Category Archives: Economics

The Chaos of German ‘Renewable’ Energy

I have been detailing the disaster of Germany’s dash for renewables, and the problem is now spilling over to Germany’s neighbours. I picked up this story from a translation of a Die Welt article at GWPF:

Germany considers itself the environmental conscience of the world: with its nuclear phase-out and its green energy transition, the federal government wanted to give the world a model to follow. However, blinded by its own halo Germany overlooked that others have to pay for this green image boost and are suffering as a result.

For example, Germany’s ‘eco-miracle’ simply used the power grids of neighboring countries not only without asking for permission but also without paying for it. Now Poland and the Czech Republic have pulled the plug and are building a huge switch-off at their borders to block the uninvited import of green energy from Germany which is destabalising their grids and is thus risking blackouts.

The problem is detailed further here, under the catchy title of ‘German Renewables Run Amuck’:

Germany allows any family to put a solar power unit on its roof and start feeding its output into its own house and thereby replace public power supply. Initially, the panels on the roofs fed cheap electricity into the grid and brought down the costs. But soon there were too many. On bright, sunny days, those families were generating anything up to 30 gigawatts of electricity and feeding it into the grid. The result was massive surges in the grid. There was not enough demand for the power, and Germany exported power to Poland at such times. That destabilised the Polish grid, and Poland is now installing equipment to stop power inflows from Germany. In Germany itself, the midday surge in power reduced the demand for power from conventional plants, which are no longer profitable, so no one is prepared to invest in conventional power plants.

And more detail again here:

One impact from rising intermittent German wind power generation in the north of the country is of electricity spilling into neighboring networks en route back into southern Germany or Austria, called loop flows.

Another is of rising exports of cheaper, intermittent power, undercutting the economics of baseload power in Germany’s neighbors.

The interesting point here is that the undercutting has been spun as being a result of cheaper German energy prices as a result of them shifting to renewables:

Moreover, by blocking the German access to their grid, they prevent Germany companies from selling their electricity, which is cheaper than that of the Central Europeans, to Austria.

“This is what it’s really all about,” says Rainer Baake, director of the think tank Agora Energiewende and former high-ranking official in the German environmental ministry. “Germany’s increase in clean energy has led to Germany’s wholesale electricity prices becoming cheaper and cheaper. Now it’s less expensive to import electricity from Germany than to produce it in coal fired power plants in Eastern Europe – let alone to build new nuclear power plants.”

I took a look at a translation of the Agora website, and they are a think tank dedicated to advocacy for renewable energy. This is the situation of German energy costs in relation to the rest of Europe:

The global average for the cost of one megawatt hour of electricity is around 23 euros ($31). In Germany, the same runs about 45 euros ($60) – making electricity here the second-most expensive in Europe (after Denmark).

As a note, Denmark has also rushed into wind energy. So it not that Germany is creating cheap electricity, but rather that intermittent energy leads Germany to simply dump their excess on their neighbours, as they absolutely have to remove it from their own grid, or risk a collapse of their own grid. This then exports the problem to other countries, who then have to deal with the consequences of power peaks from Germany, as well as the impact of their dumping on the economics of their own energy sector. It is no wonder that these neighbours are up in arms over the issue. It is a very simple issue; they are importing problems of intermittency that are not of their own making. It seems that if Germany wants to go down their own mad route to renewables, those who are following their own policy of generating reliable energy should not pay the price.

In addition to the fundamental problems of renewables again becoming evident, the reaction of renewable energy advocates is revealing. The claim that the reason for the problems being ‘cheap’ German renewable energy is simply laughable. Nevertheless, it appears in a report on the issue without any reference to the sky high energy prices within Germany. The high energy prices in Germany are now really starting to develop acute problems for the German economy. This is a passage from one of the articles cited earlier:

The path toward an energy policy that everyone can agree on is a bumpy one, which particularly economists are increasingly worrying about. The German industrial sector accounts for 24 percent of the gross domestic product; many of its businesses have high electricity consumption.

Every second one of these businesses associates the ongoing energy sector with a decline in competitiveness, according to Hans-Heinrich Driftman, a businessman and head of the Federation of German Chambers of Industry and Commerce.

Driftman said almost all businesses should expect higher electricity bills for 2013, compared to 2012. He said passing on to the consumers the costs for funding renewable energies his company’s bill will increase from 300,000 euros ($398,000) to 450,000 euros ($598,000).

“With these amounts of money, as a businessman I have to think about where I can make some cuts,” Driftman said.

Indeed, I have posted on this subject several times. In many of the posts, it is apparent that there is increasing alarm over the cost of Germany’s renewable energy policy by businesses in Germany. I recently posted on renewable cost exemptions being made to certain businesses, but this just hides the kind of business closures that garner headlines, rather than the gradual erosion of competitiveness that comes with renewable energy. For every Euro not paid by the exempted businesses, someone somewhere is making up the difference:

Since Spenner’s company is registered as an “energy-intensive business,” his electricity bill is exempt from the rollover costs of renewable energy production. These costs are made up of government-guaranteed reimbursements to the energy producers based on the amount of electricity they feed into the grid coming from renewable sources.

These extra costs, which shall be passed on to consumers, are estimated to amount to 23 billion euros ($31 billion) for 2013. This means that each electricity consumer will pay an extra 5.28 cent per kilowatt hour.

But Spenner wonders how long the government can afford sticking to its promise of exempting businesses such as his from the extra costs. “We’re worried when we see how private households are being maneuvered into opposing energy-intensive sectors. This should not be the case, because if we weren’t exempt, we’d be facing an existential problem.”

