Solar Power IV: The German Experience

Germany is widely considered the global leader in solar power, with over a third of the world’s nameplate (peak) solar power capacity. Merkel’s government is determined to reduce the country’s dependence on coal and nuclear.

The European Union set a series of binding renewable energy targets for all of its members. The goals, in which about 35% of Europe’s electricity is projected to come from renewable sources by 2020, are considered ambitious by international standards. But Germany’s “lonely revolution,” as some call it, goes much further. By 2025, Germany aims to produce 40%-45% of its electricity from renewable sources, rising to at least 80% by 2050.

The German government is finding out, much to its despair, that its alternative energy programme is hugely expensive and proving to be less than successful.

Germany’s utilities and taxpayers are losing vast sums of money due to excessive feed-in tariffs and grid management problems. The environment minister says the cost will be one trillion euros (~US$1.35 trillion) over the next two decades if the program is not radically scaled back. This doesn’t even include the hundreds of billions it has already cost to date.

Worse, Germany’s carbon output and global warming impact is actually increasing because of ill-planned “renewables first” market mechanisms, forcing the growth of coal power. Solar panel power has a fundamental flaw for large-scale generation in the absence of electricity storage. Electricity must be used when it is produced. 

The more daytime summer solar capacity Germany builds, the more coal power they need for nights and winters as renewable power sources are forced offline. This happens because excessive daytime solar power production makes base-load nuclear plants impossible to operate, and makes load-following natural gas plants uneconomical to run.

Coal is the only non-subsidized power source that doesn’t hemorrhage money, now. The result is that utilities must choose between coal, blackouts, or bankruptcy.

Germany is building more coal plants, and even re-opening old ones. It’s inefficient, but coal plants have better load-following capabilities than nuclear. The end result is that solar is forcing a resurgence of coal.

A point that is often overlooked or understated: Hydro and thermal power plants are intended to operate at steady states. Adjusting operating rates to meet demand (when solar and/or wind power fluctuate) is very hard on the equipment; leading to extended downtimes and increased repair costs.

Solar power has a fundamental flaw for large-scale generation in the absence of electricity storage; it only works for about 5-10 hours a day. Without storage capacity, the electricity it produces must be used at the exact same time it is produced. The more daytime summer solar capacity Germany builds, the more coal power they need for nights and winters as cleaner power sources are forced offline.

Unfortunately, because the technology for grid-scale power storage does not yet exist, Berlin is faced with either compromising its objectives to reduce carbon emissions, importing power from neighbouring Denmark and/or France, or building additional nuclear capacity.

A well-reasoned paper by Ryan Carlyle points out: “Between the northern latitude, the grey weather, and the Alps blocking much of the diffused morning sunlight from the south, Germany is a terrible place for solar power.”

Ironically, Carlyle goes on to suggest that a major problem with expanding solar power is oversupply. On sunny summer afternoons, Germany actually exports power at a loss compared to conventional generation costs. 

The German grid does not have adequate power storage capacity so excess solar power production actually forces conventional power plants to shut down, reducing the capacity factor of coal and gas plants, making non-solar power more expensive per kWh.

With no storage of solar-generated electricity for use at night, the conventional plants are forced to ramp back up at sundown to compensate for the drop in solar generation.  But base load generation is extremely difficult and expensive to throttle up and down every day. It takes several days to shut down and restart a nuclear plant, and nuclear plants outside France are not designed to be throttled back, so nuclear cannot be paired with the daily fluctuations of solar, leaving thermal plants to handle variable power demand. 

Worse, the re-commissioned thermal plants are, at least partly, being fed wood, leading to deforestation and reduction of a valuable carbon sink, the forests, themselves. Many people are surprised to hear that Germany only gets a tiny 4.6% of its electricity from solar power (in 2012). All the headlines about new records on peak summer days make it seem more like 50%. On the occasional sunny day solar panel output can exceed half of total electricity demand. This is the source of the myth that Germany gets half of its electricity from solar panels.

