The looming German capacity crunch

By Paul Homewood

A pertinent update from Timera:

The looming German capacity crunch

The German Energiewende has supported impressive growth in renewables since its inception. Wind and solar now accounts for 47% of German capacity. A renewed policy emphasis on renewables means this percentage is set to increase significantly over the new few years, with new targets of 98GW of solar, 20GW of offshore wind and 73GW of onshore wind by 2030.

Set against this growth in intermittent generation is a rapid reduction in installed firm capacity. 16GW of nuclear, coal and lignite closures are scheduled by the end of 2022, 29GW by 2030.

The German policy narrative is for renewables growth to offset the closure of nuclear, coal & lignite capacity… but the numbers tell a different story. In this article we examine the net effect of these two contrasting capacity changes and set out why we see a looming capacity crunch.

The supply deficit in numbers

In 2019 the German coal commission provided recommendations to phase out Germany’s coal and lignite capacity by 2038, starting in 2022. These recommendations have now been drafted into a proposed law released last week. This will formalise the pathway to zero-coal.

Under the legislation, coal and lignite capacity will be capped at 15GW each by 2022, at 8 and 9GW respectively in 2030 and at 0GW by the end of 2038.

In addition to coal closures, Germany will also close its remaining nuclear fleet by 2022 as part of the Energiewende. 12GW of nuclear capacity has been closed under this policy already, with coal generation making up the shortfall. The remaining 8GW of nuclear is due to close in 2022, but with coal capacity also closing, the current policy intention is for renewables to plug the gap.

Both coal and nuclear closures are dictated by legislation. This significantly reduces uncertainty around closure volumes & timelines.

Projecting renewables growth is inherently more risky and subject to investor sentiment. However, for simplicity we assume Germany meets its aggressive new wind and solar targets in the following analysis (i.e. we show an optimistic view of renewable build).

On the renewables front, the latest 2030 targets are for an additional 48GW of solar and 33GW of wind capacity by 2030, totalling 81GW combined capacity. As Chart 1 shows, on a net capacity basis, that renewable installations clearly outpace closures, so what is the problem?

Chart 1: Known German capacity changes

Source: Timera Energy

In a nutshell, the large increase in nameplate capacity turns into a deficit once de-rating is considered. Nuclear and coal capacity is firm and dispatchable on demand, whereas wind and solar capacity is not. Once de-rating is considered, we see a net de-rated capacity shortfall of -13GW by 2022 and -20GW by 2030.

De-rating is important to consider as it allows us to see what the capacity situation will be across peak demand periods, to ensure security of supply.

Nuclear and coal assets are dispatchable and so have high de-rating factors (80% +). Solar generation is low or non-existent across peak demand whilst wind generation is unpredictable and so de-rating factors are lower than annual average load-factors.

The full post is here.

But let’s backtrack.

During this January demand in Germany has peaked at around 74GW. Allowing for spikes and a sensible safety margin, Germany should have at least 80GW of bankable capacity at hand. Allowing for derating, that is the fact that individual plants cannot supply for 100% of the time, that figure should rise to about 100GW.

http://energodock.com/germany/actual-load

Germany currently has capacity of 211GW, including 109GW of wind/solar. In other words, 102GW of dispatchable power.

https://www.cleanenergywire.org/factsheets/germanys-energy-consumption-and-power-mix-charts

According to Timera, coal/lignite capacity will be capped at 17GW by 2030, and nuclear will be gone completely. Assuming nothing else changes, that will leave us with dispatchable capacity by 2030 of:

GW

Bio: 8..2

Hydro: 4.8

Oil: 4.4

Gas: 29.9

Coal: 17.0

TOTAL: 64.3

Clearly Germany is facing a very serious problem, probably an understatement!

Maybe they are hoping to rely on imports, but as Timera point out, with France and the Netherlands also closing coal and nuclear capacity, that could be dangerous. Moreover they also show that when wind power is low in Germany it also tends to be so in Belgium, France, Netherlands and Italy.

This is where Timera totally lose the plot, so immersed are they in the “need” to decarbonise. Their proposed solution to the pending catastrophe is demand side management (DSR) and battery storage!

The gap between daily peak and low demand is around 20GW, so even if demand could be perfectly smoothed within the day it would only cut peak demand by 10GW. In reality, most consumption cannot be deferred at peak times, so any saving would likely be in the region of 1 or 2GW.

As for batteries, you would need an awful lot to bridge the gap.

Even with daily demand smoothed, Germany will still need 90GW of dispatchable capacity, particularly if transport and heating are electrified, leaving them 25GW short at the moment. By 2038, when all the coal capacity is shut, that figure will increase to 42GW.

They had better get building a lot of gas power stations fast!

As an aside, I read today in another context about how Merkel has become complacent in recent months, knowing her time will soon be up.

It actually seems to be symptomatic of the country as a whole.