Little Presents: NuScale, Germany, Meateasies

Sustainable Business Oregon presents a interview with Pete Lyons, DOE’s assistant secretary for nuclear energy. It’s fine and worth a read – he talks mostly about the NuScale deal – see posts below for more on this.

Lyons does a good job explaining what NuScale offers specifically and what the interest in small reactors may mean generally:

Small modular reactors offer an opportunity for a new paradigm in how we think about nuclear plant construction. In the past we’ve gone to bigger and bigger plants built at a job site. We have realized there are some economies going to these bigger and bigger plants (built) on site. We’re trying to explore a different type of economy by moving down in size to where they can be built in a factory under factory quality assurance standards and moved intact to a site.

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The European Union is investigating the deal between the British government and Electricite de France to build a new reactor at Hinkley Point C. That story will require more attention from us when it ripens a bit more. For our current purpose, another EU inquiry is interesting:

The Commission also announced yesterday that it was launching a full investigation into German subsidies for renewables under its renewable energy act (EEG) to determine whether these subsidies constitute illegal state aid. The investigation is looking at the law's exemptions scheme, which makes consumers pay a green surcharge which funds renewable projects, but exempts heavy industry.

“We received various complaints from consumers and competitors on this and the commission must therefore investigate this particular matter in depth,” said Joaquin Almunia, European commissioner for competition.

I’m not sure how many teeth this commission has or how much of the complaining is pure crankery. It does seem as though Germany has really led its people into a financial sinkhole as it tries to move very rapidly from nuclear energy to renewable energy sources.  It also leads to some very un-holiday-like schadenfreude – but we’ll endure it.

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Some climate change goodness for the vegetarian set:

The analysis also estimates that the greenhouse gas emissions of raising livestock are 19 to 48 times higher than from growing high-protein plant food, such as beans and soy. Last month, a study found that methane emissions in the U.S. were about 1.5 times greater in 2007 and 2008 than previously estimated, and that livestock produced about twice as much methane during that time period than the EPA previously estimated.

The bad news for the vegetarian set is that if the government cannot find a way to grapple with climate change, expecting large swaths of even committed people to abandon meat seems dim indeed. I know from talking with an old 4-H friend that methane mitigation can be done, though still rather theoretically, through feed (see this story from Chemical and Engineering News for more).

The ThinkProgress story suggests that a tax on meat might do the trick, but that’s just silly. Governments like sin taxes because people will pay the tax to maintain their bad habits. But taxing meat as a sin so it becomes prohibitively expensive might well test the elasticity of people’s tolerance for such taxes (meat speakeasies – password “prime rib” – would rise up to feed the protein hungry.) (De)incentivizing behavior through taxation is a tough sell. As we discovered in New York, bans on 32 oz. soda pops to fight obesity doesn’t go over too well, either.

I’d go with the feed idea for now.

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Happy holidays to our NEI Nuclear Notes friends. We’ve had a great year looking at the interesting, inspiring and sometimes odd happenings in the nuclear energy world during 2013 and reading your views in turn. We look forward to a equally illuminant 2014. Next time out, we’ll start a look at the big stories of the past year. Until then, travel safe and stay reasonably fissionable while hanging around the relatives.

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Germany’s Nuclear Retreat: Depressing and Wholly Predictable

The energy situation in Germany is both depressing and wholly predictable. To replace nuclear energy with renewable power sources was always going to be the heaviest of lifts, because it replaces most baseload energy with intermittent alternatives and because the alternatives are not fully mature,scalable technologies. Beyond this, the cost of pushing wind and solar forward has been mind-bogglingly expensive, which is now being felt by ratepayers.

Germany’s power grid operators boosted the surcharge consumers pay for renewable energy by 18 percent to a record, adding to pressure on Chancellor Angela Merkel’s government to act against rising electricity bills.

It gets worse. As we’ve seen in Japan, these subsidies put an exceptional burden on heavy industry:

The total subsidy next year will amount to about 23.6 billion euros ($32 billion), which is added to consumers’ power bills. The fee increase will raise the bill of the average German household with 3,500 kilowatt-hours of consumption by about 34 euros a year. Consumers and smaller companies shoulder a bigger portion of the cost of the increase while big industrial users are largely exempt.

The BDI industry federation that represents about 100,000 companies including Siemens AG (SIE) and Volkswagen AG (VOW) said in a statement today that Merkel’s third-term government needs to “radically reform” the EEG to reduce industry costs. Steelmakers face 300 million euros of extra charges next year and are “strained to the limit,” said Hans Juergen Kerkhoff, head of German steel lobby Wirtschaftsvereinigung Stahl.

That is contradictory to me, as Siemens and Volkswagen are certainly big industrial users but don’t appear to be exempt.

Poking fun at Germany is fun, but we need to be careful about it. I’ve seen a number of articles that try to tie Germany’s woes to renewable energy in general – especially by climate change skeptics - but the country’s energy policy is an extreme situation caused by an extreme reaction to the Fukushima Daiichi accident – in other words, not altogether rational.

The steep increase in the cost of electricity is happening in a Germany where most of its nuclear facilities are still operating (and will until 2022, which the cynical could construe as a bit of an escape hatch). Still, it’s unfortunate to see commentators use the transition as a template for bashing more measured renewable energy project rollouts.

Conversely, environmental groups want to put the best possible face on a wholesale move to renewable energy. Smart Planet tries to do some fact checking on various negative claims to get the needle back into positive territory.

Fact: The increase [in coal usage] was temporary, and is now reversing.

Germany’s recent uptick in coal consumption has been a temporary situation, primarily driven by high natural gas prices which made coal power cheaper. It’s simply incorrect to lay that at the feet of the nuclear power phaseout or the Energiewende.

