The end of baseload? It may come sooner than you think

[larry martin]

An interview with Hans-Josef Fell, German Green Member of Parliament.  

http://reneweconomy.com.au/2012/the-end-of-baseload-it-may-come-sooner-than-you-think-29425

The end of baseload? It may come sooner than you think

By Giles Parkinson on 20 February 2012

One of the principal architects of Germany’s push into renewable

energy technologies, Hans-Josef Fell, believes that the country

could achieve 100 per cent renewables in its electricity sector

by 2030 – and may do it quicker. The rest of the world could

follow soon after.

Fell, a Greens politican and architect of the the feed-in-tariffs

that have helped the country already produce 20 per cent of its

energy from wind, solar, biomass and geothermal sources, and

pushed it to the forefront of clean energy technologies, says the

growth of renewables will continue at an exponential rate. This

is partly because of the growing cost of conventional fossil

fuels, and partly because of their inability (apart from gas) to

balance the intermittent nature of renewable energy generation.

In an interview with RenewEconomy, Fell says a 100 per cent

renewables electricity grid in Germany may be 40-50 per cent

wind, 30-40 per cent solar, with the rest coming from other

sources. Balancing this generation, however, would be the key

challenge.

“This  is not possible with baseload, because you cannot switch

them on and off very fast,” he said. “It was possible with gas-

fired power stations, but peaking gas stations  were also

emissions-intensive, and European countries such as Germany had

to depend on gas imports from Russia.” He said new smart grid

technologies and storage, where costs would also rapidly decline,

would provide the answer.

Fell is effectively echoing the scenarios painted by Australian

researchers David Mills, and from Mark Diesendorf and Ben

Elliston at UNSW, along with preliminary work by the IEA, which

suggests the concept of baseload and peaking power – the current

model for electricity grids worldwide – will be replaced by a

system of flexible and inflexible energy sources.

The ability to provide dispatchable, cost competitive energy,

will largely decide the fate of the 100 per cent renewable goal,

and of gas. Fell says there is clearly resistance from the

conventional electricity energy, which sees its business model at

risk, and which he says is fighting with “lies and

misinformation.”

The cost appears horrendous. Fell puts it at $US100 trillion over

20 years, if the world was to transform to an entirely 100 per

cent grid by 2030. It’s an academic number – based around work

done by Stanford and Davis Universities in the US, but  he says

the world would be paying double that  if it continued with

conventional fuel sources. And he says while feed in tariffs

might cause higher energy costs initially, these are quickly

absorbed by the “merit order effect”, and will deliver further

benefit as the cost curves of falling renewable energy sources

and rising conventional sources intersect, as they have already

done with onshore wind and coal and gas in Europe.

Here are some edited highlights of the interview with Fell.

Q: How has the renewable energy debate evolved in Germany?

A: In Germany it began at local level, and after successful

introductions in villages and towns it came to the national level

with the introduction of the Renewable Energy Act into parliament

in 2000. I wrote the draft for that act, which was introduced by

the Social Democrats and the Greens.  We set a target for

renewable to double shares from 6% to 12% by 2010. We were told

this target was unrealistic and unachievable. But in 2011, we

have already 20 per cent.  The feed-in-tariff has driven high

investment and so much innovation – in wind power and biogas and

solar PV, that costs have dropped down very fast and solar PV is

now as cheap as grid electricity.

Q: But there has been a lot of criticism about the FiT and its

costs.

A: This comes from the conventional energy producers because they

fear for their business models, and they make a lot of mis-

information. In reality, in Germany the wholesale price of

electricity is going down. When we have a lot of wind and sun, we

can close down the most expensive electricity generation, and we

get a price which is cheaper than without renewables. Now, new

investment in wind power is cheaper than new coal fired power

station, and it will continue to fall. With oil and gas and coal

and uranium, the prices will rise and rise and rise.

Q: So you say that the business model of the conventional

producer is under threat?

A: There is a fight in Germany between the old economy with

nuclear and coal fired power stations, because they fear for

their business, so they fight very hard. We  had the discussion

in Germany that when you phase out nuclear, then our need for

cheap energy means we will have to buy cheap nuclear power from

France and the Czech Republic. The reality is otherwise. We have

had a big cold winter, and France did not have enough from

nuclear, so they bought electricity from Germany. We have so much

that we can export it to Grance and help them in a cold winter so

they don’t get a blackout.

And we are not at the end of the innovation process. Look at the

semiconductor and information technology industries, where prices

have been dropping down very very fast in the last 20 years, like

laptops, mobile phones etc. PV is like semiconductors, the PV

price will go down very fast in coming years. Solar will become

the cheapest energy that we can have in the world.

Q: So how quickly do you think we can we move to 100% renewables?

A:  In Germany, we could achieve 100% renewable by 2030 at

existing rates. We have now 20% in 2010. In 2020 with increasing

rates – and these are exponential, we could have 50%, and in 2030

we could have 100%. It is possible but it must be supported by a

good political framework, with reduced FiT tariffs, privileged

grid access, and other regulatory changes.

Q: What does a 100% grid look like?

A: We can organize it in different ways, but we need all sources.

Perhaps it could be 30-40% solar, 40-50% from wind. Then comes

the task to balance high fluctuations from wind and solar as the

weather changes. This balancing is not possible with baseload,

because you cannot switch them on and off very fast. Gas power

stations can switch on and off very fast – but natural gas brings

emissions in carbon, and we are dependent on Russian natural gas.

