until recently, the antagonism between those for and against was reflected in the varying stances of the country’s political parties: the Conservatives and the Liberals moderately pro nuclear; the Social Democrats and the Greens categorically anti.

But after Fukushima, the ruling Conservatives and Liberals changed their approach – dramatically swinging to a firmly anti-nuclear position. It was a swing more notable for the fact that, only last autumn, the coalition had decided to substantially extend the use of nuclear for ecological and economic reasons, a resolution based on extensive energy-sector analysis and deemed essential to safeguarding Germany’s position as a centre for business.

The recent u-turn was driven neither by new findings about the situation in the German energy industry, nor a lack of safety at German nuclear-power stations. On the contrary, the independent Reactor Safety Commission, which includes critics of nuclear energy, confirmed in a stress test following Fukushima that every German plant met very high safety standards.

The reason is rather that, after Fukushima, what is called the residual risk – the risk that remains even if nuclear plants meet maximum safety standards for construction and operational management – will no longer be accepted. No facts have changed, then, only the political assessment. Of course, political considerations have also had their impact: if the overwhelming majority of the population is now against nuclear energy, it will be very difficult to win elections in Germany with a pro-nuclear stance.

The abandonment of nuclear energy combined with plans for massive development of renewable-energy sources and for considerable energy savings is radical. The eight oldest German nuclear-power stations – which have been operating for an average of around 30 years – were shut down immediately after the decision was taken. The remaining nine plants are following in succession. The newest reactors are to be removed from the grid in 2022.

At the same time, the German government is sticking to its energy targets, which are extremely ambitious in European and international terms. Greenhouse-gas emissions are to be reduced by 40% on 1990 levels by 2020 and by 80% to 95% by 2050. The proportion of renewable sources of energy – primarily wind and to some extent solar power (hydroelectric power has limited potential for development) – is to rise from the current 16% to 40% by 2020 and to 80% by 2050. Energy productivity is also to increase, by 2.1% a year, and electricity consumption to be cut by 20% by 2020.

The question now is whether these targets can all be met simultaneously and, if so, with what consequences. After all, nuclear energy represents a quarter of German electricity production. That is half the “baseload” – the electricity production available 24 hours a day. The plants already decommissioned produced some 10% of German electricity. So, already, there is practically no buffer on days of maximum power consumption. The federal authority responsible has already warned that in worst-case scenarios – primarily in winter – black-outs cannot be ruled out.

Abandoning nuclear energy while developing renewables further aggravates the instability of the power-grid, already critical due to the volatility of wind and solar energy supply. Whereas in the past, transmission-system operators had to take measures to stabilise the grid – such as switching plants on or off – only two or three times a year, nowadays that is almost a daily occurrence.

To make the switch to renewables, Germany urgently needs to build new networks, including some 3,500 kilometres of power lines, in particular to take electricity from the windswept north to the wind-sheltered south. Because of resistance at local level, however, to date barely 100 kilometres have been covered. Power storage would be a solution to the volatility of renewable electricity production. But expansion of the only large-scale technology currently available – pumped storage plants – is limited by geographical factors, and there is resistance among the populace to the few projects that do exist.

Besides renewables, the loss of nuclear energy can, of course, be compensated by new coal and gas power stations. But coal power stations are unpopular with the general public and many politicians because of their carbon footprint, and current projects are at a standstill. And so instead the politicians are plumping for gas plants, which emit less carbon dioxide. However, at least six years have to be reckoned with for planning, approval and construction before these can be up and running. As Germany has no appreciable gas supply, it will become even more dependent on imports, primarily from Russia. In addition, gas is expensive and gas power stations are not profitable, raising the question: who is going to build them?

There is talk of subsidising not only wind and solar energy but also gas power stations through a levy on the price of electricity. So not only the grid, which is regulated anyway, but also electricity production would be massively regulated, further restricting competition in the electricity market.

Another option would be to compensate for the loss of power from nuclear energy by saving electricity. This, however, is very difficult and possible only in the long term: industry is already extremely efficient and has little room for improvement; most household appliances already operate in energy-saver mode. Granted, there is considerable latent potential for energy-saving through property redevelopment – insulating homes, for example – but realising it requires hugely expensive state-funded schemes. Few previous attempts have succeeded, due firstly to a lack of will to invest among property owners and secondly to the rent increases entailed, making it a political hot potato. And even if energy is saved here, electricity demand continues to grow from IT and – in future – from electric vehicles, a stated German government priority. All of this raises doubts as to whether the government’s energy-saving targets are realistic.

The further growth of currently highly subsidised renewables, the expansion of the grid and extra gas imports will together create additional costs to be borne by electricity consumers, both domestic and industrial. Views on the extent of electricity and gas price rises vary. But even if it we take a figure somewhere in the middle of the estimates, the expected increase is considerable. With the eight oldest nuclear-power stations already decommissioned, power exchange prices have already risen. Electricity-intensive industries are already threatening to quit Germany; social organisations are demanding cheaper tariffs for the most vulnerable customers.

Even if it were possible to produce 40% of electricity from renewables by 2020, 60% would still be generated by fossil fuels because of the loss of carbon-neutral nuclear energy. It is hard to imagine how in these circumstances the ambitious carbon-dioxide targets to which the German government remains doggedly committed can be achieved.

Germany is at the heart of Europe, and its EU partners are very unhappy about its unilateral abandonment of nuclear energy. Germany used to export electricity and had practically become the electricity reserve of central Europe. That situation will cease to be, resulting in supply problems in neighbouring countries, too. Having lost 10% of its production capacity, Germany is paradoxically already importing nuclear-generated power from France and nuclear and brown-coal electricity from the Czech Republic. If there is a black-out in Germany, it could easily spill over into neighbouring countries because of the linked power grid. And more expensive electricity in Germany is having a knock-on effect in Europe: if gas prices rise because of increased demand in Germany, they will also rise in Europe.

The advocates of Germany’s energy turnaround regard it primarily as an opportunity to step up the pressure for innovation in environmentally-friendly technologies, which could become export hits. In the medium and long term, independence from imports through the growth of renewables as local energy sources is said to be an added advantage. And the conversion of the energy system is seen as a huge investment programme that will trigger growth.

It is a challenge that has been compared in scale to German unification – but is believed to be manageable without upheaval to industry and the welfare-state. That may ultimately prove to be the case. Nonetheless, there are considerable doubts about carrying out this large-scale experiment with one of the biggest economies in the world. If the same risk yardsticks used for nuclear energy were applied to the risk of severe losses in prosperity and welfare as a result of the energy turnaround, the experiment would never be considered. In this case, it is more than just a residual risk. The cautious, smooth transition into a new energy future adopted by the German government last autumn should never have been ditched.

Walter Hohlefelder is an energy consultant to the board of
E.ON AG. He was formerly president of the German Atomic Forum and a member of the managing board of E.ON Energy. 

Homepage image from Greenpeace shows an anti-nuclear banner at Berlin’s Brandenburg Gate.