Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
Stock Investors Ignore What May Be The Biggest Policy Error In History - 20th Oct 17
Gold Up 74% Since Last Stock Market Peak 10 Years Ago - 20th Oct 17
Labour Sheffield City Council Employs Army of Spy's to Track Down Tree Campaigners / Felling's Watchers - 20th Oct 17
Stock Market Calm Before The Storm - 20th Oct 17
GOLD Price Creates Bullish Higher Low - 20th Oct 17
Here’s the US’s Biggest Vulnerability in NAFTA Negotiations - 20th Oct 17
The Greatest Investing Lesson Learned from the 1987 Stock Market Crash - 20th Oct 17
Stock Market Time to Go All-in. Short, That Is - 19th Oct 17
How Gold Bullion Protects From Conflict And War - 19th Oct 17
Stock Market Super Cycle Wave C May Have Started - 19th Oct 17
Negative Expectations, Will the Stock Market Correct? - 19th Oct 17
Knowing the Factors Affect your Car Insurance Premium - 19th Oct 17
Getting Your Feet Wet In Crypto Currencies - 19th Oct 17
10 Years Ago Today a Stocks Bear Market Started - 19th Oct 17
1987 Stock Market Crash 30th Anniversary Greatest Investing Lesson Learned - 19th Oct 17
Virgin Media Broadband Down, Catastrophic UK Wide Failure! - 19th Oct 17
The Passive Investing Bubble May Trigger A Massive Exodus from Stocks - 18th Oct 17
Gold Is In A Dangerous Spot - 18th Oct 17
History Says Global Debt Levels Will Lead to Another Crisis - 18th Oct 17
Deflation Basics Series: The Quantity Theory of Money - 18th Oct 17
Attractive European Countries for Foreign Investors - 18th Oct 17
Financial Transcription Services – What investors should know about them - 18th Oct 17
Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures - 18th Oct 17
Surge in UK Race Hate Crimes, Micro-Racism, Sheffield, Millhouses Park, Black on Asian - 18th Oct 17
Comfortably Numb: Surviving the Assault on Silver - 17th Oct 17
Are Amey Street Tree Felling's Devaluing Sheffield House Prices? - 17th Oct 17
12 Real-Life Techniques That Will Make You a Better Trader Now - 17th Oct 17
Warren Buffett Predicting Dow One Million - Being Bold Or Overly Cautious? - 17th Oct 17
Globalization is Poverty - 17th Oct 17
Boomers Are Not Saving Enough for Retirement, Neither Is the Government - 16th Oct 17
Stock Market Trading Dow Theory - 16th Oct 17
Stocks Slightly Higher as They Set New Record Highs - 16th Oct 17
Why is Big Data is so Important for Casino Player Acquisition and Retention - 16th Oct 17
How Investors Can Play The Bitcoin Boom - 16th Oct 17
Who Will Be the Next Fed Chief - And Why It Matters  - 16th Oct 17
Stock Market Only Minor Top Ahead - 16th Oct 17
Precious Metals Sector is on Major Buy Signal - 16th Oct 17
Really Bad Ideas - The Fed Should Have And Defend An Inflation Target - 16th Oct 17
The Bullish Chartology for Gold - 15th Oct 17
Wikileaks Mocking US Government Over Bitcoin Shows Why There Is No Stopping Bitcoin - 15th Oct 17
How to Wipe Out Puerto Rico's Debt Without Hurting Bondholders - 15th Oct 17
Gold And Silver – Think Prices Are Manipulated? Look In The Mirror! - 15th Oct 17
Q4 Pivot View for Stocks and Gold - 14th Oct 17
Gold Mining Stocks Q3’17 Preview - 14th Oct 17
U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold - 14th Oct 17
Yuan and Gold - 14th Oct 17
Tips for Avoiding a Debt Meltdown - 14th Oct 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

Global Energy Crisis, Germany Unplugged

Commodities / Energy Resources Jul 07, 2011 - 03:56 PM GMT

By: Richard_Mills

Commodities

Best Financial Markets Analysis ArticleThe International Energy Agency (IEA) has recently warned us the world will face higher energy costs, higher carbon emissions and greater uncertainty over security of energy supply if it turns its back on nuclear power.

The IEA believes the future for nuclear power, and a subsequent reduction in carbon emissions, will be show cased in China, India and Russia. Out of the 62 reactors currently under construction, 48 - or 77% of the total - are being built in China, India, South Korea and Russia, another 82 reactors are planned and 210 are proposed for these four markets.


