Alternative argument

Wind Energy, Not Hot Air

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This Santa wants to shine and needs the electricity to do so, now and in the future.
  • Why it matters

    Why it matters

    If Germany fails in its goal to increase renewable energy production at affordable costs economic growth may suffer and businesses could move abroad.

  • Facts

    Facts

    • After Japan’s Fukushima nuclear disaster in 2011, Germany decided to shut down all nuclear power plants by 2022, favoring renewable energy sources instead.
    • The energy transition, or “Energiewende” in German, has cost more than $140 billion so far and is paid for in part by surcharges on electricity bills.
    • Utility companies such as RWE and E.ON have been hurt as profits from traditional power generation have plummeted.
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    Audio

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News reports offer daily warnings about Germany’s energy future. Either the power grid is not being upgraded fast enough, or profits from coal- and gas-fired plants have collapsed. Sometimes it’s the developers of renewable energy projects are running into trouble. In all, the nation’s switch to cleaner, sustainable energy is not going well.

What’s worse, the ambitious transition is losing public support. The leading protagonists in renewable energy could end up failing if they do not overcome their differences and agree to a new plan.

Everyone needs to sit down together – the political establishment, utility companys and advocacy groups. Of course, the relationship between environmental advocates and energy providers is difficult, with both sides prone to building up walls against the other. They refuse to recognize that both are on the same side of the issue – ultimately they both want Germany’s energy transition to succeed.

But instead of cooperation, the debate on sustainability is loaded with “us versus them” resentment. Energy policy today is frequently aimed at helping the “good guys” and hurting the “bad guys.”

Is that bringing us progress? The politics of promoting one side and damaging the other has led to the current crisis – in which all protagonists in the energy industry are losers, caught between declining revenues and dwindling investment power. This is true for classic energy providers, as well as for many project developers and the domestic solar and wind industries.

The crisis can only be overcome if environmental interests, politicians and utilities establish a new foundation for guiding the energy transition. It is not a “good versus bad” situation. Providing energy should be viewed as a shared house — a complex building of technical and economic functions that work together. Many protagonists are working to build this communal house — traditional energy providers, public utilities and new energy providers.

 

Germany's Energy shift-01 Energiewende

 

Each entity must contribute what it is capable of providing. Renewable energies can deliver electricity that is almost entirely free of CO2, but they can scarcely provide reliable and predictable power-plant performance. That’s what gas- and coal-fired facilities are designed to do extremely well. Local energy production facilities are close to end-users and fulfill consumers’s wishes to generate electricity themselves, increasingly at acceptable costs. But these facilities can only fulfill part of the power that energy-intensive industries demand.

Energy providers have learned to respect and value society’s wish for new energies. This has led to pioneering business models — not only in Germany, but throughout the world.

On the other side, it is probably too much to expect environmental groups and non-profit advocates to be enthusiastic about coal. But it should be possible to respect the contribution that coal makes to energy security today.

It should be possible to get past this “us versus them” mentality and talk more about goals shared by both environmental groups and the energy industry. There are actually quite a few ambitions that both sides want: renewable energy, decentralization, citizens’ energy and intelligent marketing solutions, modern gas-fired power plants, better storage technology and much more.

Energy providers, environmental advocates and politicians must engage in a serious discussion about their common goal of sustainability.

A commonsense energy policy would reward each side of protagonists for working together to make the transition to renewable energy a success. The right energy policy would be like a set of house rules — it would regulate cohabitation.

Not all inhabitants of the shared house of sustainable energy are equally appealing, they have varying needs and habits. But the project of living together works best when each participant shows consideration and respect for the other.

 

The author is chief executive of RWE, Germany’s largest utility firm after E.ON. To contact the author: gastautor@handelsblatt.com

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