Germany set to overhaul subsidy regime for renewable energy

https://www.reuters.com/business/energy/germany-set-overhaul-subsidy-regime-renewable-energy-document-2024-07-05/

by thelastgallon • 2 years ago

38 107 2 years ago

cbmuser• 2 years ago

Germany currently pays 20 billion Euros per year for subsidizing renewables.

Yet, after doing this so-called energy transition for almost 25 years now and spending hundreds of billions of Euros on it, the country still has more than 130 coal-fired power plants while France has only two with one actually being decommissioned.

Despite these facts, there are still plenty of people here on HN and other platforms that are convinced that wind and solar are the way to go instead of nuclear.

I will never understand that!

stavros7• 2 years ago

Both are the way to go. Let's stop this "either solar or nuclear" mentality.

teractiveodular• 2 years ago

Nuclear was a great choice in the 1970s, when France started seriously investing in it, but solar & wind have come a long way since then.

lousken• 2 years ago

The issue is that you need both - a stable source of power like nuclear for solar or wind to work

senectus1• 2 years ago

the problem is, every time the sun shines and the wind blows it makes the investment in nuclear a sinking ship.. you cant throttle nuclear power plants like that, so they keep producing energy you cant charge for. They keep producing waste, they keep chewing up fuel and they continue being a saftey issue.

What needs to happen is baseload storage, batteries, pumped hydro, hydrogen/ammonia.

h0l0cube4• 2 years ago

Building new nuclear night have been a worthwhile proposition 10-15 years ago, but if you build one now, the exponential growth of grid storage will render it useless by all measures once it is finally in operation. Definitely decommissioning existing nuclear makes no sense for the next decade or two.

bgnn• 2 years ago

Is there data about this exponential growth of grid storage?

Here in the Netherlands grid is over-capacity and cannot be expandee easily because it should have been planned 10-15 years ago. Grid storage is in a worse state than the grid itself.

zozbot2346• 2 years ago

The only grid storage that matters at scale is pumped hydro. Everything else is literally a drop in the bucket. And you can't practically scale pumped hydro beyond what's there now.

nilsherzig• 2 years ago

Disclaimer I haven't researched the two points I'm going to make, they are just things I've heard from people around me.

1. Nuclear power also never produced a profit in Germany / had to be subsidized the entire time.

2. France has some weird agreements with their former colonies in africa allowing them to basically steal the resources needed to make atomic energy at their scale viable.

Booth points might be partly wrong, but could be worth looking into

vladvasiliu• 2 years ago

I don't know about your first point, but the second doesn't seem correct. Here's a Le Monde article with details on where the Uranium comes from: https://www.lemonde.fr/les-decodeurs/article/2023/08/03/a-qu...

It's in French, but thre's a graph showing the distribution which should be legible.

TLDR: a good chunk (~20%) comes from a former colony (Niger), but it's not the largest. Other main suppliers have not been French colonies.

coldtea3• 2 years ago

Perhaps they are people who understand that the failure mode or nuclear, whether it's an accident at the station or regarding the long term byproducts storage (and also transfer), is not that good of a bet.

Or the kind of people who don't buy the assurances (from players, scientists working in the industry, and fanboys)

Or the kind of people who are not convinced by statistics about the "low" past impact of accidents and leaks, because they can see how they're downplayed and under-measured by governments trying to save face or promote further nuclear plans, but more importantly, because it just takes one grave accident to kill tons of people, doesn't matter if 200 previous accidents were "tame" enough.

GaggiX2• 2 years ago

Dams have killed tens of thousands of people, the latest incident 10 months ago killed 10000-20000 people, yet I always see people bring up how dangerous nuclear is.

j-pb9• 2 years ago

I'll never understand how people can have easy access to the latest price metrics [0], which clearly shows that renewables are miles ahead of nuclear, and still largue against them.

20 billion Euros would only give you a SINGLE nuclear power plant at best [1].

If the conservative government we had for the 10 years prior hadn't sabotaged the Energiewende we could have hit 100% renewables by now, instead we had the "Altmaier-Delle" [3][4].