In addition to Germany facing problems, the problems are broader than Germany. The push towards renewable energy and the anti-fracking policies throughout Europe are now seeing interest from European companies to relocate to the US, where the fracking revolution has seen diving energy costs. This from the New York Times:

LONDON — On Dec. 19, Voestalpine, an Austrian maker of high-quality steel for the auto industry, announced that it would build a plant in North America that would employ natural gas to reduce iron ore to a kind of raw iron that would then be used in the company’s European blast furnaces.

Asked whether he had considered building the plant in Europe, Voestalpine’s chief executive, Wolfgang Eder, said that that “calculation does not make sense from the very beginning.” Gas in Europe is much more expensive, he said.

High energy costs are emerging as an issue in Europe that is prompting debate, including questioning of the Continent’s clean energy initiatives. Over the past few years, Europe has spent tens of billions of euros in an effort to reduce carbon dioxide emissions. The bulk of the spending has gone into low-carbon energy sources like wind and solar power that have needed special tariffs or other subsidies to be commercially viable.

“We embarked on a big transition to a low-carbon economy without taking into account the cost and without factoring in the competitive impact,” says Fabien Roques, head of European power and carbon at the energy consulting firm IHS CERA in Paris. “I think there will be a critical review of some of these policies in the next few years.”

Both consumers and the industry are upset about high energy costs. Energy-intensive industries like chemicals and steel are, if not closing European plants outright, looking toward places like the United States that have lower energy costs as they pursue new investments.

Germany has now grabbed the lead in the transition to renewable energy. Unlike a country like New Zealand, they have been able to export their problems to their neighbours, at least for the moment. New Zealand has no such neighbours. However, in addition to Germany’s neighbours bearing the price of the intermittency of German energy, they have to deal with their own problems; an increasingly uncompetitive energy industry in Europe overall. This is down to the ‘green’ objections to fracking and renewables policies, and they will pay a price in jobs and their manufacturing output.

As I have said in previous posts, the ‘green’ renewables future is not now just in the future, but is becoming a reality. That reality is very straightforward. It is an increase in the cost of living and a declining economy. It is folly beyond belief, and New Zealand is endorsing this madness in its own dash for ‘renewable’ expensive, intermittent, and economically damaging energy. When is the New Zealand government going to wake up from its disastrous and politically correct dash for renewables? I simply despair.

The ‘Panto Villain’ Narrative and Climate Change

A little while ago, there was coverage and publicity of Lucy Lawless and members of Greenpeace taking ‘direct action’:

Lucy Lawless and seven other Greenpeace activists today pleaded guilty over the occupation of an oil drilling ship in February in protest of planned oil drilling operations in the Arctic.

The New Zealand actor’s arrest and the subsequent court action received publicity from far afield, and was covered by global media giants including the BBC, ABC, Reuters, the Daily Mail and the Washington Post.

The huge media scrum outside Auckland District Court this morning also attested to the success of the protest.

It is just one example. It does not take much to find huge numbers of articles on ‘direct action’ by environmentalists. Many of these ‘direct actions’ involve breaking the law, and preventing people going about their perfectly lawful business. This is often wrapped up with the justification that the protestors are ‘saving the planet’. Reporting on such ‘direct action’ is often fawning.

I am not keen at all on ‘direct action’ that breaks the law. At least, not in countries in which there is freedom of speech and assembly, and where marches and other legal forms of protest are allowed. In such places, there are mechanisms for people to make their point, and to raise interest in their cause, and there is no need to break the law. Where these mechanisms are curtailed, this is a completely different story.

This brings me on to the latest news of Christopher Monckton, who has caused upset by having the temerity to push a button and talk at the Doha COP18 conference; the latest round of talks on establishing an international climate change agreement. This is his description of the incident:

I have been a bad boy. At the U.N. climate conference in Doha, I addressed a plenary session of national negotiating delegates though only accredited as an observer.

One just couldn’t resist. There they all were, earnestly outbidding each other to demand that the West should keep them in pampered luxury for the rest of their indolent lives, and all on the pretext of preventing global warming that has now become embarrassingly notorious for its long absence.

No one was allowed to give the alternative – and scientifically correct – viewpoint. The U.N.’s wall of silence was rigidly in place.

The microphone was just in front of me. All I had to do was press the button. I pressed it. The Chair recognized Myanmar (Burmese for Burma). I was on.

This is a video of the incident on Youtube:

As anyone who follows the debate on climate change knows, Christopher is firmly in the skeptic camp. Those who are skeptical are, just like the environmentalists, driven by concerns but the concerns are sometimes different. In the case of the environmentalists, the concern is often about saving ‘the planet’, albeit that they will also discuss the impacts of the climate on humans. It is often the case that the ’cause’ is abstract, and simply founded in a belief that humans are disease on the face of the planet. Or about the ‘good’ of ‘nature’.

In the case of skeptics, the concern is always human centred. I hope that I can speak for all, and am not being arrogant, when I say that everything I have read indicates that the skeptic position is driven by concerns that the policies of governments on climate change are economically damaging. It is a concern that is about human consequences. For example, when good agricultural land is turned over to provide material for bio-fuels, it is not being used for the growth of food. This means that the available supply of food in the world is diminished. With less supply of foods, it is basic economics to say that this will see increases in prices. Whilst this is not a problem for the richer people in the world, for those living on the margins, it is catastrophic. It can mean the difference between life and death.

