Germany’s policy of weaning itself off nuclear power is predicted to lead to a major power supply shortfall, which the current recession will do no more than defer slightly.

Energy Overview

Germany’s major fossil fuel reserves are in the form of coal, mainly lignite. Its reserves of oil total just 367 million barrels and lie in the north of the country, so Germany imports nearly three million barrels per day to meet its needs. Its largest source of crude imports is Russia, followed by Norway, the UK and Libya.

Natural gas reserves total 257 m3 and Germany produces around 20 m3 annually. Imports are around 81 billion m3 per year and, as with oil, the biggest supplier is Russia, which supplies 37 per cent of Germany’s gas imports either via Ukraine or Belarus. Most of the rest comes from Norway and the Netherlands.

Breakdown of Germany’s renewables sector, which is dominated by wind generation.
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Germany’s heavy dependence on Russia for energy is a concern, and the dispute over gas payments between Russia and Ukraine in early 2009, which saw gas pressures fall sharply in the west, has only served to add to the anxiety over security of fuel supplies.

Coal is by far the biggest of Germany’s natural resources. With an output more than 175 million tonnes (2008), lignite contributes around 40 per cent of Germany‘s primary energy generation and is the most important domestic energy carrier. There is an estimated 40.6 billion economically viable lignite mining reserves in Germany. Despite the introduction of flue gas desulphurization, dust removal and NOx reduction technologies in domestic power plants, the requirement to meet tougher environmental standards is the main constraint on greater use of coal in German power production.

Electricity Market

The electricity generation market in Germany is dominated by four large players, who between them account for 80 per cent of national power generation: RWE, which operates primarily in western Germany; E.ON Energy, which produces in central Germany; Vattenfall Europe, which was formed in January 2003 and operates in the New Laender and Berlin; and Energie Baden-Wuerttemberg Aktiengesellschaft (EnBW), which operates in south-west Germany. These companies supply regional and local distributors as well as their own industrial, commercial and domestic consumers. There are around 60 regional companies and over 800 local or municipal electricity/heat suppliers, known as Statwerkes. The liberalized market has encouraged customer switching, which has made it harder for Statwerkes to compete.

Germany, along with France, has opposed the pace of liberalization across European energy markets and was initially slow to respond fully to the EU’s 2003 competition reforms. The European authorities require open access to electricity transmission networks for third parties, and this will form part of its third energy package due to be passed this year. An energy regulator was appointed in 2005, since when the switching rate among German consumers has increased. The rate still remains low compared with other comparable markets.

Germany’s projected power generation mix to 2030.
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Germany has the largest electricity market in Europe, generating 592 TWh in 2007, two-thirds of which came from fossil fuels (mostly coal), with nuclear power making up the remainder alongside a growing renewables sector. Germany is a small net importer of electricity. From 1990 to 2007 electricity demand in Germany increased by 0.7 per cent on average each year. In recent years the increase in electricity demand slowed significantly.

Germany has an aging fleet of power plants, with much of the coal fired fleet in need of replacement or refurbishment. It is estimated that the country will need to add around 12 per cent (16 GW) of new built thermal capacity by 2012 and over 30 GW by 2020. It is planned that around 60 per cent of this new capacity will be coal fired, with the remainder fueled by natural gas and renewables.

With its 17 operating nuclear power plants, Germany is one of the world’s largest generators of this type of energy. Current legislation requires the phase out of all nuclear power by 2022. Support for a softening or reversal of this policy is growing, as concerns increase over dependency on imported gas and the need to meet CO2 and other emissions targets. The Christian-Democrat government has so far declined to back away from Germany’s nuclear pledge but may be forced to if the promise of alternative clean power generation sources does not materialize soon enough. Reports suggest that the nuclear phase-out will result in a generation shortfall by 2015, but some believe it will be far sooner. Meanwhile, German engineering giant Siemens has re-entered the nuclear power market through a collaboration with Russian nuclear holding company Rosatom to work on international projects.