Which more-or-less admits that most baseload energy has become unwelcome. That approach can turn flipping a light switch into a suspenseful activity. All the unknown qualities can be useful to all sides of the debate, because it allows anyone to say anything.

But here’s the thing: an atomic Germany had an exceptionally stable energy market well able to roll out renewable energy projects and offer generous subsides for them. Now, the country is flirting with the most expensive electricity in Europe while still depending a fair bit on nuclear energy. When 2022 comes, the country will shut down its reactors and – then what? It all seems as it always has – precipitous and potentially ruinous.

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What Gets Sacrificed in a Nuclear Energy Shutdown

Writer Mark Gunther over at the Energy Collective talks about his hesitation to renew his Greenpeace membership:

If Greenpeace manages to persuade the US or other governments to "eliminate nuclear power"- that's what the headline [of the renewal letter] says - the risk of catastrophic climate change will grow much worse. Climate activists [and]environmentalists who  support nuclear power include Stewart Brand (in his excellent book Whole Earth Discipline), ex-DOE chief Steven Chu, contrarians Michael Shellenberger and Ted Norhaus (see Going Green? Then Go Nuclear), the former British prime minister Tony Blair, economist Jeffrey Sachs and ex-NASA scientist James Hansen.

You could throw in current DOE Secretary Ernest Moniz (“Moniz is an advocate for a low-carbon future and has, in a variety of forums, promoted the use of nuclear energy to get there.” – from the National Journal) and President Barack Obama if you want.

Gunther also brings up our old bête noir Germany and points to an excellent article in Der Spiegel about the destruction being wrought in the name of renewable energy. This stood out:

Although this conflict touches all political parties, none is more affected than the Greens. Since the party's founding in 1980, it has championed a nuclear phase out and fought for clean energy. But now that this phase out is underway, the Greens are realizing a large part of their dream -- the utopian idea of a society operating on "good" power -- is vanishing into thin air. Green energy, they have found, comes at an enormous cost. And the environment will also pay a price if things keep going as they have been.

The working cliché here is “Be careful what you wish for.” Why? We’ve talked about the land needs of wind and solar power, but biomass also has requirements.

Martin Kaiser, a forest expert with Greenpeace, gets up on a thick stump and points in a circle. "Mighty, old beech trees used to stand all over here," he says. Now the branches of the felled giants lie in large piles on the ground. Here and there, lone bare-branch survivors project into the sky.

Kaiser says this is "a climate-policy disaster" and estimates that this clear-cutting alone will release more than 1,000 metric tons of carbon dioxide into the atmosphere.

Kaiser and Greenpeace are none-too-happy about this outcome, but all those mighty beech trees have been repurposed to facilitate clean renewable energy,right? (Honestly, this consequence had not occurred to me – but it is potentially worse than the land mass required for solar and wind – destroying both an effective counter to carbon dioxide and a country’s natural legacy.) Germany doesn’t appear to be taking much care in how it gets to where it wants to go. Let’s hope it finds the right balance as it proceeds.

The Der Spiegel article is worth a careful read – it describes a situation like that in the Luis Bunuel faux-documentary Land Without Bread, in which efforts by the Spanish government to help the people of an impoverished region of the country only makes their lives far, far worse. (Probably, much of what the old surrealist depicts in the movie is made up, but his point is valid – as Germany is showing.)

But back to Mark Gunther. Does he renew with Greenpeace? – well, it’s only fair to go over to the Energy Collective and find out yourself. But his conclusion is valid whatever he decides:

We don't need an all-of-the-above energy strategy--that's folly, if it includes burning lots of fossil fuels--but we do need an all-of-the-above low carbon energy strategy, led by a strong commitment to renewables and energy efficiency, but including nuclear and some natural gas (ideally with carbon capture) to provide affordable baseload power. [bold in original]

I might add that fossil fuels represent a major industry with many workers – a Germany-like move here would devastate the economy of several states and pitch a lot of folks onto the street – but Gunther has the right idea withal.

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An Authentic Replica of a Closed Nuclear Plant

This affects Germany, too, and I suppose any country with a democratic form of government:

One of the first policy victims of Japan's incoming Liberal Democratic Party is likely to be the commitment to phasing out nuclear power. The promise made after Fukushima does not sit well with the pro-business party.

Get it? Every few years, the party in control changes and everything that was certain becomes  uncertain. Can you be sure that the next time the government changes in Japan, the nuclear facilities will not be heading into mothballs?

Now to be fair – and to ding this story a bit – the previous prime minister, Yoshihiko Noda, did not get as far as pledging a shut down of the nuclear facilities. He was, if anything, frustratingly vague on that subject.

Abe, who has been in power since December 26, has not said directly what he intends to do with the plants. All but two reactors are currently idled and have been since the 2011 accident at Fukushima Daiichi. He has been trying out a few statements, though.

But Abe's Liberal Democratic Party, which regained power in elections this month, says it plans to spend 10 years studying the best energy mix for the country. Abe has said he may reconsider the previous government's decision to stop building reactors.

And gotten a good response from the people he would like to appeal to.

The relatively favorable stance toward resuming operations of more nuclear plants has won favor among business leaders worried about power shortages and rising costs; since the Fukushima disaster, Japanese imports of costly liquefied natural gas have soared.

To be honest, the thaw in Japan lurked in my mind as something more likely to happen in Germany. There, the government has said it will close nuclear plants by 2025. That’s far enough down the road that a change in regime could reverse it. That’s still true.

I’ve read that the tax cuts in the current fiscal cliff deal are “permanent.” Really? Permanent? Permanence in government policy is like that authentic reproduction of a Renoir on my wall. Unless Japan or Germany were to bang down the nuclear facilities with sledgehammers and salt the earth, we may expect a similar permanence in their decisions – or at least anticipate the possibility of a complete or partial reversal. Either would be welcome – and good policy, to boot.

