16 Per Cent of German Companies Produce Own Electricity

I came across an article that I think ties in with the co-generation discussions we have been having here recently. An article on the Greenzone website reports that 16% of German companies produce their own electricity last year, rather than buying it from the grid, with another 23% considering moving to in-house generation.

The driving force behind this trend is the high price of electricity in Germany, which is making strong efforts to become free from coal and nuclear as sources of electricity production. There are also government subsidies in place that reward companies that reward energy efficiency and production of electricity from renewable sources.

I wonder what this trend will do to the retail prices of electricity for domestic users. I hear that energy poverty is a pressing problem in Germany, with hundreds of thousands of households struggling to pay their utility bills. Here’s an article on that topic titled “Germany’s Energy Poverty: How Electricity Became a Luxury Good” from Der Spiegel which discusses some of the expensive consequences of moving to renewable electricity sources.

This year [2013], German consumers will be forced to pay €20 billion ($26 billion) for electricity from solar, wind and biogas plants — electricity with a market price of just over €3 billion . . . Solar panels and wind turbines at times generate huge amounts of electricity, and sometimes none at all. Depending on the weather and the time of day, the country can face absurd states of energy surplus or deficit.

If there is too much power coming from the grid, wind turbines have to be shut down. Nevertheless, consumers are still paying for the “phantom electricity” the turbines are theoretically generating. Occasionally, Germany has to pay fees to dump already subsidized green energy, creating what experts refer to as “negative electricity prices.”

On the other hand, when the wind suddenly stops blowing, and in particular during the cold season, supply becomes scarce. That’s when heavy oil and coal power plants have to be fired up to close the gap, which is why Germany’s energy producers in 2012 actually released more climate-damaging carbon dioxide into the atmosphere than in 2011.

If there is still an electricity shortfall, energy-hungry plants like the ArcelorMittal steel mill in Hamburg are sometimes asked to shut down production to protect the grid.

Reliable and efficient energy storage technology would help a lot in this scenario. I would expect that Germany will be looking at any available technology that will help them in making renewables more affordable, and of course, in the future LENR could be an attractive alternative to the traditional alternatives.

  • Fibb

    Frank, sorry but you got it all wrong. Germany has super low wholesale electricity prices and industry pays very little for power. “Retail electricity rates are up; Germany has the second-highest in the
    EU after Denmark. But industry doesn’t pay retail rates. The rates they
    pay differ greatly, however, depending upon which exemptions to
    surcharges are granted. Firms with the greatest power consumption (that
    is, the ones with the most exemptions) paid as little as around 0.05
    euros per kilowatt-hour in 2013.”

    Also for more background please see http://blog.rmi.org/blog_2013_04_17_germanys_renewables_revolution

    “German wholesale power prices have fallen about 30% just in the past
    two years to near eight-year lows, putting big utilities that
    underinvested in renewables under severe profit pressure.
    Even so, Germans pay a lot for their household electricity, about
    $0.34/kWh in 2012. The household tariff includes a “renewables
    surcharge,” expected to amount to roughly $249 per three-person household this year. That’d be three-fifths smaller
    if households weren’t subsidizing many businesses, mainly large
    ones—exempted from nearly the whole renewables charge, allegedly to
    boost German competitiveness—by 3–4 billion Euros a year. Yet German
    industry enjoys the lower spot prices that renewables create, so it pays
    about the same for electricity as it did in 1978, and less than French
    industry pays today. “

    • about renewable energy in Germany I observe as a tech-watcher, like on LENR or climate, a “dual-equilibrium cognition” as Benabou name it about groupthink.

      It seems each camp is sure to be right, and I admit I have a position, but sure both camps have arguments and are sure they are right.

      Sure Solar/wind is bankrupting the grid and pushing coal and gas…
      sure Solar/Wind will be soon cost effective and replacing coal and gas soon.

      dual-equilibrium are really amazing and it is a red-pill blue-pill dilemma for us who are color-blind.

    • tomandersen

      The businesses do not pay wholesale rates. No one does. The billing is different there. Yes households subsidize business, but still business rates are skyrocketing.

      To make things more complicated, there are some very large German businesses that do get the ‘no renewables’ rate.

      The super low wholesale rates indicate a system on the verge of breaking down. Essentially the owners of coal will shut some plants down which will destabilize supply. When the power goes out, people die. This will happen more and more often in Europe.

      A 100% solar/wind/storage grid cannot be built today or in a decade for less then $2.00 kWh. Batteries/Pumped storage to run Germany for a week would cost a trillion $.