France build Nuclear instead of Coal from the get go, if we could turn back time and do the same in Germany too, great. But unless we invent a time machine, the next best thing is investing into the cheapest CO2-Free technology we have right now, and that's renewables.

0: https://en.wikipedia.org/wiki/Cost_of_electricity_by_source

1: https://www.reuters.com/business/energy/edfs-nuclear-project...

2: https://www.focus.de/politik/deutschland/bundestagswahl/true...

3: https://www.youtube.com/watch?v=wpmceuO02uI

zozbot2346• 2 years ago

Renewables are not truly CO2-free because sometimes the sun is not shining and the wind is not blowing. And then renewable fans have to rely on peaker natgas plants, that emit CO2 (though less of it on a kWh basis than oil or especially coal).

tass2• 2 years ago

Germany has actively shut down nuclear plants and as a result burns more fossil fuel, no?

As a percentage of total generation nuclear in Germany was never as high as France, but couldn’t they skip the 20 billion euro cost of a new plant and simply restart an existing one?

GaggiX2• 2 years ago

HN and other platforms that are convinced that wind and solar are the way to go instead of nuclear.

Wind and solar with nuclear is the way to go, in my opinion the perfect balance.

imtringued2• 2 years ago

Those subsidies are the result of getting rid of the EEG surcharge. Before that, the EEG surcharge funded the entirety of the feed in tarrifs. When you consider the fact that the CO2 price was introduced a few years ago, it means that the government merely shifted the burden away from electricity consumers to CO2 polluters, but it also reclassifies the payments as a subsidy that has to be paid through taxes rather than surcharges.

anovikov4• 2 years ago

Well, Germany is now at around 65% of renewable power and is set to go coal-free in a few years. These concerns are outdated.

bamboozled• 2 years ago

Coal-free, but how much gas?

coffeeri2• 2 years ago

That comparison lacks as France heavily subsidizes nuclear energy as well. At the same time having to demolish and rebuild multiple reactors. Nuclear energy was never cheap. I don’t have the numbers but I doubt that France made the better net-deal.

Tade0• 2 years ago

I think a good indicator here is that EDF, after several years of partial privatisation, became an essentially (92%) state owned company again - partly because they've lost €19bln when it suffered nuclear power plant outages along with scheduled maintenance.

France doesn't really seem to have a plan for when their current fleet of nuclear reactors reaches decommissioning age. There's no schedule for replacing them, much less expanding generation capacity.

energy1235• 2 years ago

Solar and wind were too expensive twenty years ago. Nuclear was the only option back then. Everyone should have done nuclear but they didn't. But it's not twenty years ago right now. France is the way France is because of decisions they made decades ago. Given none of us have access to a time machine, the best decision is to pursue the most cost effective and fastest to deploy technology today, which is solar and wind.

tass2• 2 years ago

Were the nuclear plants shut down in a way which prevents them from being restarted?

Restarting them could be faster and more cost effective than burning coal while waiting for new solar and wind installations.

svara3• 2 years ago

Photovoltaics and batteries have been on a multi-decade exponential decline in cost. The world is installing about twice as much PV capacity every day in 2024 as it did in all of 2004. (1)

The dynamics are so crazy, anything you've read or learnt about this 2 years ago is already outdated.

Extrapolating this another 2 decades into the future, all of the world's primary energy consumption will be covered by PV.

Those subsidies, in particular those in Germany, have had an important role in enabling this.

Now, what Germany did with nuclear is still insane, and it's not all smooth sailing to a carbon free 2045, but I think that should pretty clearly help you understand why people think that way.

(1) https://www.economist.com/interactive/essay/2024/06/20/solar...

adrianN8• 2 years ago

The number of coal fired power plants is a lot less interesting than the amount of carbon per kWh, which has come down continuously in Germany, thanks to more and more renewable capacity: https://ourworldindata.org/grapher/carbon-intensity-electric...

mk896• 2 years ago

Some more context here that helped me understand better the Reuters article: https://www.cleanenergywire.org/news/lower-electricity-price...

