Germany’s decision to abandon atomic energy could cost the country some US$2.15 trillion by 2030, according to Michael Suess, in charge of Siemens’ Energy Sector, which built all of Germany’s 17 nuclear power plants (NPPs).
The cost includes a major expansion of renewables capacity, with feed-in tariffs (the price that utilities have to pay to producers of renewable energy), investments into power transmission and distribution networks, operations and maintenance, as well as technologies to store renewable energy and carbon dioxide. The expenditure would be reduced if gas were one of the major energy alternatives, Suess said.
Siemens’ estimate is far higher than a US$350 billion estimate given earlier by Juergen Grossmann, chief executive of Germany’s No.2 utility, RWE. Grossmann, however, did not give a time frame for his estimates.
Following the Fukushima crisis, Siemens closed its nuclear business, deciding only to supply components such as steam turbines for non-nuclear islands of NPPs.
The German government announced its decision to totally phase out its 17 NPPs by 2022 after the massive 11 Mar earthquake and tsunami last year damaged Fukushima’s Dai-ichi NPP in Japan, causing a core meltdown and a radiation disaster. The decision, taken based primarily on political considerations, is likely to create a gap of some 20,000 MWe in Germany’s power generation capacity. Germany is planning to fill this void by shifting to alternate sources such as renewables, with gas-based plants as the focus area.
However, according to executives in the energy sector, the progress in Germany’s shift away from nuclear power is extremely slow, hindered by inadequate incentives and a lack of powerful investors, suggesting it will be an uphill task. Germany’s current renewable law and the incentives offered are reportedly insufficient for expanding renewable energy sources, especially solar, in a sustainable way.
According to government targets, renewable power is to account for at least 35% of Germany’s total electricity mix, up from the present 20%. However, renewables will still need to be heavily subsidised to compete with conventional energy sources.
Wind power accounted for 7.6% of Germany’s energy mix, representing the largest component of renewables, and, according to the industry body BDEW, capacity stood at 27,000 MW by mid-2011. Germany has a plan to install about 7,600 MW in offshore capacity by 2020 and 25,000 MW by 2030. Presently only 54 turbines with a total capacity of 210 MW are located off Germany’s coasts.
Solar power accounted for only 3.2% of Germany’s total energy generation in 2011, which the government wants to increase to 10% by 2020. However, producers of solar energy receive a guaranteed price for their power for several decades, with no incentive to upgrade or modify their systems. Experts say the incentives should be linked to innovation, thereby forcing the owners of solar panels to modernise their systems.
Siemens’ Energy Sector, which is active in several areas, including power transmission, solar, wind and hydro power, expects to benefit from the global push into renewable energy by installing the power transmission networks required to transport electricity from solar and wind power plant sites. For example, energy from wind farms installed in the seas off northern Germany will need to be transported to the south.
The German energy agency DENA estimates that 3,700 km of high-voltage transmission networks will need to be constructed to by 2025. The global market for transmission of high-voltage direct current could triple in the next few years to US$11 billion, expects Siemens.
Siemens estimates that the cost of Germany’s energy shift will be mostly borne by taxpayers and power consumers. Germany’s roughly 900 municipal utilities aim to invest billions of dollars in new power plants and more than double their share in power production to 25% over the next 10-15 years. The top ten state utilities have said some US$12 billion in investments would be possible over the next 10 years.