China is the world's largest consumer of coal, India produces more than 70 per cent of its electricity by burning coal and Russia mainly uses natural gas for electricity generation. A reduction in all three countries carbon footprints could be reached by switching a lot of fossil fuel generated power to nuclear power as nuclear's life-cycle emissions range from 2 to 59 gram-equivalents of carbon dioxide per kilowatt-hour while emissions from natural gas fired plants range from 389 to 511 grams and coal produces 790 to 1,182 grams of carbon dioxide equivalents per kilowatt hour.

In 2002, Germany enacted a law to phase out nuclear power, but the current government, led by Chancellor Angela Merkel decided (just last autumn) to extend the lifetimes of the country's reactors by an average of 12 years. This was based on the judgment that Germany would not be able to meet its power demand using only natural energy sources - wind and solar power - and would not be able to meet the governments ambitious goals of a 40% reduction in carbon emissions by 2020 burning more coal and natural gas.

Merkel has consistently said that Germany has to remain a net exporter of energy, repeatedly stressing that there is no point closing German nuclear plants only to import nuclear power.

In 2010 Germany was a net exporter of power to France, sending 16.1 terawatt hours to the country compared with imports of 9.4 terawatt hours.

Then, playing populist politics and over reacting to the partial meltdowns in Japan's Fukushima Daiichi nuclear complex Merkels government immediately shut down almost half of the countries nuclear power and is closing the remainder in stages - the last reactor is to be closed in 2022. Germany, overnight, decided 40 percent of its nuclear power capacity will be shut down and removed 8,800 megawatts (MW) from the grid, the remaining 12,700 MW of nuclear supplied electricity will be gone by 2022.

Before the Merkel government shut down 40 percent of Germany's nuclear power plants Germany had been an energy exporter. Not anymore, DIE WELT reports:

"Before and after the moratorium - as is usual for this time of the year - between 70 and 150 gigawatt-hours were exported. After switching off the German nuclear plants, that surplus disappeared. Since then 50 gigawatt-hours have been imported. The power coming in from France and the Czech Republic has doubled and exports to Holland have been cut in half."

In April 2011, France was a net exporter of power to Germany for the first time since the summer months of June, July and August 2010.

This author would like to suggest the real proving grounds for nuclear power will not only be in China, India and Russia as the IEA predicts, but will also - and give us much more immediate results - be in Germany and the European Union.

The IEA says Germany faces a big challenge to achieve its goal of replacing a significant part of its nuclear power generation with wind and solar. The Breakthrough Institute says that renewable energy sources would have to generate 42 percent of Germanys electricity in 2020 in order to replace 21,500MWs of nuclear power.

Germanys Green Power Quick Start:

  • The Federal Electricity Feed Law (StrEG) of 1991 compelled public utilities to purchase renewable generated power from private producers on a yearly fixed basis
  • The Market Incentive Program (MAP) was introduced in 1999. MAP offered government grants totaling 203 million Euro in 2003 for the commercialization and deployment of renewable energy systems
  • The Feed-in Tariff was introduced into the solar industry - the tariff gives producers of solar electricity a guaranteed price for the energy they supply to the grid. The price is set for 20 years and that price is considerably higher than the price paid for fossil fuel electricity (more than double). The Feed-in Tariff is open to both commercial solar providers and householders who connect their own solar panels to the national grid

Recently the German government has been lowering feed-in tariffs, and solar power, much pricier than wind, has seen steep cuts in incentives. Germany also plans to slash subsidies paid to households generating electricity.

Germanys wind power generation is concentrated in the northern parts of the country. For Germany to supply its southern region with electricity from wind power in the north the country would have to build more of those extremely expensive giant offshore windmill parks in the North Sea. That also means a massive financial commitment to not only upgrade the existing grid to handle such diverse, spread out power but also building massive transmission lines to cross the country and deliver that northern power to the south.

Many green organizations are against the transmission lines and offshore wind park construction has been held up for a year because of environmental issues.

In any event offshore power generated by windmills in the North Sea would be much more expensive than French or Czech nuclear generated power which is readily available to southern Germany (where most of the shutdown reactors were located).

The share of energy wind contributed to Germany's power generation mix did not grow in 2009 because of a weak meteorological wind year. Despite more generational capacity being built, produced electrical energy from wind farms amounted to 37.5 TWh in 2009, compared to 40.4 TWh in 2008.

