Tag Archives: fracking

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.

A Great Energy Solution

What is the reaction to a cheap and plentiful source of energy? Is the world raising a cheer, are we celebrating that one of the great inputs into making our lives might be made cheaper and enhance everyone’s prosperity. Strangely enough, no. The source of energy is natural gas, and the process of fracking is a relatively new method to tap into huge new sources of natural gas. If you are unfamiliar with fracking, this is a neat summary from Wikipedia:

Hydraulic fracturing is the widening of fractures in a rock layer caused by the high-pressure injection of chemicals with water. Hydraulic fractures form naturally, as in the case of veins or dikes, and industrial fracturing widens or creates fractures to speed up the migration of gas and petroleum from source rocks to reservoir rocks. This process is used to release petroleum, natural gas (including shale gas, tight gas and coal seam gas), or other substances for extraction, via a technique called induced hydraulic fracturing, often shortened to fracking[a] or hydrofracking.[1]

I thought I would cover fracking as a topic as I received an interesting comment from ‘Andy’ on a recent post on wind-energy, which linked to an article as follows:

A $1.6 billion wind farm – the country’s largest – has been given the go-ahead to be built in Wairarapa.

Genesis Energy’s Castle Hill Wind Farm will dot hillsides throughout northern Wairarapa with up to 286 turbines and provide power for up to 370,000 homes.

It is all very dispiriting, as it means that electricity in New Zealand will, as time progresses, become ever more expensive. Wind-energy is just useless, wasteful and expensive, and we will eventually see this in the cost of our electricity bills, and the closure of energy intensive businesses that can move overseas. In consideration of the size of the population, New Zealand is blessed with commodities, including the possibility of large reserves of oil. However, to add to this mix, there is the possibility of major sources of natural gas becoming available, if only fracking continues to be allowed to be developed in New Zealand.

Up to now, I have been cautious about commenting on this new source of energy, as there have been some controversies over the use of Fracking. In particular, questions have been raised about the possibility for fracking to cause seismic disturbances and groundwater contamination. However, as time has moved forwards, it seems that, though not perfect, fracking is a reasonably safe and cheap way to access energy. However, this portrayal does not match up with that given by the ‘green’ lobby, who would rather see useless windmills built at huge cost to the economy and to individuals when they pay their electric bills.

So what of the potential. Well, surprisingly enough (or perhaps not), it was very hard to find any articles that actually detailed the potential reserves of shale gas in New Zealand, with nearly all of the articles focusing on the controversy surrounding the extraction of the gas. I eventually dug up a very brief article that says the following with regard to reserves:

Amidst opposition from local environmentalists, permits have been approved for hydraulic fracturing on 4,406,400ha of New Zealand land and another 3,065,500ha is up for consideration, Rigzone reports. L&M Energy believes its plays on the South Island may contain more than 5 trillion cubic feet of gas. Could New Zealand join Australia as a potential shale gas supplier to the south east hemisphere?

The really curious thing about my search was how hard it was to find this information, and the lack of discussion of the potential benefits for New Zealand’s economy in general, or the benefits of cheap energy for both individuals and business. Instead, the major focus is on the environmental risks. The chart below shows the most obvious benefits the shale gas revolution has brought to the U.S.

Perhaps it is stating the mindlessly obvious, but when massive new sources of a new commodity become available, it becomes incredibly cheap. In this case, it is energy that is becoming much, much cheaper, and the result is that this is a boon for any economy. Instead of a celebration for the potential for cheap energy, we instead have hand-wringing about the ‘risks’. As such, it is worth looking at the risks, and I will hand over to Matt Ridley for his commentary on a recent (very ‘green’ oriented) UK government report:

It is now official: drilling for shale gas by fracturing rock with water may rattle the odd teacup, but is highly unlikely to cause damaging earthquakes. That much has been obvious to anybody who has followed the development of the shale gas industry in America over the past ten years. More than 25,000 wells drilled have caused a handful of micro-seismic events that can barely be felt.