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“Easy to shut down a nuclear power plant, but…”

Stephan Kohler

We’ve left Germany alone for awhile, you may have noticed. We perhaps overstressed the country’s difficulties in its projected transition from nuclear energy to (mostly) renewable energy sources. Maybe there was too much glee on our part at what is, after all, a terrible decision. The Germans have a word for that glee. It’s Schadenfreude, taking delight in other’s misery, and it’s not an attractive quality whatever motivates it.

Still … Still … there are things to say about this that are genuinely germane and instructive. Along these lines, I was very impressed by an interview Der Spiegel had with the German Energy Agency’s President, Stephan Kohler. Their chat contains a notably balanced look at the difficulties the country has set for itself. Here’s a sampler:

It's easy to shut down a nuclear power plant, but that doesn't mean you have something to replace it with. We know today, for example, that we don't have enough reliable power plant capacity in southern Germany to be able to offset the loss of nuclear energy.

Why can’t the country replace nuclear energy one-to-one with renewable energy sources?

When a new wind farm is opened and we're told how many thousands of households it can supply with electricity, that number applies to only a quarter of our demand. In Germany, 75 percent of electricity goes to industry, for which a secure supply -- that is, at every second, and with constant voltage -- is indispensable. Neither solar nor wind power are suitable for that purpose today. Both fluctuate and provide either no secure supply or only a small fraction of a secure supply. Solar energy has a load factor of about 1,000 hours a year. But there are 8,670 hours in a year.

But solar energy in particular can generate, on sunny days, a large amount of electricity. Isn’t that a good thing?

I don't want to bore you with the details, but a surplus and fluctuations lead to very unpleasant systemic effects. We have voltage fluctuations within the grid that create problems for industry. Or we overload the grids in neighboring countries. Poland is in the process of installing technical equipment to protect its grids by keeping out surplus German electricity.

Kohler goes on to make the point that many current wind and solar installations have been sited without much consideration of whether the electricity is needed there or even whether the installation can even connect to the grid without substantial new build. Additionally, where the energy isn’t needed – such as wind power in the north – there is no way to transmit the electricity to the south where it could be used. The transmission lines have to be updated first.

What Kohler describes is fairly messy, with a lot of moving parts (and expensive ones, too) that have not adequately been addressed. I found this statement to be especially telling:

In the 1970s, they believed that there is an annual 6-percent linear increase in the demand for electricity. That number was used to estimate how many nuclear power plants had to be built. … I thought the calculations were fundamentally wrong. Today we have a solar and wind euphoria, instead of a nuclear euphoria. We believe that there will be a 10-percent decline in electricity consumption by 2020. And, once again, we assume that this change will be linear. But I'm sure that we're probably going to be wrong this time, too.

Energy choices as a fad. Kohler is clearly interested in the environmental impacts of different energy sources and favors an increased use of renewable energy, though not at the expense of nuclear power. In this interview, though, he is focused on the implications of current German energy policy – and not thinking much of it.

Do read the whole thing – you’ll learn a lot about the complexities of delivering electricity steadily. It shows that energy policy matters a lot in achieving this. Making arbitrary changes to policy hurts the national treasury and ultimately, will hurt badly the people (and industries) who must have reliable electricity to thrive.

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The Irresistible Chaos of German Energy Policy

"It should make you think..."
Stefan Guttler in Werner Herzog's Heart of Glass (1976)

The news out of Germany could be better, but your feeling about it may depend on how much sympathy you have for a country that keeps shooting its own feet:

Germany's surcharge for renewable energy will rise by almost half next year, a government source told Reuters on Wednesday, intensifying the burden for consumers from the country's shift away from nuclear power.

Reuters could have avoided the nuclear energy angle, but make no mistake – the decision to shut the nuclear plants before renewable energy sources were really ready to take over has done no one any favors.

This story in Der Spiegel (in English) makes the point the German way – bluntly:

With the new rates, German citizens will be paying a total of more than €20 billion ($25.7 billion) next year to promote renewable energy. This is more than €175 for an average three-person household, a 50 percent increase over current figures. And then there are the additional charges a consumer pays for the electricity tax, the cogeneration assessment, the concession fee and value-added tax.

And remember, the majority of Germany’s nuclear facilities (a bare majority – 9 of 17) are still operating, reducing the nuclear share of electricity generation from about 25 percent to 17 percent. So Germany is running on the fumes, so to speak, of an industry it intends to close down by 2022 – and not well.

Think there might be a political price?

In a government statement issued in June 2011, Chancellor Angela Merkel promised that prices would remain stable. "The EEG assessment should not increase above its current level," she told the German parliament, the Bundestag. Economics Minister Rösler said that there could even be "room for decreases." The environment ministers, first Norbert Röttgen and then Peter Altmaier, behaved as if Germany's phase-out of nuclear energy was not going to cost anything, even as they handed out billions in subsidies to owners of homes with solar panels and wind-farm operators.

In the interim, prices are going up and Germany has switched on plants using brown and black coal. See here for more. Renewable energy sources are up, too, with biomass and wind providing about 20 percent, also higher than nuclear energy, but without a grid that can handle sporadic generation well.
All this has caused some chaos:

What some grid operators, power plant owners and scientists are doing today is nothing short of flabbergasting. There are power plants that are not connected to the grid, power masts without lines, and power lines leading to nowhere.

This is a little overstated, but the Der Spiegel story is a real hair raiser and well worth a full read. It barely mentions nuclear energy, but it’s there in the negative space.

The prospects are so poor that energy providers have little interest in building new power plants. Under current conditions, even the most modern and efficient combined steam and gas power plants are not recovering billions in investment costs.
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What this amounts to is that companies will be compensated in the future for keeping their backup power plants up and running. As the government considers writing a bill to this effect, electricity consumers will once again be the ones to foot the bill.