The German government has found subsidies for new solar installations to be financially and politically untenable.  The government passes the subsidy cost on to consumers in a surcharge. While the flood of new energy sources has lowered market prices for electricity, consumer prices have actually increased as the surcharge has risen to make up the difference between the market and government-guaranteed prices.

With subsidies for new solar systems phasing out over the next 5 years, solar growth has already started to decline. The installation rate peaked and is now declining. Despite falling panel and installation costs, the majority of new German solar projects are expected to stop when subsidies end.

The German case, illustrated in the above chart, clearly demonstrates that solar utilization grew much slower than conventional energy sources scaled up in the past. It should be noted that only about one quarter of the “renewables” line is due to solar (the majority is biomass, wind, and trash incineration).

The above also shows that, when a new energy source is genuinely better than the old energy sources, it grows quickly. In solar’s case, even with significant government support, photovoltaic’s growth has been dismal. 

Up until now, the economics of German solar have only made sense because all types of energy are taxed, even other renewables, and then the proceeds are used to subsidize solar panels. Utilities are forced to buy distributed solar power at rates several times the electricity’s market value, causing massive losses for these companies.

German solar demand is in free-fall with only 818 megawatts of photo voltaic solar panels in the first five months of 2014, a 45 percent drop from 2013. This comes after a 60 percent decline in PV solar demand between 2012 and 2013.

Germany’s solar power boom has been driven entirely by political distortions. The growth of solar cannot continue without massive political interference in the power markets.

The German government has engineered a well-intentioned but harmful redistribution system where everyone without solar panels is giving money to people who have them. 

This is a tax on anyone who doesn’t have a south-facing roof, or who can’t afford the up-front cost, or rents their residence, etc. People on fixed incomes (e.g. welfare recipients and the elderly) have been hardest hit because the government has made a negligible effort to increase payments to compensate for skyrocketing energy prices. 

The poor are literally living in the dark to try to keep their energy bills low. A sad fact that is not widely publicized: More than 300,000 households per year are seeing their electricity shut off because they cannot afford the bills.

Solar boosters often say people need to shift their energy consumption habits to match generation, instead of making generation match consumption. That might be feasible, to some extent — perhaps 20% of power consumption can be time-shifted, mostly by rescheduling large consumers currently operating at night like aluminium smelters. 

However, modern civilization revolves around a particular work/sleep schedule, and you can’t honestly expect to change that. The public is not going to give up cooking and TV in the evening, or wait three hours after the sun goes down to turn on the lights. And weekends have very different consumption profiles from weekdays. 

The “biomass” power component you see in the above charts is actually firewood being burned in coal plants.  Due to a quirk in the EU carbon pricing system that considers firewood carbon-neutral, Europe is cutting down its forests at an alarming rate to burn them as “renewable biomass.” 38% of Germany’s “renewable energy” comes from chopping down forests and importing wood from other countries.

There is a widely held belief that Germany is decommissioning its nuclear fleet because of the Fukushima accident, but the Germans do not really have a choice. They are being forced to stop using nuclear power due to all the variability in solar output. A huge problem: Germany has been getting four times more electricity from nuclear than solar; the math does not add up. 

What they are doing is building more coal plants, and re-commissioning old ones. It is a far from perfect solution, expensive and inefficient, but you can run a coal plant all night and then throttle it back when the sun comes up. It has better load-following capabilities than nuclear.

“Europe’s Green Energy Industry Faces Collapse As Subsidies Are Cut” – Michael Bastasch –

“Reality Check: Germany Does Not Get Half of its Energy from Solar Panels” – Robert Wilson –

“Should other nations follow Germany’s lead on promoting solar power?” – Ryan Carlyle –

“Germany’s Expensive Gamble on Renewable Energy” – The Wall Street Journal – Matthew Karnitschnig –

“Germany’s Solar Failure” – Doug Hoffman –

“European utilities – How to lose half a trillion euros” – The Economist –

“Reforming the Renewable Energy Sources Act (EEG) – Market solutions for market failures” – Craig Morris –

First published in the Duncan Journal in 2015