And that is the point. In this one example, it is possible to see that the conversion of agriculture to foods is going to lead to the death of those living on the margins or, in many cases, malnutrition and disease. Other policies are less dramatic in their consequences. For example, the increase in the price of energy, even in rich world countries, resulting from mad schemes like wind energy, will see poorer people struggling to meet their bills, unable to keep their children and themselves warm in winter. For others, the increase in energy costs might see the loss of their livelihood, as their employer relocates in search of cheaper energy, where there is no policy to promote uneconomic energy. The consequences of policy to mitigate climate change have consequences; from death to destitution, to energy poverty to disease.

The environmentalists cloak their arguments in ‘righteousness’ and decry the skeptical camp as wicked. What they do not and will not accept is that there is a strong moral dimension in the skeptic camp. It simply does not fit their neat narrative, and their narrative dominates much of the discussion in the media. How noble to ‘save the planet’ echoes around the media. For those who seek to portray skeptics as wicked, this is a wake up call; we are driven by concern for the real consequences of the policies that you are promoting. Consequences that do harm to people.

Whilst the media and environmental movement cloaks direct action in the clothes of morality, they are unable to give credit to Christopher Monckton for doing the same. The point is this; the whole environmentalist movement seeks to turn their views into a simple black and white morality play. They want you to believe that they are the players with the white hats on, and we, the skeptics, are the people wearing the black hats. However, our aim is to prevent and reverse climate change policies. We do so, not out of wickedness, but out of concern for the real harm that ‘green’ anti-climate change policies do. The views of the green movement are best summed up by an article in the Guardian, in which Christopher Monckton is described as a ‘climate panto villain’.

And that is the story, the narrative, that is pushed forwards. We, the guys in the white hats, face down the ‘panto villains’. The problem with the narrative is that is simply a lie. In order to be a villain, you must act out of malice, with bad intent. It is quite the opposite of motives of the skeptical camp, who act out of concern and compassion. We do so in the absence of government grants, of government funded conferences to sunny climes, of prestige in the press. Indeed, vilification is often the reward of skepticism, along with damage to careers, and being treated as ‘panto villains’.

In light of this, environmentalists may wish to ask where the real nobility lies.

But they will not. They are blind to the possibility.

More on the Reality of Living with Wind and Solar Energy

A while ago, I discussed that the future has arrived, and that we can see the real cost of ‘green’ energy policies in the case of Germany. If you are a business owner, or just and ordinary electricity bill payer, you should read the earlier post. The sudden retreat in Germany from nuclear power has left the country reliant on renewables, and energy shortages, energy unreliability and skyrocketing energy costs are the result. Just to serve to emphasise the point, Spiegel online has yet another news story that tells of the many problems being experienced in Germany. All the ingredients I long ago discussed are there.

  • Problems concerned with the intermittent power provision
  • High costs associated with connecting renewables to the grid
  • High costs associated with storage of energy
  • Hight costs associated with keeping backup online from conventional sources for when the wind does not blow / sun does not shine, including inefficient use of conventional capacity
  • High costs of investment from the necessity to build conventional plant backup for each renewable sources (capital expenditure)
  • Rationing of power, in this case, having large business energy users being paid to shut down their factories – paid to produce nothing

I may have missed a couple of points, but I am sure you get the picture. The consequences of renewable energy in Germany are now not the bright hypothetical future painted by ‘green’ propoganda, but are now very real and dismal. I have long admired Germany as an industrial power, but even Germany cannot be immune from the consequences of their mad ‘green’ energy policy. If the quotes I give below later are not enough, read the whole article. It is very clear and very simple to see the consequences of moving to ‘green’ energy.

Countries that follow a green energy agenda are putting an economic gun to their own heads, and pulling the trigger. In the case of Germany, the abandonment of nuclear has made the future now. We have yet to see the full consequences of energy based upon renewables; they will be seen in the next few years, but right now, the situation for energy provision is already dire. It is already very, very bad. It is a disaster, and even the ‘green’ Germans are starting to choke on the consequences. I will now quote at length from sections of the Spiegel article and let the quotes speak for themselves.

With the government driving up the price of electricity, Rösler seems to feel an urge to make himself useful by dispensing advice on how to save money and energy. On Monday, grid operators announced a significant increase in electricity prices in Germany, prices that are already the second-highest in Europe.

The price hike is the result of an assessment under the Renewable Energy Act (EEG), a sort of green-energy solidarity surcharge that is automatically added to every consumer’s electricity bill. Under the agreement reached in the last round of negotiations, the assessment will increase from 3.6 cents to 5.4 cents per kilowatt hour.

With the new rates, German citizens will be paying a total of more than €20 billion ($25.7 billion) next year to promote renewable energy. This is more than €175 for an average three-person household, a 50 percent increase over current figures. And then there are the additional charges a consumer pays for the electricity tax, the cogeneration assessment, the concession fee and value-added tax.

[and]

The rising cost of electricity is also a burden on businesses. According to Oettinger, energy costs now represent the biggest liability for Germany as a place to do business, especially in light of the marked increase in the number of blackouts and voltage fluctuations in the grid.

Consumer advocates view the electricity price as a social issue, not unlike the price of bread in ancient Rome. The Paritätischer Gesamtverband, an umbrella association for social-welfare groups, estimates that about 200,000 recipients of benefits under the Hartz IV welfare reform program for the long-term unemployed saw their power shut off last year because of unpaid bills. The VdK, Germany’s largest welfare organization, uses the term “electricity poverty” and is sharply critical of what it sees as a “glaring violation of basic social rights.” According to the VdK, it is unfair that citizens are being asked to bear much of the burden of costs and risks associated with the energy turnaround.

