Kat Stevens said:
Germany’s green energy transformation
By Jeevan Vasagar
June 23, 2014
On a bright but windy weekend in Germany last month, renewables set a new record. For an hour at lunchtime on Sunday May 11, wind and solar energy accounted for 70 per cent of the national electricity supply, illustrating the transformation brought about in Germany’s energy system.
The record reached that day also highlighted the challenge facing conventional power generators, as the glut of clean energy in the system pushed electricity prices into negative territory. On the intraday energy spot market, prices ranged as low as minus €48.19/MWh. For a brief period, utilities were paying grid operators to take their energy.
The renewable energy law which came into force in 2000 set guaranteed prices for 20 years and provided clean energy with favourable access to the grid, sparking a scramble to install solar power, wind and other renewable energy sources.
The consequences of the Energiewende, as Germany’s ambitious transition to green energy is known, are now visible across the country. Photovoltaic panels speckle the roofs of Bavarian farmers and community wind farms dot the windswept plains of northern Germany.
While established utilities were slow to respond, new businesses seized the opportunity. Renewables have gone from being the province of idealistic “Grüne Spinner” – crazy greens – to being firmly anchored in the mainstream, says Tim Loppe, a spokesman for one such business, Naturstrom.
The company, founded in 1998, has 240,000 customers across Germany and has signed a partnership deal with BMW to offer clean energy to buyers of the carmaker’s electric vehicles.
In March, Audi offered a similar deal to buyers of its electric A3. The Volkswagen-owned brand teamed up with Hamburg clean power provider LichtBlick, which has 600,000 private and business customers across Germany, to recharge its electric model with hydroelectric power.
For investors, the news from Germany’s traditional power providers has been bleak. Last year, RWE reported an annual loss for the first time since the Federal Republic of Germany was established. Germany’s second biggest utility is crossing a “vale of tears”, its chief executive Peter Terium told the Financial Times recently.
Eon, Germany’s biggest utility by market value, suffered a 46 per cent drop in underlying net income in 2013. Income fell from €4.2bn in 2012 to €2.2bn last year. The hit to the utilities’ profits had made it tougher to adapt their business models.
“The government forced significant losses on the utilities’ businesses and on their market values, which limits their ability to invest,” says Ralph Trapp, managing director of Accenture’s German utilities practice.
It was an indication that the pace of the Energiewende was too fast, Mr Trapp says. “It was not a coherent solution.”
But the tide may be turning in favour of the big power providers. Reforms to Germany’s renewable energy law, due to come into force in August, pose a challenge to the prospects of smaller players. “Politicians are giving the big energy concerns space to breathe,” says Mr Loppe, of Naturstrom.
He suggests three reasons why the reforms to Germany’s Energiewende will cramp smaller developers. First, a tendering model for new clean energy projects that is due to be introduced by 2017 will raise the risks for smaller businesses. Such companies are less likely to be able to afford early investment in a project that does not win a tender.
Second, annual caps on new installations of renewable energy mean there is a possibility that by the time a project comes to fruition, the annual limit will have been reached. Again, bigger companies are more able to bear such a risk, he says.
Third, the higher feed-in tariffs for offshore wind projects, compared with other forms of clean energy, favour a market from which smaller players are excluded because of its scale and technical difficulty.
The traditional model of power generation in vast plants outside big cities has been squeezed hard by the Energiewende. Eon plans to shut more than a quarter of its conventional generating fleet in Europe.
Both Eon and RWE are seeking to expand instead in areas that require greater interaction with customers. These include helping customers to optimise their energy consumption, or working with customers who also generate their own power using sources such as rooftop solar panels or combined heating and power plants.
“Utilities need to develop agility,” says Mr Trapp of Accenture. “That is not the way they have been used to working.”
The utilities are waking up to a world in which selling electricity is no longer enough. In the UK, RWE’s Npower has teamed up with Google’s recent acquisition Nest to sell a thermostat that tracks household energy usage and uses the data to set temperatures automatically, saving energy.
“What helps [the utilities] is they have so much experience,” Mr Trapp says. “If you combine that with new technology, they are certainly in an advantageous position.”
It remains to be seen whether gains in new technology will make up for declines in utilities’ core competence. The extent to which customers are willing to pay for the extra convenience and bespoke solutions offered by digital technology is open to question.
However, once they have discovered and tested the right technology, the ability to roll it out on a big scale is an advantage, says Mr Trapp.
