by Bill Ponton
If there is one thing to be said about the Germans, they are persistent. Any nation that would invade a neighbor with a far greater population, larger industrial base, and more natural resources, all of which were mobilized for war, as it did with Russia in WWII, and persist on that path until the enemy was at the Brandenburg Gate, would also be the last to give up on an energy policy that is a complete failure. Chalk it up to the conceit and over-preening of its people. For the Germans, it is a repeat of Stalingrad. Commit the whole economy to achieving the prize of Energiewende, and then watch it collapse in ruin like the 6th Army on the banks of the Volga River.
Germany’s fate is not foreordained. There is still time left for the Germans to start up their nuclear plants, fire up their coal-burning plants, and stop the hemorrhaging of industry to countries with cheaper energy. However, the German political class is like Hitler in his last days in the bunker. As the Russian troops were encircling Berlin, he busied himself with ordering non-existent troops to launch counter-offenses. Likewise, German politicians are installing an ever-increasing number of solar panels in the hope that its experiment in transitioning the energy sector will prove to be the right decision. They are taking the economic miracle that their fathers achieved in the aftermath of WWII and throwing it away on a fantasy that an economy can function without firm dispatchable thermal power.
I would like some German central planner to explain to me why installing 120 GW of solar capacity is a good thing at a latitude of 52° N. One would not grow pineapples at that latitude. Likewise, one should not attempt to power a modern economy with solar. The capacity factor, a measure of actual output / maximum possible output, for a solar plant is 8%. Compare that with a thermal plant that might range between 60–70%. Solar is an expensive asset from which little utility is derived.
Germany has an additional problem with solar power. Half of its solar power capacity is on private rooftops (behind-the-meter) and floods the grid at inauspicious times. During periods of high solar radiation combined with low weekend or holiday demand, the grid gets flooded with “must-take” renewable energy, making it difficult to balance the power grid. Unlike dispatchable thermal power plants, which can be throttled more easily, the fluctuating nature of solar requires complex interventions to prevent grid overloads. Moreover, solar panel owners are guaranteed a fixed feed-in tariff regardless of market prices, and the gap between market price and the guaranteed remuneration must be covered by subsidies.
It is a mess that keeps growing, becoming more menacing. It also is ratcheting up the price of electricity, scaring away industry and plunging the average German into energy poverty. German electricity generation cost for its mixed system of solar, wind, and thermal running in tandem is $136/MWh, compared to U.S. electricity generation for a thermal only which is $38/MWh—over three times greater. If you were the owner of a German chemical company, the cost differential would make relocation to the U.S. attractive. My calculations are here.
Moreover, pressure on Germany to change its energy policy is emerging from another quarter. Trump’s order for withdrawal of 5,000 U.S. troops from Germany was not only an expression of his displeasure with Germany’s stance in the war with Iran, but a signal to German leadership that support for European security amongst the U.S. populace is waning. Germany will have to choose between rearmament and staying the course with its Energiewende, a classic guns or butter tradeoff. The question remaining is whether Germany will allow itself to be encircled and destroyed as it was at Stalingrad, or will it break out of its current mindset and forge a new path forward?