Germany is also facing a reduction in coal fired capacity, which currently accounts for close to 40 per cent of generation. Some older plants will shut under the European Large Combustion Plant Directive. However, German utilities are encountering increasing opposition to new and replacement power generation projects.

Germany is in the forefront of developing and deploying renewable energy technology. Government policies have encouraged renewable energy to grow, and it now accounts for 14 per cent of production. Germany has the second largest installed base of wind farms in the world and the largest solar thermal market. The country has a strong commitment to protecting its environment. It has actively promoted renewable energy, and energy tax revenue is used to fund renewable projects.

Infrastructure Investment

The majority of new capacity additions in Germany in the last year have been wind projects, which are offered grid access and energy prices on favourable terms. In 2008 Germany added 883 new wind turbines with a capacity of 1665 MW, taking the total number of turbines to 20 301 with an overall capacity of 23 902 MW. A new German Renewable Energy Sources Act came into effect on 1 January 2009, and the resulting planning security is expected to encourage further growth in 2009, despite the financial crisis.

Environmental campaigners have been stepping up their opposition to planned coal fired power projects on environmental and health grounds. Plants in various stages of planning or construction include a new 823 MW hard coal plant being planned by KMW at Main-Wiesbaden, a 1600 MW project on the Baltic Sea in which Denmark’s Dong plans to invest €2bn ($2.6bn), an Electrabel/BKW FMB 800 MW coal plant at Wilhelshaven, due for commissioning in 2012, a 910 MW hard coal unit being proposed by utility MVV in Mannheim and E.ON’s Staudinger 6 1100 MW unit to be built at Grosskrotzenburg/Hanau near Frankfurt. Vattenfall Europe is also planning a 1645 coal plant in Hamburg’s Morrburg suburb, which will be carbon capture and storage (CCS) ready. One plant not facing opposition is EnBW’s 900 MW hard coal fired unit at Karlsruhe, due to come into operation in 2011.

An important pilot project was commissioned in Germany in mid-2008, the purpose of which is to validate engineering work and better understand the dynamics of oxyfuel combustion as well as demonstrate carbon capture technology. Vattenfall’s 30 MW thermal plant at Schwarze Pumpe is an important milestone project. It is the necessary scale-up link between initial engineering and successful operation of the future 250—350 MW electricity demonstration plant. The initial testing programme will run for three years. Thereafter, the pilot plant will be available for other tests. The plant is expected to be operate for at least ten years.

The four German transmission system operators (TSOs) are E.ON Netz GmbH, RWE Transportnetz Strom GmbH, Vattenfall Europe Transmission AG and EnBW Transportnetze AG. The German TSOs currently prevent the development of congestion in their networks by employing network and market-related measures. However, the predicted development of the German power generating market over the next few years, which is likely to see both the additional construction of new conventional power plants as well as the construction of onshore and offshore wind farms, will require an expansion of the transmission system and related planning.

Future Trends

The main drivers for Germany’s electricity market over the next few years will remain European and national environmental policy. Its target of producing 27 per cent of energy from renewable sources by 2020 remains ambitious, as does the further goal of increasing this to 45 per cent by 2030. Germany’s feed-in tariff policies have boosted development of biomass and photovoltaic capacity as well as onshore and offshore windpower.

The pressure to cut emissions and CO2 levels will also influence the debate over nuclear power production in Germany. Germany may need CO2-free nuclear production to bridge the gap until sufficient renewable generation is available and CCS is a viable option.

Coal generation will remain the bedrock of Germany’s electricity production, but European rules will force the closure of older, dirtier plants. Permits and public support for new facilities are likely to be harder to obtain, which could see a switch to more gas fired generation using CCGT technology. The recession will reduce demand for electricity in the short term and may mean that a predicted energy shortfall as early as 2010 is deferred. However, with the shutdown of both nuclear and older coal plants, capacity will need to be replaced at a faster rate than it is currently.

Germany Briefing was reproduced from Power Engineering International’s Global Power Review 2009 –