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Time running out for German power sector

Time is running out for Germany to replace its ageing power plants as opposition to new projects frustrates energy industry efforts to avert looming supply shortages.

Opposition from some politicians and campaigners to any new nuclear power stations, combined with vociferous resistance to any more coal-fired plants means Europe’s biggest economy risks not having the electricity it needs to sustain growth. “For companies planning new power stations, the current situation is a disaster,” Berthold Hannes, an energy expert at consultancy Bain & Company said. Faced with the forced closure of its nuclear power stations in Germany over the next seven years, Vattenfall Europe, is still waiting for approval for a coal plant near Hamburg after the city-state’s new coalition government dodged a decision on the €2 billion ($3.19 billion) project last week.

Hamburg’s dominant political party, the conservative Christian Democratic Union (CDU), had to appease its coalition partner the Green Party, which opposes coal because of its climate-warming carbon dioxide (CO2) emissions. “There used to be local initiatives against new plants, but with the HamburgGermany could be short of 15 large thermal power plants by 2020, or 12,000 megawatts, if investors fail to replace old ones soon. example, there is now a completely different quality to political opposition,” Hannes said. Discussions about power plants may soon start dominating national politics. A general election is due in 2009 and a CDU/Green Party alliance is possible. Government energy agency Dena has warned that

 
RUNNING OUT OF OPTIONS
Coal fuels half of German power generation and nuclear just under a third, with renewable energy contributing about 14% and gas playing a relatively small role. Germany remains committed to phasing out nuclear energy by 2021 and coal has been touted as a durable and relatively low-cost replacement. Concerns over emissions were allayed by the high efficiency of modern coal plants and hopes that any carbon they bellow into the atmosphere could in future be captured and buried safely underground. But many environmentalists now want no coal at all. “If the CDU and Greens achieve the exit from coal-to-power, that would be a positive signal for the whole of Germany,” the World Wildlife Fund said in response to the Hamburg case. It proposed gas as an alternative. But many Germans baulk at gas because it increases dependency on Russia, which accounts for 80% of gas imported by Germany to use mainly for home heating.

Some energy experts say gas is too expensive to burn for around-the-clock power production because its price is linked to oil. Crude prices have risen five-fold since 2002. “Germany depending on gas turbines for power? I don’t think so, it is a finite raw material with user competition, I don’t think that’s been thought through,” said Klaus Kraemer, managing director of the German unit of energy trade lobby Efet. With coal, gas and nuclear seemingly out of the equation, renewable energies such as wind or solar are seen as the answer.

The government wants to double their use in power generation to 30% by 2020, while demanding substantial energy savings by industry and households. But even wind turbines often face fervent local opposition, prompting one German newspaper to title a recent story about the population’s attitude to energy supply “No To All Options.”

 
DELAYS COULD BACKFIRE
Ironically, the protests over everything else may play into the hands of the nuclear industry, which is much bedeviled by green campaigners. Nuclear might even see a revival if coal projects are dropped and planners realize reliable power supply could be met by virtually CO2-free atomic energy. Apart from looming power shortages, the delays in approving new plants could maintain Germany’s power oligopoly, where 80% of generation is still in the hands of E.ON, RWE, Vattenfall and EnBW. “New projects would change the supplier structure, which is politically desired, but there are no consistent political signals that they will receive the backing they need,” said Robert Busch of the new energy suppliers group BNE.

Ultimately, if the big four cannot get their plants built at home, they could still invest in nuclear and coal-fired generation in adjacent countries and import more power into an undersupplied Germany. Pollution from the coal, like the power it generates and any potential radiation from nearby nuclear reactors, would not stop at the country’s borders but it would mean thousands of lost energy sector jobs in Germany. (Reuters)