[and]

Unfortunately, the electricity is not needed as urgently along the thinly populated coast, but rather in the distant southern states of Baden-Württemberg and Bavaria. The two states have large populations and industry, as well as a number of nuclear power plants scheduled to be shut down soon. For this reason, the federal government’s decision to expedite the expansion of offshore wind power means that new power lines will have to be built, at a cost of €20 billion to €37 billion — the most expensive infrastructure project since German reunification.

[and]

Franken is part of the so-called cold reserve of the German energy supply. As long as there isn’t enough storage capacity, virtually every solar plant and every wind turbine has to be backed up by a conventional power plant. Without this double structure, the power supply would collapse.

At the same time, however, the boom in subsidized renewable energy is ensuring that conventional power plants are no longer profitable. Since the law requires that preference be given to green energy, if it’s available, gas-, oil- and coal-fired power plants frequently have to be shut down to avoid overloading the grid. This reduces their revenues while increasing costs because powering plants up and down consumes a lot of fuel and inflicts additional wear and tear on the equipment.

In the past, power plant operators were able to charge higher electricity prices around midday. But now there is more competition from solar plants at this time of day. On days when there is a lot of wind, the sun is shining and consumption is low, market prices on the power exchange can sometimes drop to zero. There is even such a thing as negative costs, when, for example, Austrian pumped-storage hydroelectric plants are paid to take the excess electricity from Germany.

The prospects are so poor that energy providers have little interest in building new power plants. Under current conditions, even the most modern and efficient combined steam and gas power plants are not recovering billions in investment costs.

[and]

With extremely cold temperatures gripping large parts of Europe, there was a spike in power consumption. Hamburg was on the verge of a blackout, says plant manager Lutz Bandusch. To keep the lights from going out in the city, he shut down the blast furnaces and rolling mills in Finkenwerder.

Instead of making money by producing steel, the plant operator was compensated for not producing it. It was a profitable arrangement for the steel mill. “It has to be worthwhile from an economic standpoint,” Bandusch admits, even though he felt that it was somewhat odd to be getting paid to do nothing.

[and]

Batteries are also part of the government’s plans, and €400 million in public funds have already been earmarked for related R&D. The industry also has high hopes for battery technology. But it this realistic?

For the fun of it, Florian Schlögl, director of the regenerative power plant department at the Fraunhofer Institute for Wind Energy and Energy System Technology (IWES) in the central German city of Kassel, calculated how large a battery would have to be to supply a city like Munich (pop. 1.38 million) with electricity for two or three days.

The answer, says Schlögl, depends on which battery technology is available. A cube-shaped lithium ion battery, such as the ones used in cell phones and laptops, would be 53 meters (174 feet) long on each edge. This would make it as tall as the roof of the Allianz Arena, where FC Bayern Munich plays its home games, and it would weight 250,000 metric tons. The dimensions would be even larger in the case of a lead acid battery, such as those used in cars. A cube-shaped battery would be 93.3 meter long on each edge — and Munich would have a new signature landmark.

[and]

In the next few years, electricity consumers will pay for more than €100 billion in subsidies for solar power. Additional billions will follow. Like its predecessor, the current CDU/CSU-FDP government has also bowed to the solar lobby. The latter’s business model is still based on collecting as many subsidies as possible rather than on feeding as much usable electricity as possible into the grid.

This is not the future. It is the ‘now‘ in Germany. It is the future being embraced by most of the major political parties in New Zealand. They are embracing economic decline, and telling you the future is bright. It is not bright, but a future of darkness in which the lights go out, and you pay ever more for an ever less reliable energy system. It is job losses, a lower standard of living, and energy poverty. It is time to wake up. We can now see the future. When you hear ‘green’ platitudes and arguments, point their attention to Germany. When you hear a politician wittering about the benefits of going ‘green’ point the politician’s attention to Germany. When you hear the ‘green’ platitudes and arguments for the wonders of renewables, paint the picture with the now of Germany.

The New Class War

My instinct is against the concept of class war, as I do not see the interests of different ‘classes’ are necessarily in opposition. However, a couple of news stories have captured my attention, alongside my own consideration of my last post; that the people who will suffer from green energy policies are those who are those who struggle with day-to-day costs of living. We do have a class war, and it is very ugly. But our ‘class warriors’ do not, I suspect, realise what they are really doing.

The individual news stories that captured my attention are not really that important, except that they are illustrative of a pattern. In one story, there was vocal opposition against a salmon farm extension, which would provide 400 jobs. The opposition talked of damage to the ‘pristine’ environment. It was impossible not to notice that the backdrop to the story featured boats moored in pleasant scenery; do not mess with our pristine environment for boating and leisure pursuits. The second story I barely paid attention to. It was the same collection of nice ‘middle class’ people protesting against some kind of economic development. Not in my back yard (NIMBY) was the argument, and the ‘enironment’ was again wheeled out to back their point.

When looking at the so called ‘green’ energy of windfarms, there is little doubt that this comes at a price. In my last post the cost for consumers, and the cost for the economy for any country that pursues the green dreams are considered. The dream is one that leads to higher energy costs, and ultimately to lost jobs. Who pays the price first? Is is the teachers, the university employees, the civil servants? No. It is ordinary working people. With regards to the middle classes in the private sector, the middle managers, the senior managers, it seems that they will be the people most able to afford the higher bills, but do not realise that they defeat their own economic position when their votes, and their views, load expenses onto already stretched businesses.

As such, there is a divide. There are those at the bottom who care only for a job, and to be able to afford to live well enough. Then there are the middle managers who cannot see that they risk their own future when they go ‘green’ in their views and attitudes. They do not link their views to long term decline. Then there are those in the government sector who are insulated from the consequences of their actions. Finally, we return to the  NIMBY. Whilst their individual protest against any economic development, dressed up with greenery, appears to be genuinely serving their self interest, the collective NIMBY action only serves to retard the economic development on which their own futures, in many cases, rests.