And this is only the first full year of the transition.

The German director Werner Herzog made a movie back in the 70s called Heart of Glass about a small town that loses its ability to make a special kind of glass, causing the townspeople to lose their minds. But that wasn’t an intentional loss. This is. Call it Heart of the Atom.

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Nuclear Today, Lignite Tomorrow: Germany’s Withering Choices

German Nuclear Plants (Wikipedia)

Color Bloomberg unimpressed:

Chancellor Angela Merkel’s government says RWE AG’s new power plant that can supply 3.4 million homes aids her plan to exit nuclear energy and switch to cleaner forms of generation. It’s fired with coal.

And Herr Dieter Helm, energy policy professor? Also not impressed:

“Angela Merkel’s policy has created an incentive structure which has the effect of partially replacing nuclear with coal, the dirtiest fuel that’s responsible for much of the growth in the world’s greenhouse-gas emissions since 1990,” Dieter Helm, an energy policy professor at the University of Oxford, said by phone Aug. 17. Building new coal stations means “locking them in for the next 30 years” as a type of generation, Helm said.

The problem is that natural gas, inexpensive here, is expensive in Germany, so it isn’t as viable a fuel for large installations. As we’ve seen, Germany’s grid isn’t equipped (yet – let’s be optimistic) to handle the intermittency of solar and wind stably. What Merkel is doing actually makes some sense taken from one angle:

Merkel’s government wants utilities to build 10,000 megawatts of coal- and gas-fired generators this decade to replace older, dirtier generators and underpin a growing share for wind turbines and solar panels.

The problem is: natural gas and especially coal will replace the nuclear energy capacity while wind and solar will contribute additional electricity generation above that, so the trajectory of greenhouse gas emissions is up. But some of the same forces that made nuclear energy toxic in Germany are understandably no more happy with this plan. Or shall we say: unimpressed?

Building new coal generators in Germany isn’t easy. A group of local utilities last month scrapped plans to spend 3.2 billion euros to construct the nation’s biggest hard-coal plant in Schleswig-Holstein after resistance from environment groups and the state government led by the Social Democratic Party and Green Party.

Can it be said that Germany’s options are withering away?

“It’s very alarming that leading German politicians praise a plant run on lignite,” Gerald Neubauer, a Greenpeace campaigner in Germany focusing on energy issues, said by phone on Aug. 16. “Burning lignite spews more carbon dioxide than using most other energy sources, and mining it inflicts major damage on the environment.”

I almost feel like saying: This is what Germany wanted and this is what it got. But this transition is just depressing, however you look at it, a casebook study of bad policymaking.
Great story for Bloomberg by Stefan Nicola and Tino Andresen. Do read the whole thing.

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Nuclear Energy and Those Who Are Reasonable

It should come as no surprise that environmentalists oppose the use of nuclear energy in the same way they oppose coal or the fracking technology that is unlocking huge new reserves of natural gas. Currently nuclear energy provides about twenty percent of the electricity used in the U.S. Their attack on coal—led by the Obama administration—has driven its use down from just over fifty percent a few years ago to about 47% today.

Not to mention the rise of natural gas. But you’ve got to take your triumphs as they come.

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In Germany:

[Holger] Arntzen is now project manager of Wind Comm, a nonprofit that supports wind farm development. For him, the key to stopping the backlash against the power lines is to do more to inform Germans that the nuclear phase out comes with a price and changes in lifestyle.

"To show what is possible, and how I, as a citizen, can influence the load on the grid, like putting on my dishwasher only when the sun shines, because we have a lot of photovoltaics. Or waiting on my dishwasher if we have no wind," he says. "People must accept that the post-nuclear phase has a direct impact on how I live, how they live."

Here’s hoping Arntzen, the wind and his dishwasher stay synced or he’ll be eating off the floor in no time.

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From Andy Lemke at Forbes, providing a primer on issues around nuclear energy.

At the time of this writing, nuclear energy has support from both Democrats and Republicans in the United States. While it isn’t a  partisan issue, it is generally divided by those well informed on the topic and those who are uninformed. Between those who trust the  scientists / engineers and those who do not. Between those who are reasonable vs. general skeptics.

A pro-nuclear energy writer trying really hard to be even handed. (still good and he’s right - nuclear energy lost its partisan flavor some time ago.) 

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Germany, Electric Cars and Collapse

Germany wants to put one million electric cars on the road by 2020 but is falling a wee bit short – to date there are about 4500 such cars clogging up the autobahns. And maybe that’s a good thing, at least in the short term:

But the Ministry of Economics and Technology argues that placing strict limits on vehicle charging would require electricity providers to concentrate renewable energy generation in areas with large shares of electric vehicles. This could overburden the power grid and threaten the country with blackouts, according to renewable energy experts within the ministry.

Given the short time left to get 996,000 electric cars onto the road, I was poking around to see if the country was offering tax rebates, as the United States and other countries are doing to seed the marketplace. It appears not, at least not yet:

Germany has not decided whether it too will offer subsidies to electric vehicle consumers. The government estimates, however, that subsidizing as much as one-third of the cost of a vehicle's battery should allow for competitiveness with gasoline-powered vehicle counterparts. How the subsidy would be financed remains to be decided, but likely sources include general tax revenue or the country's relatively high gasoline tax.

Not only is the market nascent, but so is government policy regarding it. And let’s put these numbers in proper context: Germany has about 53 million cars on the road, so even the goal has a smell of the nascent about it.

To date, the electric (and hybrid) car market has not caught much traction. The most compelling reason for this (among several plausible explanations) is that they are too expensive – $40,000 at a minimum. About a third of that cost goes to the battery. But what if that changed?