_heimdall2• 2 years ago

She stressed that the difficulties in funding did not alter the fact that power generation costs for renewables are cheaper than fossil or nuclear energy. “Many projects nevertheless need financial safeguards for the banks to make investments available,” Peter argued

Well that's a fun little quote. If renewables are already a cheaper alternative to power generation, why would you need government funding and safeguards to convince banks to invest in a project?

If the numbers work and a bank can see a clear psth to being paid back they will invest. There's clearly information being glossed over here that would explain why banks aren't willing to invest without government safeguards.

ibeff• 2 years ago

Banks don't care if it's "cheaper than" some other form of power generation, they care that profitability is safe over a very long time span. If power prices crash 5 or 10 years from now because of renewables overcapacity (which is already happening regionally on sunny days with solar), profitability is gone.

ZeroGravitas4• 2 years ago

I'm not sure the two articles are about the exact same thing, or that either actually explains the upside and downsides of the proposed changes.

Moving away from per kWh production subsidies/guaranteed minimum prices/contract for difference is considered good by energy wonks because it means the renewables developer needs to think about how to sell into a market with lots of renewables. A solar project that only producing during the day at will at some point earn very little in midsummer due to price competition from all the other solar, so guaranteeing them a minimum price is sub optimal. Though already contracts usually have clauses about not paying out if there are hours of zero prices.

The second article is about a mis-estimate of how much money they needed to put aside from government budgets this year because they assumed the Ukraine situation would keep gas prices higher for longer.

So good news for everyone that it's lower, except the government that had to top up renewables developers not getting the agreed rate on electricity sales. If they pay out an extra 9 Billion then the German economy has saved a multiple of that in lower electricity prices, and probably a larger multiple again on gas for non electrical needs.

mk896• 2 years ago

They are really about the exact same thing from different angles. The second article explains the why: they underestimated how much it would cost them. What they planned for was already used in the H1 of 2024. If you expect the same energy production (which apparently is a record of 58%) then you'll have to get another $9B from somewhere and they won't be able to do 1) additional debts, 2) use emergency covid money like they tried to do last year.

This means the budget has to be good this time, before they have holes left and right.

PS: The reuters article comes late. Apparently this was already in the news about 10 days ago. E.g., https://www.rechargenews.com/energy-transition/germanys-9bn-...

imtringued2• 2 years ago

The feed in tarrifs have been falling every year and now the feed in tarrifs are barely a cent or two higher per kWh than the average spot price on the electricity exchange. Meanwhile there are weird edge cases such as negative prices where the feed in tarrif is paid anyway. The government is forced to pay the difference. The current subsidies unfairly disadvantage investments into energy storage so the simplest solution is to just get rid of them.

However, this doesn't get rid of the need for subsidizing energy storage, which is starting to take off thanks to sodium batteries.

derriz5• 2 years ago

It's been clear for quite a number of years that renewables in Europe no longer need any sort of government support.

In any case, most of these support contracts have a "contract for difference" structure with a price established by competitive auction. In the early years, the prices were high as there were fewer bidders and large (unjustified) profits were made. But as time has gone on, increasing competition has pushed the prices lower and lower. On a net project-lifetime basis, it's probably now a wash whether you operate a wind farm under a CFD regime/contract or you just compete in the regular market. CFDs require you to reimburse the state when you get paid more than the strike price and so many (particularly wind) producers in the west/north of Europe were hit with large rebate bills in 2022 and 2023 as wholesale prices often exceeded the strike prices after the energy crisis caused by Russia's attack on Ukraine.

At least in the UK and Ireland, some renewable energy companies are opting out of the renewables-subsidy scheme completely. For example, the owners/promotors of the large Oriel off-shore wind project in Ireland are skipping all the bureaucracy and delays associated with the renewable auction process and will build the wind farm to compete directly in the day-ahead wholesale markets.