With wholesale power prices predicted to fall further in the next few years, the outlook remains tough for utilities. But there are a few glimmers of hope.
George Wallace said:
E.R. Campbell said:
Kat Stevens said:
E.R. Campbell said:
Blame fossil fuel users – not producers for greenhouse gas emissions
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Gwyn Morgan
Special to The Globe and Mail
Published Sunday, Sep. 06, 2015
Since the dawn of the Industrial Revolution in the mid 1700s, fossil fuels have transformed humankind’s journey in almost every conceivable way. Agricultural production has soared, transportation was revolutionized, electrical power enabled breathtaking technological advancements, and petro-chemistry has provided synthetic materials for the manufacture of everything from fertilizers to plastics to clothing and even heart valves.
Real GDP per capita, the measure most closely reflecting global living standards, has soared by more than 1,600 per cent (according to Indur Goklany, a member of the U.S. delegation that established the Intergovernmental Panel on Climate Change) in lock-step with the per-capita growth in fossil-fuel consumption. Harnessing our planet’s enormous endowment of natural hydrocarbon energy is, without doubt, the greatest factor underpinning the huge gains in virtually every aspect of humanity’s remarkable progress. And the technological advances made by the workers who unlock those buried resources have been equally profound.
But now those workers, and the companies that employ them, are being attacked as environment-destroying pariahs. They have become the prime target in a global anti-fossil-fuel war that aims to cripple their financing and destroy their livelihoods. Last February, an international group calling itself Fossil Free disrupted the opening of the Toronto Stock Exchange and other stock exchanges around the world. The occasion was a so-called “Global Divestment Day” aimed at convincing shareholders of corporations “who have become rogue entities seeking profits at the expense of people and planet” to divest their holdings. The group claims its advocacy has stimulated a $50-billion reduction in fossil-fuel investments. That number is likely exaggerated, but the movement is definitely gaining traction, most notably among churches, academia, leftist politicians and, now, doctors.
Here in Canada, the General Council of the United Church has voted to drop fossil fuels from its investment portfolios, saying the decision is based on “the Christian duty to care for the earth.” Divestment campaigns are under way at some 30 Canadian universities, including the University of British Columbia and University of Toronto, where professors have voted to urge portfolio divestment. Victoria City Council recently passed a motion asking the provincial Municipal Finance Authority to allow divestment. And just last week, the Canadian Medical Association announced it would divest its holdings in fossil-fuel companies.
But here’s the “elephant in the room” being missed by the divest-fossil-fuel movement: The vast majority of greenhouse gas (GHG) emissions are caused not by producers of fossil fuels, but by users of fossil fuels. Environment Canada’s website states, “Globally, almost 80 per cent of GHG emissions from human sources come from the burning of fossil fuels and industrial processes. Specific activities include … vehicles, electric production, heating and cooling of buildings, operation of appliances and equipment, production and transportation of goods, and provision of services and transportation for communities.” U.S. Environmental Protection Agency data show that agriculture and land-use changes contribute most of the other 20 per cent.
Here in Canada and other oil- and gas-producing countries, the proportion of GHG emissions from hydrocarbon production is higher than the global average, but even our much-vilified oil sands produce only about one-tenth of 1 per cent of global GHG emissions, according to the Canadian Association of Petroleum Producers. The reality is that production of fossil fuels contributes only a tiny proportion of global GHG emissions.
What do these facts tell us about the fossil-fuel divestment movement? Clearly, the only way to have an impact on emissions is to target the users. But the users are, of course, everyone. So why aren’t those university professors, who fancy themselves as intellectually rigorous thinkers, calling for divestment of the shares of companies that use fossil fuels? And if, as those church leaders, doctors and politicians believe, fossil fuels are morally wrong, shouldn’t they be boycotting their own use of fossil fuels? No driving, no air travel, no road- or rail-transported food, no natural gas heat for their houses, no electricity from fossil-fueled power plants. And those passionate Fossil Free divestment activists must also target any company that uses fossil fuels in its production or distribution system (i.e., virtually all companies). To do otherwise is moral hypocrisy.
Without hydrocarbon energy, the global economy would shut down. Ironically, if producers failed to supply user demand, the public would be outraged. Approximately one million Canadians are working to make sure this doesn’t happen. Despite all the “drive-by” vilification from some of the same people who count on them every day, hydrocarbon industry workers should be proud of their role in providing the energy people need.
Gwyn Morgan is a retired Canadian business leader who has been a director of five global corporations.