We have to learn how to do without it. We should switch to biogas

and green gas – perhaps we can use wind power, when we have too

much, to make hydrogen and use that to produce electricity.

Q: So you are saying that the current model of baseload and

peaking power will be replaced by flexible and inflexible energy

sources.

A: Yes, and we can also call it a smart grid system. Balance with

other energy sources and a lot of storage in hydro pumps, and

batteries and other energy. It is beginning now, we are learning

with the grid operation, we need to do it in such a way that it

can be done in time and in a way that frequency and volatage is

stable.  That very important, but new technology, such as

inverters for PV, can bring this about. Balancing is critical,

otherwise won’t see enough investment.

Q: How quickly can world follow?

A: The world can follow in same period, if they want to. At

Stanford University, they pointed out that information technology

– via mobile phones and laptops – did not take 100 years or 50

years. Professor Mark Jacobsen (the Stanford engineer) said the

world can achieve 100% renewable by 2030. It is possible on

technology, and it is also cheaper to go to 100% renewables than

to go on with conventional. He estimated it would cost $100

trillion over 20 years. That seems a lot, but it is only half of

the estimated conventional fuel bill over the same time, which on

2008 prices is $200 trillion.

Q: Does this message get through to politicians?

A: There is a lot of criticism from old companies, nuclear,

natural gas, coal and uranium. They fear of their business, and

this fear is right. With 100% renewables, there is no baseload

energy business. And they fight very strongly with misinformation

and lies, and a lot of the media brings this argument. But on the

other side, people in Germany see the reality – they  see the

benefits in new jobs, which in Germany has gone from  30,000 in

1998 to 370,000 today – and they see they can reduce their own

energy bill with solar energy at home and biofuels in the car. In

Germany, 80% of people support the switch to renewables, even in

the short term it means a higher price.

Q: Will it be only in the short term?

A: Yes, in the short term it is little bit higher – but we have

already achieved reduced prices on the electricity market. Last

year, the cost of the Renewable Electricity Act was €12 billion.

At the same time, we avoided €11 billion by not buying oil, gas,

coal and uranium. And savings from other costs, such as waste

management, took the total savings to €17 billion

Q: What is your assessment of policies in Australia?

A: You have wonderful research for renewables in Australia, at

ANU, Sydney University and elsewhere. Research is very important

but without market introduction it is not so useful, and you do

not have enough deployment. You need a good feed-in-tariff. But

you do have a carbon price, which balances a bit the high

external cost of fossil fuel production, so it balances a little

the uncompetitiveness of renewables.

The main thing is that Australia is the biggest exporter of

uranium and coal – most investors believe that when uranium and

coal prices rise, it is good for their business, because they

have a bigger income. But I believe that this is not stable in

future. It happens already in Germany, the higher the coal price

is rising, the more coal fired power stations they close, because

they are uncompetitive with renewables. The higher they go, the

less coal other countries will buy from Australia. I see most new

investment  in coal is a stranded investment.

Q: That message is not getting across.

A:  That’s because they believe it will go on., but it will not

go on. The oil price will be the leading price for all energies.

Peak oil is already here, the IEA says it is. In coming years we

must fear declining oil production. This will lift price very

high, and that will increase pressure on people, banks and

nations. The only chance to come out of this economic crash is to

go renewables.

Q: Some would say those are the words of an ideologue.

A: I often here this argument, you are Green politician, you have

no sense of the economy, you are unrealistic, a dreamer, and so

on. I hear this all my life.  I see now all my forecasts have

become reality, and for renewables they will go much faster

because the price will drop down very fast.

Q: You said that 100% renewables in Germany is possible by 2030.

How quickly will it occur in reality?

A: I personally believe it will come sooner, because of the

problems of the conventional energy sector. We will see in the

middle of this decade, oil price is about $200 a barrel. This

will lead to much more investment in renewables.

Q: What about CCS?

A: CCS? No chance on an economic level. You must understand that

new investment in coal power production without CCS is already

not competitive with wind power in Europe. To have CCS you need

one third more coal. How should it be competitive with

renewables? There is no chance. We see it in Europe at the

moment, all projects are cancelled.

Q: You are forecasting then a massive amount of stranded assets.

That will be difficult to manage, politically and economically.

A: It is difficult to manage because most politicians and

managers are going with  with the old thinking of conventional

energies. This will lead to stranded investment and possibly

economic crisis, and not only in energy system. The IEA

highlighted in its report that subsidies for renewables were $52

billion and fossil fuels more than $400 billion, and this is

growing because of rising oil prices.

Governments want to give energy consumers a stable, low but this

costs them more as fossil fuel prices rise, and .ruins their

budgets. We have seen what happens in Greece, and now Italy.

Energy costs play a bigger role that is often assumed. Rising oil

prices are also  leading to rising food prices, and to the

transport sector.

Q: Are you optimistic about how all this pans out.

A: Yes, I am optimistic about the increasing rate of renewables

and decreasing fossil fuels. I’m pessimistic if this comes fast

for problems of climate change. It can happen quick enough when

we can organize the political framework, when new actors can

promote this. I think these new actors will come from the finance

industry. I see hopeful movement there. A lot of them see now

that investment in renewables is most secure investment – they

want high profit and secure investments. When they want to

organize a strategy to have private money go to  climate

protection rather than climate polluting, then we have a chance

in the world. The finance industry will go to the politicians and

demand a feed-in-tariff, and it will come.