Of course there is a large benefit to being protected from the volatility of wholesale electricity markets but it seems like we've passed the point where the financial value of such a contract is required to make a renewables project viable.

tgsovlerkhgsel3• 2 years ago

As a result of primarily this subsidy regime (with a small assist from very high taxes on electricity), consumer electricity prices in Germany are the second-highest in the EU: https://ec.europa.eu/eurostat/statistics-explained/images/a/...

For non-household consumers, prices are more in line with the rest of the EU: https://ec.europa.eu/eurostat/statistics-explained/images/a/... - and I suspect that statistic mixes small commercial consumers that pay residential rates and industrial ones, because to my knowledge, this subsidy is paid mostly by small consumers while industry and export are exempt...

Hugsun• 2 years ago

This is a little off topic but why did you end your comment with ellipsis? What do you mean with its usage?

armada651• 2 years ago

It's showing that they're at a loss for words from the fact that industry is exempt.

coffeeri2• 2 years ago

It is the result of an energy dependence on Russia that has been built up over years, not due to any specific subsidiaries.

tgsovlerkhgsel3• 2 years ago

That could explain it if prices were high in general (i.e. also for industry).

https://de.statista.com/statistik/daten/studie/152973/umfrag... shows that 2014-2021 over six cents per kWh were going to the renewable energy subsidy scheme, and this is directly attributable, not some kind of hand-waving. I believe this was more than the wholesale cost of the electricity (without grid fees and taxes) in many of these years, and I think you also have to add another 19% of VAT on top of that.

In 2022 the subsidy started to be paid from taxes instead, and it was lower because market-based electricity prices went up (reducing the amount of subsidy necessary to reach the guaranteed prices).

ZeroGravitas4• 2 years ago

Germanay's CO2 emissions from electricity have also been on the high side compared with most of Europe due to coal so it having higher prices is not necessarily a bad thing, as it incentives efficiency.

It's not ideal if it slows adoption of EVs and Heat pumps because politics prevents you properly pricing the fossil alternatives to thise, but the ideal solution would be for those to be taxed based on their emissions too.

usrusr2• 2 years ago

Long overdue: I'm all for subsidizing renewables, let's down them in money. But the way it's currently done in Germany erases all incentive to tap low hanging fruit in dispatchability. Which has lead to the ubiquitous biogas setups (capture methane that's created in the agricultural refuse>fertilizer cycle anyways and burn it for heat and electricity) all getting designed for continuously burning exactly the amount produced, instead of adding a little overcapacity in conversion throughput and the little short term gas storage that would be required to follow the intraday cycle. This would be easy enough, but the reality is that those biogas systems in Germany now run baseload with even less dispatchability than nuclear.

anovikov4• 2 years ago

Indeed. Biogas has to be used to balance wind and solar. Not to be used as a carbon-free replacement for coal. This is ridiculous.

usrusr2• 2 years ago

Adding to my old post, I suspect that those broken incentives were the result of mixing "how" and "how much" in political decisionmaking. That's a process problem I see repeated over and over again: the "how much" is not isolated from the "how" and then you get compromises that are too generous in some parts and too frugal in other parts. It's as if compromises in salary negotiation went "yeah, we could agree on 10% more each month, if in turn we skip payment in December".

I believe that politics could get much better results if compromises about the particularities of distribution were always discussed with an open scale factor shared across the entire range of a particular kind of spending (e.g. renewables subsidy), and then the scale factor was decided upon in a separate discussion/compromise.

ThatMedicIsASpy• 2 years ago

November 2023: 18600€, 6.4kW solar, 8.7kW battery, inverter, installation, new electrical cabinet. The subsidy is the 19% VAT is free

Germany near NL.

Current energy price 0.25cents/kWh. Sunny days gives 40kWh of production with 50% of it being used. Current rate is 0.807cents/kWh when feeding back to the grid.

OptionOfT• 2 years ago

Do I read it correct that you pay 0.0025€ / kWh?

And that you get paid 0.00807€ / kWh sent back, which is more than what you pay to consume?

kkfx• 2 years ago

Of course the support is only for enterprises, state aid to them, nothing to the people who have or want renewables...

Germany set to overhaul subsidy regime for renewable energy

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