New research from analysts at the McKinsey & Company suggests that the price for lithium-ion batteries could fall by as much as two-thirds by 2020. Instead of $600 per kilowatt-hour today, batteries would cost just $200/kwh in 2020 and $150/kwh in 2025. And that, the report suggests, would upend the entire automobile industry.

That leads to the conclusion that Germany and the U.S. are risking that this will happen and the appeal of the cars will increase. Everything aligns rather nicely in 2020, too, though that’s largely guesswork. And the reasons people might not want such cars regardless of cost will still have to be overcome. So the risk remains high – so does the reward, if reward there will be.

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Electric cars and nuclear energy have always seemed a natural pair, because the latter can produce the electricity on grids as they currently exist while “smart” grids (which can manage the intermittency of renewable energy sources better) are built out. These are exceptionally large infrastructure projects and just on cost alone, you wouldn’t want to try to build one in a year even if you could. Hence, the German energy grid as it is threatens to collapse if it tries to power cars with renewable energy sources.

And, as it happens, it doesn’t need cars to (almost) bring that about.

Germany’s lights were kept on by solar power last winter, after Berlin’s rapid phase out of nuclear power brought the country to within a whisker of complete breakdown, senior energy industry sources say.

And that’s because February was an uncharacteristically sunny month – want to count on that happening next February? Or the next?

“The data don’t lie,” Brandon Mitchener, a spokesman for First Solar, a leading PV manufacturer, told EurActiv. “They prove that solar and wind can provide real power right when it’s needed most, when demand is at its peak.”

Feels almost pagan, doesn’t it? We needed the sun and the sun responded. May the sun always respond thusly.

Germans love cars almost as much as do Americans – their automotive industries contribute equally to their national identities. I believe this sporty little number is a prototype made by Daimler AG.

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Germany and the Cost of Moving Fast

We promise not to beat the horse until it starts beating us – and we’re probably close to that point – but say, how is that shift to renewable energy going in Germany?

The country’s third-largest aluminum producer, Voerde Aluminium GmbH, filed for bankruptcy amidst trade groups advocating affordable power. Ulrich Grillo, president of Germany’s non-ferrous metals association, views Voerde Aluminium’s insolvency as proof that the metal manufacturing industry in Germany is endangered by high electricity costs, which are no longer competitive on the international level.

By point of comparison:

Electricity prices for industrial use are 41.7 percent lower in France than in Germany. If similar inefficiencies begin to surface in steel and other critical manufacturing industries, the impact on the German economy will be significant.

Let’s be fair: Germany generated (in 2010) about the same amount of electricity via nuclear energy – about 22 percent – as the United States does and half the nuclear plants there are still chugging along until 2022. Germany gets about 43 percent of generation from coal. It’s move to renewable energy is meant to impact the coal percentage as well as get nuclear to zero. What’s hurting here the impact that move is having on ratepayers and, obviously, the industrial sector.

In an interview with Uranium Investing News, Edward Kee, vice president of NERA Economic Consulting, offered his opinion on the current policy dynamics, commenting, “before all German nuclear plants are permanently closed, the policy will shift and some of these nuclear power plants will remain in service. However, this view is based on fundamental economics and not by the less-predictable politics.”

Anyone can say anything, of course, but that doesn’t mean we can’t like some of what they say – NERA doesn’t seem to have any particular ideological or pro-nuclear inclination, so it’s just making an economic assessment. We’ll see in a decade or so how that works out.

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The German decision to close its nuclear plants was bound to cause problems: raise the price of electricity and create various kinds of spirals, ripples, even plummets in their economies, all at a very bad time for any of that to happen. Reporters, of course, always latch on to those spirals and plummets because there is drama in them. The real trick is to determine where the German experience will take the country and its people if its energy transition does exactly what it says it will do.

This Reuters story talks about Germany’s energy plans and produces this lovely bid of analysis:

More variable power prices could be a forerunner of a new kind of market, where centralized and inflexible plants, including new nuclear, cannot compete in a more dynamic, connected, modular approach to energy generation.

When they say “centralized and inflexible,” they mean 24/7 electricity production. “Dynamic, connected, modular” – not. Still, it’s a very attractive formulation for doing away with your baseload energy. Read the article to understand the implications of “more variable power prices.”

There was never any question that Germany was going to increase its commitment to renewable energy and revamp its grid to accommodate it. It intended to do so before the accident in Japan and even intended to close its nuclear facilities – at some point. (See this Christian Science Monitor story for more on this.)

So, it is doing hat it had planned to do – but more quickly and in an iffy economy. To be honest, if you leave nuclear energy out of the equation, it’s what has to happen if a country hopes to end its dependence on fossil fuels and get ahead of climate change. Even if the nuclear facilities stayed open, it’s a breathtakingly expensive undertaking.

(You might say: what about an all nuclear solution? But that should make one hesitant on energy diversity grounds.)

The firs of the Black Forest (or Schwarzwald if you’re in it). What, you wanted another picture of a German nuclear facility?

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James Lovelock on Germany's Nuclear Phaseout

James Lovelock, the originator of the Gaia Theory and a prominent pro-nuclear environmentalist was interviewed by the Guardian today. He was as provocative as always, and had this to say about Germany's planned phase-out of nuclear energy:

"It looks to me as if the green ideas they have picked up now could be just as damaging. They are burning lignite now to try to make up for switching off nuclear. They call themselves green, but to me this is utter madness."

How mad is it? Click here for a piece from Brad Plumer of the Washington Post.

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Ironies in Germany and Japan – and Reopening Ohi

A little irony – and a touch of tunnel vision:

With audacious hypocrisy, American pro-nuclear pundits have been indulging in the familiar sport of losers – the relentless bashing of the more successful.

This should pique our interest. Bashing the more successful is a regular sport over here.

