Thursday, December 23, 2021

Germany’s Reaction To The Energy Crisis Could Be Catastrophic

From OilPrice, December 22:

  • Germany's determination to go green despite an energy crisis in Europe could significantly impact the country's energy security
  • While power prices in Europe have been soaring and natural gas prices have begun to drop, Germany is refusing to change its energy policy
  • Specifically, it is Germany's decision to phase out nuclear power and accelerate the phase-out of coal-fired plants that has confused analysts

The European gas crisis has hogged energy headlines for months. But that hasn’t stopped Germany from retiring half of its nuclear capacity by the end of the year and pushing an accelerated phase-out of its coal-fired plants by 2030. And for Germany’s energy security, it could spell disaster. 

The commitments to greenifying Germany’s grid are noble. Unfortunately, they also appear ill-timed, as German baseload power for 2022 delivery—a European benchmark—hit a brand new contract high of 278.50 euros. This is an increase of 10%, as gas flows through a pipeline that brings natural gas from Russia to Germany switched direction to flow Eastward. 

But soaring power prices and sagging natural gas prices haven’t knocked Germany off its green ambitions—and it could have bigger ramifications than many realize. 

Coal and nuclear power, now on the ropes in Germany, rose in prominence this year, accounting for a larger percentage of Germany’s overall energy mix compared to 2020, BDEW said this week. The rise in nuclear and coal-fired power was due mainly to lower wind speeds and increased demand. 

Coal and nuclear energy made up 40% of the overall energy mix in Germany. Meanwhile, renewables fell to 41% of the mix. Still, Germany is stuck on kicking its coal and nuclear habit—coal because it’s dirty, and nuclear because of Fukushima. The decision to retire the latter was made shortly after the Fukushima disaster, but since then, coal use has risen to fill in the gaps left by nuclear. 

This year, Germany plans to shut down the Grohnde, Gundremmingen C, and Brokdorf nuclear plants, which will leave Germany with just three. Those final three will be retired by the end of next year. 

For coal, Germany has agreed to phase out coal by 2030—up from its previous goal of retiring coal in the country by 2038. 

These two moves alone put Germany, gasping for energy, in a precarious position. But there’s more.....