Tuesday, September 07, 2010

" ...a step backward to the energy technology of yesterday"

Wind and nukes are the two heavyweights still standing in the battle for "carbon-neutral" energy supremacy. They are not the only solutions, but the capital costs required to build-out either of these energy technologies is significant enough to dim the prospects of the other moving forward at the same time. (GW)

German Nuclear Power Extension Threatens Offshore Wind Funding

By Jeremy van Loon
September 6, 2010

The German government’s plan to extend the phase-out of nuclear power risks hampering investment in offshore wind turbines, a technology that may provide much of the country’s renewable energy by the middle of this century.

Utilities including E.ON AG and RWE AG may cut their investment in the industry to compensate for a tax of 3 billion euros ($3.9 billion) a year they will be charged, said Charlie Hodges, an analyst at Bloomberg New Energy Finance. The levy on nuclear-plant operators is meant to support renewable energy.

“It’s probably detrimental for offshore,” Hodges said. “Keeping that much nuclear power online means electricity prices will be stable and maybe even with some downside potential. That suggests less investment” in wind energy.

Under Chancellor Angela Merkel’s plan, an extra 12 years of nuclear power beyond a legally-mandated phase-out by 2022 will help the nation of 82 million make a transition to renewable power at an affordable price. The final plan on the nuclear extension will be presented to Merkel’s cabinet on Sept. 28.

“The decision is step backward to the energy technology of yesterday,” said Hermann Albers, president of the German Wind Energy Association. “The government is squandering the potential for wind energy.”

Solar Sidestepped

The focus of the government’s plans now is on support for the offshore wind industry, said Environment Minister Norbert Roettgen. The proposals sidestepped questions about Germany’s solar industry, which accounted for more than half of world demand for photovoltaic panels in the first half of this year.

Germany’s largest utilities are focusing on wind power as their preferred renewable energy technology, while households and farmers are tapping solar energy to earn above-market rates for electric power.

Yesterday’s decision “puts the brakes” on investment worth billions of euros and “cements the baseload-oriented oligopoly” tilted toward nuclear power and fossil fuels, Albers said.

Investment of as much as 4 gigawatts in offshore windmills is at stake, New Energy Finance estimates. That’s four times as much capacity as is currently installed in the U.K., the world’s largest market for wind turbines at sea.

E.ON, the country’s biggest utility, had its biggest intra- day gain since May 27, advancing as much as 3.7 percent. RWE, based in Essen, climbed as much as 3 percent. Until yesterday, the stocks had tumbled 21 percent since the start of the year, putting them among the DAX Index’s three biggest losers.

Wind Target

As part of the energy strategy, the government is considering ways to accelerate investment worth 75 billion euros in offshore wind to reach a target of 25 gigawatts of installed capacity by 2030. Possible measures include additional financing guaranties for the first 10 offshore wind parks, “alternatives” to the feed-in tariff and speeding up the approval process, according to a draft of the plan.

RWE spends about 1.4 billion euros a year on renewable energy, and “a lot of funds” for its expansion into the business come from its nuclear plants, said Julia Scharlemann, a spokeswoman for the company. E.ON is investing 8 billion euros in the five years through 2012 mainly on wind parks.

Nuclear power operators will resist investing in renewable energy with an extension because more wind power makes nuclear electricity generation less profitable, said energy researcher Olav Hohmeyer of the University of Flensburg in a study published Aug. 25.

Smaller Operators

Smaller operators of gas, coal and renewable power plants are demanding that the government force larger nuclear power plant owners like E.ON and RWE to give up a corresponding gas, hydro or coal plant in order to promote competition, Robert Busch, who heads the BNE association of energy providers, said in an e-mailed statement.

Money to support renewable energy in the form of a tax on nuclear operators will only reduce the money that large utilities were planning to spend on renewable, Busch said.

Germany aims to boost the percentage of electricity from non-polluting sources such as solar and wind to 50 percent by 2030 and 80 percent by 2050 from less than 20 percent now. Those targets will help Europe’s largest economy lower greenhouse gas emissions by 80 percent by 2050 from 1990 levels, according to the plan.

To contact the reporters on this story: Jeremy van Loon in Berlin at jvanloon@bloomberg.net


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