With nuclear energy rapidly losing favor around the globe, the industry’s boosters have taken to blaming countries that have rejected it for worsening climate change. Top of the target list? Germany, which has vowed to generate 80-100% of its electricity from renewable energy sources by 2050; and Japan, which chose this month not to restart the last of its 54 nuclear reactors.

Of course, Germany still has some functioning nuclear plants. Japan does not currently.

The accusation that these countries are worsening climate change is pretty rich coming from US commentators.  By any measure – whether calculating total CO₂ emissions or per capita – the US is one of the worst offenders on the planet.

Oh, that’s it. The tunnel vision part comes in here, as the assumption is that it’s all about electricity generation. It’s not – cars and animals do an awful lot of emitting and we have a lot of both in the United States. It’s not always about the electricity.

And the irony? Germany is currently replacing lost nuclear energy with – nuclear energy. France made about $400 million from Germany in the last nine months by selling it electricity – generated largely by nuclear energy.

And Japan? Well, it is importing a lot of fossil fuels now and hoping it can keep the lights on this summer. But really, while pundits may have dinged them on carbon emissions – the real problem is the economic impact.

Shutting down nuclear power permanently would reduce economic output by 2.5 percent per year -- equivalent of over 14 trillion yen -- over the next decade.

Factory output would probably fall 2.4 percent on month-on-month in July 2012 and 1.2 percent in August.

I’m cherry picking here – there are mitigating factors – but there are no mitigating factors to this one:

Power generation costs would rise by over 3 trillion yen ($38 billion) per year if Japan replaced nuclear energy with thermal power generation. Higher electricity costs would lift production costs by 7.6 trillion yen per year. The ministry did not provide estimates of how such an increase in costs would affect economic output.

Yoshito Sengoku, the president of the ruling party in Japan, called ending all nuclear power production the equivalent of “mass suicide.”

That’s not a pundit talking.

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Oh, and:

The local assembly in the Japanese town of Ohi that hosts Kansai Electric Power Co's Ohi nuclear plant agreed on Monday it was necessary to restart two offline reactors, its chairman said.

Power shortages are a concern as all 50 of Japan's nuclear power plants have been shut down following routine maintenance checks in the wake of Fukushima, with the country's last operating reactor going offline on May 4th.

Well, there’s a mitigating factor.

Ohi – reopening.

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Why the World Can't Afford to Phase Out Nuclear Energy

Today's Washington Post features an unsigned editorial that asks an important question:

CAN THE WORLD fight global warming without nuclear power? One major industrialized country — Germany — is determined to find out, and another — Japan — is debating whether to try. Both illustrate how hard it would be.

Give it a read right now.

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Japan and The Summer Heat

Germany is exhibit A for the economic havoc that turning off nuclear facilities can wreak if care and planning aren’t taken. No energy source should be seen as an economic trap or be allowed to become one – it’s one reason the term “energy diversity” is bandied about – and countries should be able to respond to price spikes in, say, the cost of natural gas, uranium or coal without the cost of electricity likewise going haywire. That’s another reason for energy diversity. But if a country makes too precipitous a change, without adequate planning, well, you’ve got Germany.
Japan, of course, is a different case. If it were to allow a similar outcome, it would be especially distressing because Japan has so few other options.

With some of its reactors running, Japan’s gross domestic product in 2012 would grow 1.9 percent, according to the first scenario. Industrial production would rise 5 percent from the previous year, and the country would have a trade surplus — its standard for three decades, before a deficit in 2011.
Without its reactors running, though, Japan’s GDP would grow just 0.1 percent. The country would be 12 percent short on electricity during the hottest months, forcing a reduction in factory production and further encouraging corporations to relocate overseas. Just as important, the country would log another trade deficit — projected at $57 billion. Much of this will be directly attributable to fossil fuel imports, which will account for about $21.1 trillion, or 30 percent of Japan’s total imports, according to the report.

It’s a tough situation, much more so for resource-poor Japan than for Germany. The story says that Japan’s new energy policy, due this summer, is likely to retain nuclear energy in some measure – let’s hope enough of it to stave off some of the more dire predictions.
In the meantime:

Japan's economy minister said Monday two nuclear reactors tentatively met government safety standards even though completing improvements will take several years, paving the way for final approval for their startup soon.

And that’s because:

Kansai Electric said Monday that its service area, including Osaka and Kyoto, will face up to 20 percent of power shortage during the summer if the reactors stayed offline.

All but one of Japan’s 54 reactors are off-line for inspection and it’s fair to guess they won’t remain that way as the summer heat arrives.
There can be no second-guessing the national reaction caused by the accident at Fukushima Daiichi. This is something that has to be left to Japan’s people and government. Culture and history will play their parts, too, in how the Japanese will proceed. But there are practical issues, too, and those, right now, are pressing down hard.
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Speaking of Germany:

German Foreign Minister Guido Westerwelle has underlined Iran's right to develop its nuclear energy program as a member of the International Atomic Energy Agency (IAEA) and a signatory to the nuclear Non-Proliferation Treaty (NPT).

On the one hand, chalk it up to the strange ways of international diplomacy; on the other hand, huh? This comes from an Iranian news source, so there is plenty of reason to doubt that this is the whole story.
I looked at Bild, which the story cited, and of course Westerwelle hoped Iran would resolve any issues about weapons building.

Wir setzen uns für eine atomwaffenfreie Zone im gesamten Nahen und Mittleren Osten ein.
Iran hat das Recht auf eine zivile Nutzung der Atomenergie. Es hat nicht das Recht auf atomare Bewaffnung.

Approximately (my translation - buyer beware):

We are committed to a nuclear-free zone in the entire Middle East.
Iran has the right to the peaceful use of nuclear energy. It does not have the right to a nuclear weapon.

A little more:

Ein Iran mit Atomwaffen hätte schwerwiegende Folgen: Die ohnehin gefährdete, prekäre Stabilität der Region wäre endgültig dahin. Es würde ein kaum kontrollierbares Wettrüsten einsetzen. Auch die globale Sicherheitsarchitektur käme ins Wanken.

Or:

A nuclear Iran would have serious consequences: the already vulnerable, precarious stability of the region would be permanently gone. It would cause an uncontrollable arms race. The global security architecture would falter.

So there you go. What do you think Westerwelle is “underlining?”
The Ohi nuclear facility. This has the two reactors which may be allowed to operate again.

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Concentric Circles of Irony

Almost too awful:

If a crisis over Iran curbs the supply of liquefied natural gas while Japan's nuclear fleet is shut, it could cause an economic impact greater than that from the March 2011 earthquake, the former executive director of the International Energy Agency said Thursday.

With 20% of its gas and 80% of its oil coming through the Strait of Hormuz, Japan would face a "disastrous impact" from a crisis in the Middle East, said Nobuo Tanaka, now a global associate at Japan's Institute of Energy Economics. He spoke at an event in Washington sponsored by the Center for Strategic and International Studies.

Obviously, this is highly speculative. It’s worth pointing out, too, that all those nuclear facilities sitting around over there don’t depend on the Strait of Hormuz to get up and running. But Tanaka is right to make the warning – it isn’t only Japan that would face an energy crunch and some of those countries have fewer options than Japan.

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Over in California:

In a report presented to the Independent System Operator board Thursday, staffers said that in a major heat wave or transmission line outage during the peak season, South Orange County and the San Diego and Los Angeles areas could face energy shortages without the 2,200 megawatts of power generated by San Onofre.

This one is due to a new steam generator that isn’t working quite right and will keep the facility shut until it is fixed.

It’s probably a little early to start worrying about the summer, but not too early to emphasize the importance of San Onofre to Southern California, especially as advocates gather petitions to try to close California’s two nuclear facilities (Diablo Canyon is the other) via a ballot measure. This is in part a response to the accident at Fukushima Daiichi and in part a California thing – if a question can get onto the ballot, someone will get it there.

A state ballot initiative proposed for next fall would force California's two nuclear power plants to immediately shut down, causing rolling blackouts, spikes in electricity rates and billions of dollars in economic losses each year, a nonpartisan analyst has found.

Closing the plants this way is likely not possible, as only the NRC can close a nuclear facility and then only for safety reasons. That was reconfirmed in Vermont recently. But in any event, San Onofre is in an excellent, terrible position to demonstrate what doing without the plant can mean – and hopefully, that won’t happen.

Even more than in Japan, the situation in California feels a bit like watching concentric circles of irony intersect each other, doesn’t it?

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I guess another definition for this would be absurdity. But no – for that, we’ll always have Germany.

“After deciding to exit nuclear energy, it seems as if Ms. Merkel’s coalition stopped its work,” said Sigmar Gabriel, a former environment minister and the leader of the opposition Social Democrats. “There is great danger that this project will fail, with devastating economic and social consequences.”

Ms. Merkel conceded in her weekly podcast that, “of course, we need a lot of new investment” for the plan to be carried out. But she insisted that her decision was the right choice.

Because, really, what else can she do?

San Onofre Generating Station.

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“You had better adopt nuclear energy”

Rep. Mike Simpson (R-Idaho) wants you (or, really, Energy Secretary Steven Chu, whom he was addressing at a hearing) to know:

“Fifty percent of our electricity is produced by coal, 20 percent by nuclear power. Yet, when I look at your budget, I look at huge increases in renewable energy funding, which makes up only a small portion of our energy portfolio and cuts in the other area that’s producing most the electricity and frankly I’m disappointed,” Simpson said. “Seems to me like there is an agenda of trying to push green technology, when I think nuclear energy is green technology … you’re really going to address global climate change, you had better adopt nuclear energy and it doesn’t seem like we’re doing that in this budget. This is the first time I’ve seen a retrenchment in this administration in advancing nuclear energy. The talk is all there, but the budget doesn’t reflect that.”

Like Rep. Simpson, the industry was disappointed with the 2013 budget request for nuclear energy. Even if one thinks that nuclear energy should take a financial hit as a result of the accident at Fukushima Daiichi, the response will largely be directed by the industry and regulators. The United States remains committed to nuclear energy and its technological advancement, so imposing a kind of slowdown doesn’t help the country achieve its long term energy goals – Simpson’s main point.

And Simpson’s right – achieving carbon reduction goals on renewables alone would go far more slowly than with nuclear energy in the mix. Though no one is threatening to shutter the American nuclear industry – just the opposite, in fact - slowing progress makes no real sense. What’s that? Did someone say Germany?

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Germany's abrupt change in nuclear policy has put a dent of €1.3 billion ($1.7 billion) in RWE's results for FY2011. It also boosted power prices and raised carbon dioxide emissions, the company said in its annual report to shareholders.

That’s from World Nuclear News. The story is largely about RWE’s earnings report, but there were a few telling tidbits. For example:

Among the figures moving upwards was the amount of carbon dioxide produced by RWE for each unit of electricity. This went up 8.2% from 0.732 to 0.787 tons per MWh "mainly because our Biblis nuclear power station stopped operating," it said.

Rep. Simpson, take note.

RWE linked the nuclear shutdown and a general rise in the cost of fuel to a hike in wholesale power prices. It said that the price of base-load power on the EEX Energy Exchange in 2011 had averaged €51 ($66) per MWh and peaked at around €61 ($80) per MWh. These figures represent increases of 16% and 10% on 2010 figures of €44 and €55 ($57 and $72) per MWh.