Chancellor Merkel has forsaken Germany's much needed nuclear contribution to developing a sustainable, environmentally friendly energy policy. Unfortunately she's created not just a German problem but a European one as well:

  • Germany will import more nuclear generated electricity from its neighbors, France and the Czech Republic (who still use the old soviet style reactors) and will also have to import more natural gas from Russia (and coal from Poland), which makes the country even more dependent on Moscow for its energy supply
  • Germany's new need for NG, coal and oil will push up energy prices for the rest of the EU - higher electricity costs will also project into the prices of consumer products. German and other EU consumers will see sharp increases in their energy bills as Germany is forced to import more electricity and pay for fossil fuels to generate electricity in-country while already built nuclear reactors sit idle and more are decommissioned
  • Germany's unilateral decision will impact the competitiveness of not only German industry but of the rest of Europe's as well - which is already under pressure from an overvalued currency
  • Germany's unilateral decision shows a glaring weakness of Europe - the absence of a common energy policy
  • Donald Tusk, Poland's prime minister announced Germany has put coal fired power "back on the agenda." European financial analysts estimate that Germany's move will result in about 400 million tons of extra carbon emissions by 2020
  • Germany has just demonstrated that their EU leadership role takes a backseat to domestic populist politics

Conclusion

A team of German academics, led by physicist Manuel Frondel, in a 2009 report concluded the following regarding Germany's record with renewable energies: Germany's conversion to green energy imposed "high costs without any of the alleged positive impacts on emission reductions, employment, energy security, or technological innovation...The government's [subsidies] have in many respects subverted these incentives, resulting in massive expenditures that show little long-term promise for stimulating the economy, protecting the environment, or increasing energy security."

The Frondel report also found that far from creating the much publicized tens of thousands of jobs - "the net employment balance is zero."

An analysis published by the Ruhr University - Ruhr Economic Papers #156, Economic Impacts from the Promotion of Renewable Energy Technologies, The German Experience reported the following:

When the German program began in 2000, it offered index linked payments of 51 euro cents for every KWh of electricity produced by solar PV. These payments were guaranteed for 20 years.

The real net cost of the solar PV installed in Germany between 2000 and 2008 was €35bn. By 2008 solar PV was producing 0.6% of Germany's electricity - 0.6% for €35bn. The Ruhr analysis estimates a further real cost of €18bn in 2009 and 2010: €53bn in ten years. Today, solar energy's share in Germany's overall energy production is about two percent.

While Europe's carbon trading system was pricing carbon at $19 a ton, the International Energy Agency says the subsidy inflated cost to the German public stood at $80 a ton for wind energy and a staggering $1,000 a ton for solar. The Ruhr paper estimates that saving one ton of carbon dioxide through solar PV in Germany still costs €716.

Why such a huge gap between the blue sky green promise of renewable energy and the reality of performance? Germany's table pounding champions of green energy didn't calculate the lost opportunity costs of the massive subsidies that are handed out and guaranteed for 20 years to the solar and wind energy sectors - according to the Frondel report, by 2008, Germany's worker subsidies had reached the incredible amount of US$254,000 per solar energy job. The Ruhr University analysis estimates that the subsidy for every solar PV job in Germany is €175,000 - which means the subsidy is far higher than the wages the workers are going to earn.

"Any result other than a negative net employment balance of the German PV promotion would be surprising." Ruhr Economic Papers #156

"Although Germany's promotion of renewable energies is commonly portrayed in the media as a 'shining example' ... for the world, we should instead regard the country's experience as a cautionary tale of massively expensive environmental and energy policy that is devoid of economic or environmental benefits." Frondel report

Renewable energy in 2010 provided 17 per cent of Germany's electricity - the questions Germans should be asking their government, and themselves, are: Firstly, just what did we accomplish spending €53bn in ten years? And secondly, can we afford to do it again on a much bigger scale - increase our production of green energy electricity from 17 per cent to over 40 per cent in just 11 years while we phase out nuclear power?

The path the country will be compelled to take is to import more and more electricity - either in the form of nuclear power from France and the Czech Republic, coal from Poland or natural gas from Russia. Going down this path has consequences that reach, as we have seen, far beyond Germany's borders.

"It's hard to see how they will replace the energy. I'm not sure there is enough Polish coal, and it creates carbon problems. Alternative energy sources are intermittent sources. I think they will do what Austria did in its time: import nuclear electricity from neighboring countries." Anne Lauvergeon, chief executive officer Areva SA

This is a truly interesting drama being played out in real time on the world stage for all to see. It should be on everyone's radar screen. Is it on yours?

If not maybe it should be.

By Richard (Rick) Mills

www.aheadoftheherd.com

rick@aheadoftheherd.com

If you're interested in learning more about specific lithium juniors and the junior resource market in general please come and visit us at www.aheadoftheherd.com. Membership is free, no credit card or personal information is asked for.

Copyright © 2011 Richard (Rick) Mills - All Rights Reserved

Legal Notice / Disclaimer: This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified; Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife