The WV coal industry continues to churn out mythology about renewable power. I was recently at an event where WV Coal Association president Bill Raney claimed that “Germany was turning back to coal for its electricity.” WV Division of Energy director Jeff Herholdt and Appalachian Power’s CEO Charles Patton were quoted in this State Journal article claiming that renewable power is just too expensive for WV. The State Journal’s reporter, although she interviewed both Mr. Herholdt and Mr. Patton for the article, cited only a nearly two year old paper by WVU law professor James Van Nostrand as a response the distorted claims of her coal industry advocates. So it seems the State Journal wanted to further the mythology about renewable power. So the question remains: are these claims true?
Well, let’s look at the reality of Germany’s electricity system, and how renewable power works there. I have posted about Germany’s energiewende in the past. Here’s a look at what is happening now, in the real world, not in the fevered minds of coal industry apologists:
Germany’s renewable sector (RE) is flexing its muscles, with solar production up 28% and wind up 19% during the first half of 2014. As a result, the renewable sector accounted for 31% of the nation’s electricity. If this trend continues, this may be the third year in a row that Germany sets a record for energy exports. The increase in renewables has also been accompanied by a decrease in fossil fuel usage. Gas-fired power plant production is down 25%, compared to last year, and hard coal production fell 11%.
Germany has expanded its own lignite production temporarily as it phases out big nuclear plants and adjusts its electricity infrastructure to replace that base load power until the country can transform its power economy further away from the base load/peak load system. Renewable power has gained such market power that in periods of high solar or wind production wholesale electricity prices actually turn negative. Big base load coal and nuke generators actually have to pay to keep selling their power into the grid, so they won’t shut down. As base load plants are phased out, this negative price problem will disappear and the whole system will be built on filling in between peak renewable production.
Max Hildebrandt, renewables expert at Germany Trade & Invest, points out that it is important to distinguish between the wholesale spot market price and the consumer market price, and to note that utilities in the EU have seen gradual unbundling into grid-side and generation and supply operations.
“Negative prices on the EPEX spot exchange are a relatively rare but not unusual phenomenon,” he said. “They occur only during short peak periods – usually around noon when solar radiation is highest – and not for entire days. They are merely a signal for the large-scale spot market participants and do not have an immediate effect on the more rigid prices in the consumer market.”
When spot prices are negative, power generators can choose whether to cut production or briefly accept negative prices for their electricity. Although there is a general tendency for greater fluctuations in demand and supply with an increased share of renewables, Hildebrandt notes that this can be countered “by expanding the grid so that it is more flexible geographically, by increasing energy storage capacity to increase flexibility in terms of time, and by employing demand response approaches. Germany does all of the above and there are large business opportunities in these areas.”
There are more than 1.4 million PV systems in Germany, according to figures from Germany Trade and Invest. The transformation of the German energy market, now known as the Energiewende, began with the first EEG legislation and has seen PV prices drop from over EUR 0.50/kWh in 2006 to around EUR 0.15/kWh in 2014. PV systems have nearly no operational costs meaning that once the initial capital investment has been paid back they produce power extremely cheaply. German legislators and regulators are currently revising their approaches toward the energy market as new business models evolve. [emphasis mine]
Those last words, “as new business models evolve,” is the crux of the matter for Messrs. Raney, Herholdt and Patton. Real movement toward renewable power means a complete transformation (that is what “energiewende” means in German – energy transformation) of the electrical system in WV away from centralized fossil fuel production to decentralized, democratized production of renewable power.
In WV, politicians and the coal industry (Unfortunately, these are often the same thing in WV.) talk about “all of the above” and “balance.” Mr. Herholdt’s Division of Energy holds little showcase events that give lip service to the idea of renewable power but takes no initiative to put real renewable generation in the hands of West Virginians. To justify their continued support for obsolete fossil fuel electricity, they all have to blow smoke about keeping electricity “cheap.” Tell that to WV rate payers who are facing 17% to 20% rate increases from both of their Ohio-based power companies.