And the energy outlook is grim:

Looking ahead, RWE is focusing research and development efforts on carbon capture and storage techniques because, "by the end of 2022, all German nuclear power stations will be offline and the gap they leave cannot be closed by renewable energy and increased electricity imports alone."

Well, maybe CCS will be ready to roll by 2022 – cost and scalability questions still abound - but RWE is really betting the farm on it. And if it’s wrong? Then what does it do?

Germany is shaping up to be quite the case study.

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Scotland would like to shut its two nuclear facilities in favor of CCS, too, and renewables. How? Apparently, by sheer force of will:

Scottish energy minister Fergus Ewing acknowledged that the government's 100% renewables target has been met with "doubt and skepticism," but said Scotland would rise to these challenges. "I want to debate, engage and co-operate with every knowledgeable, interested and concerned party to ensure we achieve our goals," he said.

To doubt and skepticism, I’d add mirthless laughter.

Germany’s Biblis nuclear energy facility.

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Breakers in the Solar Wave

Although Germany has become something of a whipping post on this blog, it’s hard not to look at its energy profile since it decided to close its nuclear facilities and not see something like chaos. But a lot of that chaos is incipient, so there’s time – not a lot, but still some time – to figure out how to proceed.

For Germany, one of those ways has been encouraging the uptake of renewable energy. But now, the plummeting price of solar panels has unleashed a new round of, how shall we put it, chaos.

Germany plans to reduce government subsidies supporting solar power by up to 30 percent within a year because higher-than-expected demand has made the scheme far more costly than authorities initially expected.

At first glance, that seems a boon to the solar business and a vindication of those subsidies – they seeded the market and now the market can proceed on its own. But not so.

German companies producing solar panels, already under pressure from stiff competition from new manufacturers in China, protested against the new cuts. Several thousand employees of about 50 firms in the segment held protest rallies across the country, the German Solar Industry Association said.

Now, this could simply be a case of not wanting the money spigot turned off – that’s not unusual. The growth of solar energy in Germany in impressive but seems containable: installations ran to 7500 megawatts in capacity last year, more than double the 3500 megawatts the government expected to see (and based its subsidy system around.) Remember that solar power cannot achieve 50 percent of its capacity rating, so those numbers are a little deceptive on their face. Nuclear energy facilities, by contrast, achieve above 90 percent of its capacity rating routinely.

Beyond these issues, the subsidies have put considerable pressure on the price benefit from the installations, essentially erasing the savings for ratepayers:

Installations of solar panels have boomed due to feed-in tariffs, generous subsidies which have mounted into a growing burden passed on to energy consumers.

Clearly the economics of solar power have gone haywire, but how?

Here’s the beginnings of an answer, from Morningstar:

Looking forward, we expect module pricing will begin falling within the next month, and reiterate our projection that module prices will be in the mid-$0.80s by summer. At such pricing levels, even a company with best-in-class production costs will not be able to turn a net profit this year. We reiterate our belief that for now long-term investors should steer clear of the space.

That’ll help, won’t it? Other financial gurus take equally dire views. The prediction is that there will be a wave of bankruptcies followed by a retrenchment. Here’s the bankruptcy part.

That will inevitably lead to more bankruptcies in a sector already laboring under 100 percent or more over-capacity and where leading names have filed for insolvency, including U.S.-based Evergreen Solar and Solyndra, and debt restructurings such as the one at Germany's Q-Cells.

And the retrenchment part.

But further cost cuts across the supply chain - and in particular the upstream manufacturers of raw solar-grade silicon - will sharpen the technology's competitiveness and see it mount a serious attack on offshore wind, shaking up the relative outlook for emerging technologies.

I’d add here that this shakeout holds the potential to strangle the solar panel business in Germany in the face of competition from China – what those protestors are rightly worried about - and losing a nascent business sector in a nascent technology would be an unquestionably poor outcome. But what about that serious attack on offshore wind?

If solar economics can leapfrog those of offshore wind, this poses the question: why invest in such a complex, moving piece of machinery as an offshore turbine, stationed in an unpredictable weather environment with massive servicing costs, rather than a simpler, static and more proven solar panel array?

One answer is that there may be more limited space for solar panels in the best, south-facing spots compared with the available coastlines suited for offshore turbines.

So – maybe. Note that Germany is far from being a sun-and-fun kind of place – this argument for solar is actually more solid for the United States.

I may be wrong, but this sounds like an instance where a business gambled that it would have a substantial product to sell but has ended up with the equivalent of a widget – and what company, especially one with considerable worker needs, can survive with a single widget as its product line?

This will shake out. Watching it do so is likely to be incredibly painful, especially in Germany, and a real blow to the solar energy business just when, ironically, it is gaining traction. In the meantime, chaos – Germany has blown a giant hole into its energy outlook.

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You win some, you lose some:

Kuwait has decided to abandon civilian nuclear power production.

Abandon in this case means not build. Kuwait thought it might build four reactors by 2020 but has changed its mind.

We wrote about Kuwait’s plans two summers ago, based on this bit of news:

Kuwait is experiencing almost emergency conditions after power consumption hit an all-time high for the third day in a row at 10,921 megawatts at 2:30 pm, which is around 30 megawatts short of maximum production capacity. The record consumption was triggered by record temperatures that reached 51 degrees Celsius at Kuwait Airport, 50 degrees in Kuwait City and as high as 53 degrees at the Abdali border post with Iraq.

53 degrees Celsius is 127 degrees Fahrenheit. Kuwait asked its neighbors for help but didn’t get much.

So, this is Kuwait:

About a quarter of Kuwait's power is generated from gas. The rest is from oil. Besides the exorbitant cost, the use of fuel oil has a major environmental impact and Kuwait City is often shrouded in a brown haze.

I’ve lost track of who lost what here.

Neighborhood as solar array in Germany.

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