Is Germany's energy strategy at risk?

Is Germany's energy strategy at risk?

Germany has long been Europe's economic powerhouse, but this growth has slowed significantly this year. In the Teutonic country, exports represent almost half (47%) of its economy.

Growth elsewhere has lowered consumer confidence. Following the intensification of the global trade war, the German economy grew by just 0.1% in the third quarter. This comes after negative data in the previous quarter. In other words, the country has escaped the recession, but just enough.

The changes proposed by Germany in the energy industry also contribute to some economic disturbances. Berlin has embarked on an ambitious transformation of the country's energy mix, seeking to adopt low-carbon energy in place of coal, which currently provides the largest amount of energy in the country. Along with the phase-out of all coal-fired plants over two decades, Chancellor Angela Merkel has pledged to shut down all 17 of Germany's nuclear power plants by 2022 due to safety concerns in the wake of Japan's Fukushima disaster.

Germany, which has the largest electricity market in the European Union, is betting on renewable energy, but there are problems on the horizon. Solar investments are down and Germany's wind industry is in decline. Experts warn that "Germany's low-carbon future will come at a cost" to the country's robust economy. Within three years of the planned nuclear phase-out, Germany's conventional power capacity will likely decline by a fifth, increasing the economically ruinous prospect of frequent outages.

The German government argues that shortcomings can be compensated for by greater energy efficiency, as well as higher renewable energy capacity and more electricity imports. "Others are not as confident, including many utilities, network operators, manufacturing companies and analysts," Reuters notes, citing an energy expert who sees the government's strategy as risky and prone to unforeseen consequences.

The expert, Katharina Reiche, executive director of the VKU association of local public services, emphasizes that if the phasing out of coal-fired plants "was not accompanied by mandatory and risk-oriented monitoring of security of supply, it would be like" walking on a tightrope without a safety net ”.

The German government predicts that 65% of energy consumption in 2030 will be through renewable energy due to the closure of all coal-fired plants. Between January and October this year, the share of renewables reached a record high of almost 43%, which seems encouraging. At the same time, however, the expansion of onshore wind power has slowed in Germany, raising questions about the long-term viability of a strategy focused primarily on renewables such as wind and solar.

The latter is especially of limited use in a country with long, dark winters. German solar experts say industrial-size PV installations could do well in sunnier southern Germany, especially considering the skyrocketing costs of PV technology. Between 2010 and last year, the average global cost of solar energy production fell by 77%, compared with a 35% decrease for onshore wind, Bloomberg notes. In Germany, the photovoltaic industry employs 49,000 people and has about 3.7 million installations, representing an emission savings of more than 28 million tons of CO2 in 2018.

Yet despite impressive gains, renewables alone won't be able to power Germany's energy-dependent economy anytime soon, others argue. By trying to remove nuclear power from its low-carbon energy mix, pro-nuclear experts emphasize that Germany's government is risking the country's long-term economic stability.

Furthermore, the nuclear industry remains a robust generator of wealth within the European Union, according to a study by the multinational accounting firm Deloitte. The EU nuclear industry provides more than 1.12 million jobs and generates € 507 billion in the collective GDP of the cluster, which is equivalent to a share of 3-3.5% of its current GDP, says Deloitte. "For more than 60 years, nuclear technologies have provided Europe with a reliable source of low-carbon electricity," says FORATOM, a Brussels-based trade association for the nuclear power industry in Europe.

Yves Desbazeille, CEO of FORATOM, sees nuclear power as a vital component in the plans of the EU and German energy industry to sustain economic growth. “We have observed that the amount of jobs that our industry generates and generates today is approximately 1.1 million in direct impact. We saw a skill level that is quite high, and it is much higher than what you see in other sectors. It shows that we are an industry of highly qualified people ”, explains the official.

"It is also interesting to see that today we are one of the largest sectors in the world, something that policy makers in Brussels largely ignore," adds the energy expert. "We see here that we are somewhere between construction and the automobile industry in terms of participation in European GDP (3.3%), which is something interesting," he clarifies. “But now we also consider what we mean in terms of jobs and impact that have a significant share of nuclear power in 2050, so with electrification it means that we would also create new jobs and also have a growing impact on GDP and also in the trade surplus ”.

For Germany, the fact that the renewable energy industry, particularly wind, is not performing as expected is worrying news. Berlin needs to review its approach to achieving a low-carbon economy, one that takes full advantage of a variety of low-carbon energy sources that work together to compensate for deficiencies and close supply gaps.

Video: Germanys Failing Energy Goals (October 2020).