So what kind of class war do we have. On the one side, we have those who will be most hurt; the less well off. They are not organised, are not vocal, and just suffer the price of ‘greenery’ in silence. They are the people who stand to lose most from the anti-development movement. But, heh, who cares as they have no voice. Then there are the NIMBY people, who just don’t get that the more of them there are, the more they undermine their own futures. They are the middle class agitators who think they are protecting their own interest/s. Finally, there are those who are in the government sector, who imagine that they are in a world where they are safe. They are vocal for their ‘green’ causes, confident that there will be no price for themselves.

However, this last group are perhaps the most deluded. For all their confidence, Greece and Spain tell a story. They are not as safe as they imagine, and are not insulated from the cost/s of their pet causes. They rely, in the end, on an economy being able to support the cost of government. If the economy starts to fail, eventually even those who live in the security of the government will pay a price. There must be a strong economy to support the current size of the state.

So is there really a class war? The answer is both ‘yes’ and ‘no’. There is a class war in the sense that the middle classes are promoting/supporting policy that hits the ordinary working people. They can afford to pay the higher bills, and some are insulated from the medium term effects of ‘greenery’. The people who are hurting now are those who are at the bottom of the socio-economic ladder. Whilst the middle classes load the cost of their greenery on this class, they do not realise that they will also pay the price; just further down the line. Whether a relatively wealthy middle manager, of a civil servant, they may not see the cost now, but what of the future? It is a class war in which interests collide only in the sense that one group are unable to project forwards, and realise the costs that they impose on poorer people will one day reflect on their own futures.

The cost of ‘greening’ is one that is not immediate, and not direct and the degree of impact is phased. The first to pay the price are the poor, the second the middle classes, and lastly the civil servants and people sheltered by being in the pay of the government. The latter two groups can afford to be ‘green’ right up to the point where their company goes bust, or the government needs to cut back due to a declining economy. They cannot connect the dots of their actions into the final consequences of their actions.

The real tragedy is that, at this moment in time, nobody cares. The green movement, green attitudes, are the thing of the moment. The middle endorses the greening of New Zealand. The bottom pays the price. But the middle cannot see that they too will pay the price. Yes, there is a class war, but it is a war of lack of care, rather than a war founded in hate. The trouble is that, whilst not caring for those at the bottom, those in the middle cannot see that the interests of the bottom and middle are the same. The bottom and middle both need a sound economy to survive. The ‘greening’ of the New Zealand economy has a price, and that price will eventually be shared by all.

Wind Energy: The Future Has Arrived

One of the sites that I visit quite regularly is the Global Warming Policy Foundation (GWPF). As of late, there have been a deluge of articles and links on the subject of wind energy, many of which are focused on the UK and EU. Whilst this blog is primarily looking at New Zealand, the experience of the UK and EU may be seen to be useful in understanding wind energy in general. This latest story grabbed my attention and prompted the post:

THE amount of electricity produced from “green” energy sources in Scotland fell by almost half for a period earlier this year – because it was not wet or windy enough.

• Murdo Fraser voices concern despite 13 per cent rise in green power over first half of year

• 35 per cent of Scottish electricity demand met by renewables

• Renewable energy down 20 per cent in second quarter

The figures prompted opposition concerns that Scotland could be left in the dark if the “wind isn’t blowing”.

First Minister Alex Salmond wants to pioneer a “renewables revolution” by generating the equivalent of all the country’s electricity needs from “clean” sources, such as hydro, wind and wave power.

But, according to government figures, renewable electricity fell to 2,498 gigawatt hours (GWh) between April and June from 4,596 GWh the previous quarter, the most dramatic fall in mainland Britain. There has been a 600 GWh drop from the same quarter last year.

For those who view wind as a source of power as near to useless, this may come as no surprise. However, it is a story that only serves to emphasise the problems inherent in wind power. How is it possible to plan power supply with such huge variability? Despite such a stark example of the risks of reliance on wind energy, I can confidently predict that this will not derail the Scottish dash for more renewable energy. The mounting evidence pointing to the problems of reliability of wind energy just seems to have no impact. And then there are the real costs of wind energy, which is starting to be felt in one of the homes of wind energy; Germany. When Germany shut down its nuclear industry, it found out what a ‘green’ future starts to look like. This from Reuters:

Germany must rein in the runaway costs of subsidising electricity from renewable sources or risk overburdening consumers, European Energy Commissioner Guenther Oettinger said on Tuesday.

“We need a speed limit,” Oettinger said, referring to the accelerating cost of funding electricity produced from sources such as wind and sun at above-market prices – a course Germany has chosen to become a low-carbon economy.

And for ordinary consumers, there are the costs of the subsidies for renewable electricity:

The rise to above 5 cents will work out as an additional 70 euros on the 900 euros ($1,200) average household power bill paid in 2012, of which 150 euros already go towards green power.

And then there is this from Christopher Booker on renewables in Germany:

Now the problem for the German grid has become even worse. Thanks to a flood of subsidies unleashed by Angela Merkel’s government, renewable capacity has risen still further (solar, for instance, by 43 per cent). This makes it so difficult to keep the grid balanced that it is permanently at risk of power failures. (When the power to one Hamburg aluminium factory failed recently, for only a fraction of a second, it shut down the plant, causing serious damage.) Energy-intensive industries are having to install their own generators, or are looking to leave Germany altogether.

