According to an estimate by Fraunhofer ISE, the value of the average kilowatt-hour that Germany exported last year was greater than the price of the average imported kilowatt-hour. If Germany were dumping excess renewable electricity on neighboring countries as Energiewende skeptics charge, this would not be happening.
Back in 2013, I noticed something about power trading data from 2012 that everyone had overlooked. Everyone was focusing on how Germany’s net export balance was increasing even in the wake of the 2011 closure of eight of the country’s 17 nuclear plants. Not only had Germany not become dependent upon our imports, but the value of German electricity was higher than the value of power in neighboring countries.
This situation repeated itself in 2013 and in 2014, though the price difference between imports and exports has largely closed, with German electricity being only slightly more valuable. In return, German power exports continue to skyrocket, reaching a net record level in every year since 2012.
The Germans have not celebrated these figures much, however. In fact, my article in 2013 was the only one that focused on something else: the higher value of German power exports. But now, Germany’s Fraunhofer ISE has begun monitoring the situation more carefully.
I spoke with ISE’s Bruno Burger this week. He is the person behind Energy-Charts.de. I had noticed that the gigantic 200-page annual PDF overviews of the German power sector had not been produced for 2015. He informed me that the website itself had grown so much that he was not sure the PDF is still needed (not sure I agree with that – but he said he is considering producing the PDF later). Anyway, he pointed me to a 15-page overview (PDF), which contains the following chart showing what went down – nuclear power, power from lignite, power from hard coal, and power from natural gas – and what went up: wind, solar, biomass, and hydropower. In a year with a slight uptick in coal power production, there would be great international dismay; we patiently (and probably futilely) await international acknowledgment of a repeat of the improvement from 2014, which also went largely unpraised.
Keep in mind that the record level of power exports – roughly a 10th of total production – increases conventional power generation; wind and solar react to the weather, not to power demand. When Germany phases out the rest of its nuclear plants over the next six years, the lower wholesale prices in Germany will become more balanced; the current excess installed capacity makes German electricity unnaturally competitive. Because no new coal plants are in the pipeline (with the possible exception of Datteln), the result should be dramatically lower conventional power production by 2023.
Which brings me to the price situation: because Germany has so much excess capacity, it is able to produce electricity at comparatively low prices when demand is high. And because it has a somewhat flexible power plant fleet, it is able to switch to imports more when demand (and hence prices) is low. The comparison with France is especially salient.
The new Fraunhofer overview for 2015 states the following about the power trading situation: “Imported electricity cost an average of 42.58 Euro/MWh compared to 42.69 Euro/MWh for exports.” German electricity sold to neighboring countries is therefore still 0.11 euros more valuable per MWh than the electricity that Germany imports. The difference is fairly negligible, however, at only around 0.3 percent. Still, Fraunhofer puts the net revenue from power trading at 1.6 billion euros.
There are many lessons to be drawn from this analysis, but the main one for today is that the basic situation has not changed:
- Germany continues to be able to generate electricity at relatively low prices when demand is high;
- the country has no excess renewable electricity (green power has never peaked significantly above 80 percent of demand, much less 100 percent);
- power is traded based on prices, not need – specifically, it is almost never traded in order to prevent blackouts (though the blogosphere talks about power trading frequently in terms of blackouts); and
- despite the comparatively low wholesale prices in Germany, German power exports are more valuable than its imports because Germany sells at times of high demand and buys at times of low demand.
All of which is to say that Germany does not depend upon foreign countries for power reliability or affordability, and it is not dumping green electricity on neighboring countries.
Source: Renewables International. Reproduced with permission.