Community Engagement

Checking out "Energiewende"

I have been traveling quite a bit lately.  In May, I traveled to Los Angeles to speak to the first annual meeting in ten years of the Southern California Public Power Authority (SCPPA), held by Michael Webster and his team in Garden Grove.  After going home to repack, I went to New York City for the Association’s annual pilgrimage to meet with the ratings agencies.  We go each year to talk to Moody’s, Standard & Poor’s and Fitch Ratings about the current environment in Washington for public power.  After some time back in the office to nail down the arrangements for the National Conference and Board meeting, I went in June to the Large Public Power Council’s CEO meeting in Asheville, North Carolina, hosted by Roy Jones and ElectriCities of North Carolina.  And then I took advantage of the kind offer of Jim Fuller of MEAG Power to drive from Asheville to Augusta, Georgia to tour the Vogtle 3 and 4 nuclear plants under construction — a truly amazing tour. From there, I went on to the Association’s National Conference in New Orleans.  It went very well by all accounts.

But the most unique trip I have taken for work in many years came soon after the National Conference.  On June 25-28, I went to Berlin, Germany, at the invitation of the German Federal Ministry of Energy and Economic Affairs and the German Renewables Academy (RENAC).  The purpose of the trip was to learn about the German energy transition known as “Energiewende,” and pronounced as best as I could tell “En-er-ghee-Ven-deh.” The RENAC team, ably led by Cecelia Strandberg and Albrecht Tiedemann, packed our days with meetings and squired us around Berlin to get to them. We met with representatives of sectors of the German electricity industry, regulators, and non-governmental organizations.   Those of us in the American delegation (about 10) came from different industry sectors and parts of the country, so it was interesting to see how we each absorbed the information learned during our four days.

My head is still spinning with everything I learned and observed, but here are some high-level takeaways:

  • There is wide agreement among the German electricity industry, regulators, and the general populace on the need to decarbonize not only the electricity sector, but the whole German economy.  Their goal is to reduce the carbon output of the entire economy by 80-95% of 1990 levels by 2050.  They are dead serious about the effort.  They are remaking their economy and technologies to do this.
  • They are phasing out the use of nuclear power, closing their remaining seven plants by 2023.  This decision was in motion already, but the Fukushima episode sealed their fate.  The fallout from Chernobyl literally fell on Germany, and most of the public is adamantly anti-nuclear.  They also plan to phase out their remaining coal-fired plants. The week we were there, a new “Coal Commission” was starting work to decide on the best way to do this.  They want to reduce coal usage by 50 percent in the next 12 years.
  • In the earlier stages of Energiewende, they had offered a feed-in tariff (FIT) for rooftop solar photovoltaics that was very high (about 25 cents per kilowatt hour).  They left it in place for a number of years before starting to ratchet it down. This rate must be paid to the installing customers for 20 years.  Our hosts were frank to note that the FIT had incented lots of uneconomic PV installations.  This has resulted in a 25 billion euro annual payment to these customers — a financial burden that is being socialized among all German retail customers except “energy intensive” industrial users.  They have now moved to an auction system to procure wind and solar power and to obtain renewable supplies at more economic prices. 
  • More than one speaker noted the desire of German retail customers for “self-sufficiency” in power supply matters.  One called this idea “citizen energy.”  They expect more solar PV plus storage installations at the residential level.  There are 90,000 such installations now and they expect 200,000 in the next few years.  As the solar PV FIT rate subsidies roll off, those who already have PV are now installing storage at the premises, so that they can self-supply.  This will decrease load on distribution systems but increase the need for flexibility.
  • Like utilities in the U.S., the Germans are trying to figure out how increased levels of distributed generation, demand response, storage, and energy efficiency will affect transmission and distribution system operations.  More and more of the action is at the distribution level, yet the transmission system operators (TSOs) do not have much visibility into what is happening on the distribution systems.  Both transmission and distribution entities want to be able to use the “flexibility” that will be introduced with distributed storage, EV charging, demand response, etc. to balance their respective grids.  The parallel to the jurisdictional debates now before FERC regarding energy efficiency and storage was unmistakable.  They have not yet figured this out, just as we have not. 
  • The infrastructure needed to support Energiewende is not yet all in place.  The most notable shortfall is in transmission infrastructure, but they need to make substantial investments in distribution infrastructure as well.  The lack of transmission infrastructure is causing friction with neighbors like Poland and the Czech Republic, as loop flows travel through their grids.  To address this, the Germans are planning to build 700 kilometers of 520 kV DC transmission lines from Northern Germany (where the best on-shore and off-shore wind resources are) to Southern Germany, where most of the country’s load is located.  They plan to underground these lines to try to reduce public opposition.  They acknowledge a transmission project like this has never been constructed, but do not appear to be intimidated by that.  There is much faith in German engineering and technical know-how.  After spending time with them, I understand why.
  • There has already been considerable economic wreckage on the Energiewende road, and there likely will be more.  Entire kinds of generation and business models are gone or are on the road to elimination.  One utility executive said it most starkly: “you must reinvent yourself early enough.”  His company went through a corporate near-death experience, but now appears to have emerged disaggregated but alive.

This trip was eye-opening for me.  The Germans see carbon reduction as a national imperative.  They do not measure the costs of Energiewende versus the short-run benefits of foregoing these policy initiatives.  Rather, they see the costs of not addressing climate change as so high that what they are doing is cost effective.  And at least among the energy companies, regulators, and policy experts we met with, there is a strong consensus to move forward.  To state the obvious, we have yet to reach a similar policy consensus in the U.S.   


EV smartcar