Die Welt has reported the risk of blackouts in Germany, with the following a summary from GWPF:

Last winter, on several occasions, Germany escaped only just large-scale power outages. Next winter the risk of large blackouts is even greater. The culprit for the looming crisis is the single most important instrument of German energy policy: the “Renewable Energy Law.” The economic cost of a wide-scale blackout are measured in billions of Euros per day.

This is from Spiegel:

At other industrial companies, executives at the highest levels are also thinking about freeing themselves from Germany’s electricity grid to cushion the consequences of the country’s transition to renewable energy.

Likewise, as more and more companies with sensitive control systems are securing production through batteries and generators, the companies that manufacture them are benefiting. “You can hardly find a company that isn’t worrying about its power supply,” said Joachim Pfeiffer, a parliamentarian and economic policy spokesman for the governing center-right Christian Democratic Union (CDU).

And there is more from the same article:

The problem is that wind and solar farms just don’t deliver the same amount of continuous electricity compared with nuclear and gas-fired power plants. To match traditional energy sources, grid operators must be able to exactly predict how strong the wind will blow or the sun will shine.

But such an exact prediction is difficult. Even when grid operators are off by just a few percentage points, voltage in the grid slackens. That has no affect on normal household appliances, such as vacuum cleaners and coffee machines. But for high-performance computers, for example, outages lasting even just a millisecond can quickly trigger system failures.

This is exactly what people, including myself, predicted would take place. As it is, in Germany, there is now a boom taking place for companies to have back-up systems for an unreliable power supply. I have found no figures for the cost of this, but it would be reasonable to expect that it is very high. The cost that is not so visible will be the companies that might consider packing their bags and moving to a country that can provide reliable energy. It is bad, very bad, and I will quote at length from another Spiegel article (emhasis added):

Energy prices are rising and the risk of power outages is growing. But the urgently needed expansion of the grid, as well as the development of replacement power plants and renewable energy sources is progressing very slowly. A growing number of economic experts, business executives and union leaders are putting the blame squarely on the shoulders of Merkel’s coalition, which pairs her conservatives with the business-friendly Free Democrats (FDP). The government, they say, has expedited de-industrialization.

[and]

In macroeconomic terms, the impending demise of heavy industry is all the more worrying, because the job losses will not be offset elsewhere. There is no sign yet of the green economic miracle that the federal government promised would accompany Germany’s new energy strategy.

[and]

The price of electricity is moving in only one direction: steeply up. For the Krefeld plant, the cost of a kilowatt hour of electricity has tripled since 2000.

And there is no end in sight. When Merkel’s new energy policy was introduced last year, says plant manager Behmenburg, planning for the future became virtually impossible. Behmenburg says that it is impossible now to know what will happen to the supply situation and the price of electricity in the coming years. The mill, steeped in tradition, didn’t stand a chance of surviving, he says.

Voltage Fluctuations and Power Outages

Other companies could suffer a similar fate. Berlin’s energy policy affects all classic industrial sectors, from the steel and aluminum industry to paper and cement manufacturers, as well as the chemical industry. The metal industry, long an important sector in Germany, is already migrating to countries with cheaper electricity.

The Düsseldorf-based conglomerate GEA closed its zinc plant in nearby Datteln. Aurubis, the Hamburg-based company that is Europe’s largest copper producer, is critical of higher energy costs and has announced plans to invest abroad, especially in Asia and South America. According to a recent survey by the DIHK, almost one in five industrial companies plans to shift capacities abroad — or has already done so. The study also finds that almost 60 percent fear power outages or voltage fluctuations in the power grid, because wind and solar power are still too unreliable.

“The promotion of renewable energy has led to substantial displacement effects on employment in the conventional energy production sectors, as well as in downstream industries that are particularly energy-intensive,” concludes the report on a conference held at the Federal Ministry of Education and Research last year. The political opposition has also recognized the importance of the issue. Some believe that the green economy is everything, warns Sigmar Gabriel, chairman of the center-left Social Democratic Party (SPD). “But they forget that they can’t make a wind turbine without steel, plastic, mechanical engineering and electrical engineering.”

Welcome to the world of renewable energy. Germany has followed this path towards its conclusion, and words like ‘deindustrialisation’ start to appear. This is the future of the countries that stake their future on renewable energy. For years we have had the ‘green’ advocates, politicians and pressure groups promising and promising that ‘green’ energy would create jobs, and that all would be good with the world. Well, the experience of Germany is not a forecast, not a hypothetical scenario, not an imagined future; the future has arrived, and it is high prices, deinstrialisation, and a grid that does not work.

Germany is an economic powerhouse. It is an economy that has even managed to survive relatively unscathed whilst much of the world economy has been in a dire state. However, for the German economy to prosper, it needs reliable and affordable power. No wonder to find then that Germany is rapidly reversing course and is building 23 coal power stations.

Here in New Zealand, as I have discussed in previous posts, there is similar enthusiasm for wind and renewables as in Germany. It is an enthusiasm that is promoted by a narrow group of green fanatics, and a renewables industry that has enjoyed subsidy and growth on the back of building useless and expensive energy.

Throughout the last few years, claims for wind energy as a solution have been made, and we can read argument after argument from the ‘green’ advcacates proclaiming a bright future for those who pursue the renewables future. Well, if a bright future is sky-high energy prices, companies fleeing from expensive and unreliable energy provision, rising unemployment, and the most vulenerable living in energy poverty, then the future is indeed bright. It is no longer an imaginary ‘bright’ future, but a future that has come to Germany.

How long until we see it in New Zealand? It is a question of politics. It is a question of when politicians finally stand up to the green lobby. Renewable energy is not the foundation for economic prosperity, but is instead a policy of economic decline. We can see the results in Germany. Quite frankly, I am simply baffled that nobody has the guts to stand up and say ‘enough’.