The two rumbles that resulted from drilling a well near Blackpool last year were tiny. To call a two-magnitude tremor an earthquake is a bit like calling a hazelnut lunch. Such tremors happen naturally more than 15 times a year but go unnoticed and they are a common consequence of many other forms of underground work such as coalmining and geothermal drilling.

The use of the word ‘earthquake’ is one which sounds very scary, but the disturbances caused by Fracking are minimal, and when we compare this to the potential and rarely mentioned benefits….

As for the contamination of groundwater, perhaps the most infamous scare came out of the US:

Yet, a small cabal of special interest groups opposes the resource and, consequently, has sought publicity to spread their dubious beliefs. Case in point: a scene from the upcoming documentary Gasland, which features a man lighting his faucet water on fire and making the ridiculous claim that natural gas drilling is responsible for the incident. The clip, though attention-getting, is wildly inaccurate and irresponsible.

To begin with, the vertical depth separation between drinking water aquifers and reservoir targets for gas production is several thousand feet of impermeable rock. Any interchange between the two, if it were possible, would have happened already in geologic time, measured in tens of millions of years, not in recent history.

The only way that drilling could have caused communication is through the vertical well bore itself which is cemented and cased. Millions of wells have already been drilled throughout the world, of which only a handful have experienced accidental leaks into water aquifers– a percentage smaller than a person’s chances of being struck by lightning in fact. In the rare instances of a leak to the surface, energy companies alert and voluntarily evacuate residents while the safety of the site is evaluated.

This has not prevented the Gasland story from being repeated in New Zealand, as in this story from the New Zealand Listener:

The documentary movie Gasland popularised these concerns with graphic images of residents holding cigarette lighters up to their running taps, causing the water to explode in a ball of flame. Many recounted stories of illness in their households, and sick and dying animals. Some said their water had turned brown and smelt foul, and they were forced to truck in water after their wells were ruined.

Please do not get me wrong. Any commodity extraction process has potential risks, but these risks have to be considered in relation to the benefits. Cheap and plentiful energy is a major benefit, but the risks involved in fracking are vanishingly small. The problem is that, as in this New Zealand Herald article on a government enquiry into fracking, there is a lack of clarity on what rewards and risks are involved (my emphasis added):

In an energy-hungry world, there is a clear case for the practice if it embodies no environmental threat, or risks that can be comfortably contained. Much of the evidence overseas points to this not having been the case when regulation of the exploration industry was weak and fracking was done incorrectly. This is the area where Dr Wright’s investigation should shed most light.

The interesting point is that of ‘no environmental threat’, albeit followed by a less strong position. All resource extraction has potential risks, but the entire world relies upon resource extraction. Whatever the resource, there are risks to the environment. Even the wind-farms given hallowed status by ‘greens’ are responsible for huge numbers of bird deaths, not to mention the poor people who live near them who are driven mad by the noise, or the occasional dangerous collapses of individual turbines, or the concreting over of land etc.

The most worrying aspect however, is that the anti-fracking movement is led by Greens, as well as ‘renewable’ energy lobbyists. Again, I hand over to Matt Ridley:

Most of the opposition, though, has come from those with a vested interest in renewable energy, including the big environmental pressure groups, which are alarmed that the rich subsidies paid to wind, biomass and solar may be under threat if gas gets too cheap and cuts carbon emissions too effectively. Their entire rationale for subsidy, parroted by their dutiful poodle Chris Huhne, when Energy Secretary, is that gas would get more expensive until even wind and solar looked cheap. That was wishful thinking.

Notwithstanding his use of ‘carbon emissions’ when he must surely mean carbon dioxide, he makes a good point. There are now powerful lobby groups that see fracking as a threat to their own industries. Add to this the green lobby view that anything that might improve our lives or any resource extraction is ‘bad’, and we have a toxic mix. It is a toxic mix which seems to be working, as the news about fracking seems to relentlessly focus on risks rather than rewards. This sits in stark contrast to the discussion of wind-energy, which is paraded as a universal positive, without reference to the environmental damage, or without reference to the huge costs that will be borne by all of us.

In short, sure there are some small risks, but what about the huge benefits?

Note: Apologies for a slightly clunky delivery of the post but I am pressed for time, but still wanted to get something out on the subject.