Underground Power

A $9 Billion Price Tag

Underground power lines construction Source DPA energy electricity energiewende
Putting the lines underground costs more.
  • Why it matters

    Why it matters

    Germany electricity consumers, both private and corporate, will face additional costs because of a decision to put new power lines underground.

  • Facts

    Facts

    • Germany in 2011 announced plans to phase out nuclear energy by 2022 and draw at least 80 percent of energy from renewables by 2050.
    • Extra German power lines are needed to transport electricity generated from renewable sources in the north to the south.
    • A political decision to construct two lines underground instead of overhead could cost up to €8 billion, or $9 billion extra, according to a ministry study obtained by Handelsblatt.
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    Audio

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Germany’s phasing out of nuclear power and its transition to renewable energy will further push up electricity costs for consumers and companies, as a domestic political battle over power lines has once again sharply raised the costs of managing the ambitious shift.

German Chancellor Angela Merkel and two of her political allies agreed in July to put two new power lines underground instead of using overhead transmission lines. It’s proving an extremely costly concession, and one that many experts warn faces tremendous technical challenges.

The construction of the power lines, needed to transport electricity from wind power plants in the north to the south, could cost €3 billion to €8 billion, or $3.4 billion to $9 billion extra to lay them underground, according to a study by the German Economics Ministry, which Handelsblatt has obtained.

Underground construction could as much as triple the construction costs compared to traditional power lines above ground, which would have cost €4 billion, according to the study.

The decision to lay the new power lines underground, a demand by the wealthy southern state of Bavaria and its state premier Horst Seehofer, will further push up Germany’s electricity bill, which is already one of the highest in the industrialized world due to levies to fund the construction of renewable power plants.

The underground north-south cables are a concession to Mr. Seehofer, who is also head of Ms. Merkel’s sister party, the CSU, based in Bavaria. Until the July deal, the state had led opposition to the new power lines, fearing that overground cables could reduce the value of nearby lands.

“For a large industrial customer, the additional yearly costs will range from €370,000 to €990,000.”

Economics Ministry

The July agreement made no mention of expenses, nor have the network operators in Germany been forthcoming with figures.

Germany has been expanding production of renewable energy, primarily wind and solar power, since Ms. Merkel decided to phase out nuclear power by 2022 following the 2011 nuclear disaster in Fukushima, Japan. Europe’s largest economy wants to draw at least 80 percent of energy from renewable sources by 2050.

The additional costs of putting the two north-south power lines underground will be borne by electricity consumers through the network-use charge included in every electrical bill.

For private households with a yearly energy consumption of 3,500 kilowatt hours, the extra costs are between €3.40 and €9.10 annually, according to the ministry’s estimates. An average German household currently pays €1,050 a year for its electricity.

Corporate customers directly connected to the high-voltage network must reckon with a network charge increase of “between 9 and 24 percent,” according to the ministry’s document.

“For a large industrial customer (100 megawatts, 7,000 hours of use), the additional yearly costs will range from €370,000 to €990,000,” the ministry wrote.

The new power lines are necessary because wind-generated energy from northern Germany has to be transmitted to the consumption centers in the country’s southern and western regions.

The southern state of Bavaria and its state premier Mr. Seehofer, a political ally of Ms. Merkel, had however objected to land lines, which could decrease the value of adjacent property and are sometimes seen as destroying the landscape view.

Up to now, underground cables were to be the exception, but now it will become the rule instead. A corresponding law is set to be approved this week by the federal cabinet.

A public hearing on the issue is set for October 14 in the Committee on Economic Affairs of the Bundestag, Germany’s lower legislative chamber. The network operators Amprion and Tennet will also be on hand.

Underground cables have drawn criticism from both politicians as well as network operators. “The large north-south corridors already present a massive technological challenge in any case,” Michael Fuchs, deputy party chairman of Ms. Merkel’s Christian Democratic Union, told Handelsblatt.

“A comprehensive underground-cable system doubles the difficulties yet again. If that sort of power line fails, then the lights will go out in Bavaria,” Mr. Fuchs said. “Someone has to take responsibility for guaranteeing the delivery of electricity. I expect iron-clad assurances in this regard.”

The politician, who is also an economic expert, warned that the underground-cable law would cause additional delays in expanding the grid, because planning procedures must be revised. Furthermore, Mr. Fuchs warned about the burden on German industry. He sees “considerable need for further talks.”

 

Planned High Power Lines map electricity energy transition energiewende-01

 

German grid operators Amprion and Tennet also have significant reservations about the underground cables. The power lines not only cost more, they also demand more technical work to construct and maintain them.

By laying the power lines South Link and Southeast Passage underground, new technological terrain will be entered. Experts warn that the dependability of the electricity transmission system could suffer as a consequence.

Both power lines will function according to the direct current technology that, up to now, hasn’t been used in the German high-voltage network. The technology is suitable for transmitting large amounts of electricity over long distances with minimum energy loss. It has been used in China for a long time, for example. In that country, however, the power lines with direct current technology are built above ground.

There are few precedents for underground cables over long distances. The problem with underground cables: Individual pieces of the power lines can be a maximum of one kilometer in length; then comes a link to the next individual piece.

“These links are extremely fragile,” said a manager in the industrial sector. Moreover, repairs are complicated and protracted.

Network operators point to research conducted by Cigré, an international network expert in electrical transmission. The studies report that the average outage time for overhead lines is 12 hours a year, while the average repair time for underground cable systems is 25 days per year.

What is true for the direct current electricity highways South Link and Southeast Passage also applies to the power lines in the time-tested alternate current technology that has dominated the German electrical grid.

It’s supposed to become possible in the future to also lay high-voltage lines with alternating current underground. But such underground cables are said to be even more delicate and demanding. For this reason, the new law on underground cables doesn’t give underground cables priority in the case of alternating current.

To begin with, experience is supposed to be gained through pilot projects. But in any case, the additional costs are likely to be substantial. Grid operators point to a project in Raesfeld in North Rhine-Westphalia: Underground cables increased costs by a factor of six.

 

Klaus Stratmann is the deputy bureau chief of Handelsblatt in Berlin and covers the energy market. Gilbert Kreijger, an editor with Handelsblatt Global Edition, contributed to this article. To contact the author: stratmann@handelsblatt.com

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