Greening and de-industrialisation

This is a very quick post, but I could not help but comment on this snippet I saw on Watts Up With That. The snippet refers to a full article that can be found at the Global Warming Policy Foundation, which is a translation of an article from a German newspaper (a long explanation of source, sorry). Below are some key quotes from the article, which are all referring to the ‘green’ energy policies adopted in Germany:

Today it is obvious that Merkel has promised too much. Energy prices in Germany are increasing dramatically – by 57 percent in just the past ten years – and not least because the state is one of the biggest drivers of cost. Taxes and duties on electricity prices have now risen to 23.7 billion Euros p.a. – an increase of just over 1,000 percent within 15 years. The levies on electricity look more like a special energy tax, which is higher than the revenue from tobacco and motor vehicle taxes combined. [and]

German industry, in particular, is suffering from high electricity prices. Most affected are the chemical, metal and paper industries. In the aluminium industry, the electricity costs amount to about 40 percent of total costs.

All industries complain; some companies have already closed down: the aluminium smelter Voerdal in the Lower Rhine town of Voerde recently filed for bankruptcy because of high energy prices. The U.S. chemical giant Dow Chemical currently operates 17 plants with more than 5,000 employees in Germany. “Because of the green energy transition I get increasingly critical questions from our corporate headquarters in the US about whether energy supply in Germany is still possible at competitive prices,” said Germany boss Ralf Brinkmann. [and]

“The de-industrialization has already begun,” Energy Commissioner Guenther Oettinger has warned in an interview with the Handelsblatt. Hans Jürgen Kerkhoff, President of the Steel Trade Association, complains: “The levels of industrial electricity prices are higher here than in most other countries.” [and]

It is really not complicated. If you increase the cost of energy, the more intensive the energy user, the more likely they will decamp to another location. Of course, this means no net decrease in the amount of carbon dioxide, as this is just a displacement of activity. It just means that one country’s de-industrialisation is another’s industrialisation.

The question is; is this what we want for New Zealand? The cost is pain for both business and households. More to the point, even where there is the possibility of potentially less expensive ‘green’ energy, fanatics such as the Green Party still seek to block the alternatives. The timing is perfect but the outcome is laughable. Just after I read the German article, I found this on the Climate Conversation Group, in reference to a proposed Meridian hydro electric project in New Zealand:

On the surface, this is an example of the extreme green position. Don’t touch the earth, don’t change it for any reason, never mind the benefits. Never mind that we have no other resources (there’s just the one planet, you know), but we can’t use these resources, because we’ll kill a few snails.

The Green Party is crowing about this victory, which is fair enough, but it says all rivers should be protected. This is wrong. The Mokihinui might have special qualities that deserve protection, but it would be anti-human to deny access to all rivers.

The Greens have campaigned against the use of the river for ‘renewable’ energy, in order to protect wildlife. At the same time they support the massively expensive use of wind and solar energy. What do they really want? The answer, in the end, is de-industrialisation. They never say it, but it can be the only outcome of their policy and approach. We can see the results in Germany. It takes time to start the de-industrialisation, but once started, it is hard to reverse. After all, once the companies are gone, are they likely to come back? The skills and knowledge to compete in the sector are lost, and hard to revive.

It really is time to wake up to the damage that so-called green energy policy will do. De-industrialisation can be the only outcome of an expensive energy policy, and this is what the Green Party, and their supporters, are pressing for in New Zealand.

Note: I have not looked at the economics of the case of the hydro-project, but am guessing that it would provide cheaper energy than wind/solar. However, readers should be cautious that this is no more than a guess. I would review the case but am short of time, and am guessing that the Climate Conversation Group were aware of the background for their post.

New Zealand Research and Climate Change

I have taken a leaf out of Jo Nova’s book, and thought I would take a quick look at research funding for climate change in New Zealand. I seem to recall that at some time, the New Zealand Climate Science Coalition has looked at this, so this might serve as an update. The only source I am looking at is the Ministry of Science and Innovation (MSI), and there will undoubtedly be other sources of funding that will be available. The MSI website has an excellent search function, and my first search was for the keywords ‘climate change‘, with no start or end date specified (the earliest grant was awarded in 1996). The results were a little startling, as follows:

Number of awards: 92,

Value of awards: $341,732,959.40

I also conducted a search for ‘climate change global warming’ and produced 7 results with a total value of £65 million. I have found some of the numbers to be a bit odd, but can only go assume that the information from the website is correct. I downloaded the results as a spreadsheet, and took a quick glance through the titles of the funded projects, and it seems that most of them were focused directly on climate change research. It will be unsurprising to find that National Institute of Water and Atmospheric Research Ltd. (NIWA) was a major recipient, with grants as follows totalling $161,130,930. It will also come as no surprise to find that New Zealand universities were also each awarded several grants.

Other large grants were primarily awarded to crown research institutes; GNS Science Ltd. with over $36 million,  Landcare Research Ltd. with $54 million, AgResearch Ltd.  and Scion, both with just over $8 million, with some other examples of major grants being Industrial Research Ltd with about $4.5 million, New Zealand Institute for Crop and Food Research Limited with $22 million,  Institute of Environmental Science and Research Ltd. with about $3 million.
When looking at these grants, and the search term, it must be remembered that climate change is a real phenomenon. It is whether humans have a major impact on climate that is questionable. Nevertheless, I think we can safely assume that these grants are given based upon the latter point; that the grants are a response to the theory of anthropogenic climate change. The problem is that, NIWA’s data has shown that warming has come to a halt in New Zealand. As such, this research appears to be investigating a non-problem. And the cost of the research is huge.

I have reproduced one of the explanations of NIWA’s grants at the end of the post (I have added formatting for readability), and the original can be found here. The grant is for $29 million. If you read the grant explanation carefully, it is possible to find some very worrying justifications. As just one example, the Stern report is cited, which has been widely criticised as alarmist and unjustified on economic grounds, with the Cato Institute suggesting that Stern’s investment advice is ‘sheer lunacy‘. However, the main problem is that there is an absolute acceptance of anthropogenic global warming theory, and absolutely no discussion of any alternative or investigation of any alternative.

During economic ‘good times’, it may be less harmful to use money on wasteful research. However, these are not ‘good times’, but actually a time when the economy is going through a tough time. The only comfort in the search was that new grant starts seem to have reduced in size and quantity. However, having said this, a case might be made for new grants to investigate climate change. In particular, despite the NIWA grant proposing that they would provide a sound foundation for New Zealand policy, their work has been found to be biased (e.g. see here), and one of their key scientists has been shown to be biased in the extreme (actually participating in activity to get a skeptical scientist sacked from his job). Therefore, perhaps a grant to investigate the skeptical position is overdue?

NIWA’s Research Grant

The Drivers and Mitigation of Global Change (DMGC) programme serves to integrate research in the fields of stratospheric change, tropospheric composition and climate change, and atmosphere-surface interactions.

  • It provides in-depth scientific understanding of the drivers of global environmental change.
  • The programme provides an international context for the impacts of stratospheric and surface climate change on New Zealand’s environment, and an authoritative basis for the development of national and international policies to mitigate global change.
  • The research directly serves New Zealand’s obligations under international treaties, including the Vienna Convention for the Protection of the Ozone Layer (and Montreal Protocol), the UN Framework Convention on Climate Change (and Kyoto Protocol), and the Antarctic Treaty System.
  • In addition to research on global scale issues, there are objectives that focus on topics of national importance, principally the emission of greenhouses gases from agriculture and the physical properties of solar/UV radiation because of their influence on the health of New Zealanders and the performance of construction materials and energy availability.

Thus the programme provides a sound basis for the management of New Zealand’s environment and economy, and information for improved policy development and societal decision-making. Over the term of this contract (2004 – 2007), the research has greatly improved understanding of the climate change issue. Global concern with respect to climate change is mounting in response to the:

  • greater certainty in the science: it is regarded as extremely likely that humans have exerted a substantial warming influence on climate through combustion of fossil fuels (Intergovernmental Panel on Climate Change; IPCC);
  • widespread acceptance of the economic costs of climate change and that mitigation cost incurred over the next few decades could avoid the risks of very severe consequences in the future (Stern Report);
  •  widespread recognition that major action to cut fossil CO2 emissions is needed within the next two decades in order to avoid dangerous climate change and/or global mean temperature increases of <3°C above pre-industrial levels (IPCC).

To help address the mounting concern by governments and the public at large on the impacts of global change, this programme provides essential physical data, models and interpretation of the processes that determine the human induced changes to the composition of the atmosphere and its radiative properties. Key personnel have been involved as lead and contributing authors in the 4th assessment report of the IPCC, the WMO 2006 Scientific Assessment of Ozone Depletion, and the 2006 UNEP Effects Panel, all released in 2007.

The Earth’s climate system is currently undergoing rapid change, primarily in response to changes in the natural abundance of long lived greenhouse gases (GHG)s. Global atmospheric concentrations of the most important GHGs (carbon dioxide, methane and nitrous oxide) have increased markedly as a result of human activities since AD1750 and now far exceed the pre-industrial values obtained from ice cores spanning many 1000s of years. Measurements of carbon dioxide made at Baring Head, New Zealand, within this programme form the longest continuous baseline record in the Southern Hemisphere and are a key component of observational evidence in the IPCC’s 4th assessment report published in May 2007.

These data show that, despite the GHG emission limitations proposed in the Kyoto protocol, carbon dioxide concentrations, currently around 380 ppm, continue to increase at an exponential rate in the atmosphere. Concentration measurements at Baring Head are supported by carbon dioxide isotope and oxygen measurements to assist in determining the magnitude of source/sink processes in the carbon cycle. The programme also made a significant contribution to predictions of stratospheric ozone recovery. A key science member within the programme was lead author of the 2006 WMO Scientific Assessment of Ozone Depletion. This important document assesses the status of global ozone depletion and its impacts. At a national level, the programme not only monitors local stratospheric ozone levels, but also continues to measure and map solar and UV radiation over New Zealand.

This work is essential to understanding the impacts of UV on human health and materials. Recent work has highlighted the potential connection between very low winter UV and reduced population levels of vitamin-D in New Zealand. Further research on this issue is to be advanced with the health sector over the coming year. Science information resources: Water and Atmosphere: Greenhouse gas data: http://www.niwascience.co.nz/rc/prog/greenhouse/info/graphical Simple climate model: http://www.niwascience.co.nz/pubs/wa/14-4/climate Nitrous oxide: http://www.niwascience.co.nz/pubs/wa/15-2/oxide Ozone hole: http://www.niwascience.co.nz/pubs/wa/15-1/ozone UV radiation: http://www.niwascience.co.nz/rc/atmos/uvconference/ UV atlas: http://www.niwascience.co.nz/services/uvozone/atlas Ocean-atmosphere studies: http://www.niwascience.co.nz/rc/atmos/sage/intro Ocean gas exchange: http://www.niwascience.co.nz/pubs/wa/14-2/gas Iron fertilisation: http://www.niwascience.co.nz/pubs/wa/14-2/iron