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May 16, 2016

Lessons from Sweden and Germany

May 16, 2016
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Northern European countries have lavishly subsidized wind and solar electricity generation for years and now we are seeing the results. In Sweden, the lavish subsidies might be coming to an end, so wind turbine owners are dismantling the turbines and selling them abroad, while in Germany, large amounts of wind power are stressing the electrical grid. Their experiences offer the US real-life information about renewable energy, but the real question is whether the U.S. will learn from these examples.

Wind Investment Down in Sweden

After receiving wind subsidies for years, Swedes are dismantling wind turbines and selling them abroad. About 50 wind turbines have been dismantled so far in Sweden where wind accounts for 5 percent of the country’s electricity consumption. Investment in Sweden’s wind industry was down by 40 percent last year compared to the year before, and Norway’s Energy Minister wants to end the joint Swedish-Norwegian wind subsidy program in five years.[i]

In contrast, in the United States, large electric utility companies are investing in wind and solar energy because they can take advantage of government incentives that permit them to sell renewable electricity at higher prices to other utilities. The government incentives consist of renewable energy mandates in more than half the nation’s states, direct subsidies in the form of tax credits, and expected federal limits on carbon dioxide emissions that will require power plants to reduce carbon dioxide emissions by 32 percent from 2005 levels by 2030. Despite the fact that the Supreme Court temporarily suspended the new EPA regulations on carbon dioxide emissions until the courts resolve lawsuits by more than two dozen states, many utilities are moving forward with plans to invest in renewable energy.[ii]

The losers of course will be American consumers of electricity, who will be paying higher prices. American competitiveness and jobs will also be affected, as higher prices for energy drive up the cost of producing things here.

The German Experience

Germany generates 30 percent of its electricity from renewable energy.[iii] On Sunday, May 8th at 11 am, renewable energy generated nearly 90 percent of Germany’s power and almost fried its electric grid. The problem with wind and solar power is that it is intermittent, and thus, it is uncontrollable by the system operator. It literally shows up for work and leaves work when it feels like it, leaving those dependent on energy to scramble according to its schedule. When the 87 percent generation from renewable power hit, Germany’s grid operators were forced to shut down conventional power plants.

Screen Shot 2016-05-13 at 11.43.03 AM

Source: http://thinkprogress.org/climate/2016/05/09/3776629/germany-renewable-generation/

In order for power grids to function properly, demand for electricity must match its production, which is a problem for wind and solar power, since their output cannot be accurately predicted in advance or easily adjusted. Wind and solar can burn out the grid if they produce too much, or not enough, electricity, leading to brownouts or blackouts. Germany’s grid has already been damaged from relying too much on solar and wind power. Since wind and solar power are dependent on the wind blowing and the sun shining, they also may not produce enough electricity, requiring grid operators to have excess conventional power reserves running that they can easily apply to meet demand.

Germany paid wind farms $548 million last year to cut their power in order to prevent damage to its electric grid. Because of the damaging effects renewable energy has had on Germany’s grid, the government plans to cap the total amount of wind energy at 40 to 45 percent of national capacity, forcing the country to get rid of 6,000 megawatts of wind power capacity by 2019. The German government expects to spend more than $1.1 trillion on wind power, even though building wind turbines has not achieved the government’s goal of actually reducing carbon dioxide emissions.[iv] In fact, a greater percentage of Germany’s electricity is produced from coal than the United States.

The Incentive to Invest in Renewable Energy in the U.S.

Today, most (66 percent) of U.S. electric generation is produced from coal and natural gas. Because electricity produced from renewable energy can be sold at higher prices than electricity produced from coal or gas, large U.S. electric companies are investing in additional renewable energy that they will sell under contract to other utilities that must also meet renewable mandates or carbon dioxide reductions. The contracts can last as long as 25 years. Further, U.S. federal renewable energy tax credits reduce the cost of constructing a new wind or solar power facility and help to offset corporate taxes.

Because of pending regulations to reduce carbon dioxide emissions from the U.S. generating sector, the Federal Energy Regulatory Commission is researching how renewable energy affects the reliability of the electrical grid. FERC believes that the American electric power grid may become unreliable as environmental regulations force renewable energy on the public, making conventional coal or natural gas power plants unprofitable[v].

Issues with Renewable Power

Despite the costs of renewable energy declining, renewables still have difficulty competing with coal and natural gas for electricity generation. They require massive amounts of land and must be backed up with sufficient conventional generator capacity to guarantee supply on windless days and sunless nights. Renewables take up too much space and produce too little energy. For example, if it were possible to run the U.S. economy entirely on wind power, it would require a wind farm the combined size of Texas, California and New Mexico, which would need to be backed up by natural gas on windless days. To power the country on wood, it would require a forest covering two-thirds of the United States that is heavily and continually harvested.[vi]  Going from an electric grid powered from sources that are available on demand to a system powered by sources that are available by chance imposes huge additional costs and may end up costing reliability that is so important to electricity in advanced countries.

Conclusion

Germany and Sweden have experimented with renewable energy for electric generation and have both decided that cutbacks are needed, as the goals of reduced carbon dioxide emissions and a healthier environment have not paid off, and as electric grid issues have arisen. Despite this experience, the U. S. government is forcing more renewables on the American generating sector, supposedly to reduce carbon dioxide emissions in order to be an example to other countries. The 32 percent reduction in carbon dioxide emissions by 2030 required by EPA’s so-called “Clean Power Plan” would mean that global carbon dioxide emissions would be reduced by just 1.166 percent in 2040, according to the Energy Information Administration’s International Energy Outlook 2016.[vii] In reality, U.S. electricity consumers will pay for the investment in renewable fuels, as utility companies pass the increased costs onto consumers.


[i] Sputnik News, http://sputniknews.com/europe/20160506/1039194928/sweden-wind-alternative-energy.html

[ii] Wall Street Journal, U.S. Utilities Boost Investments in Wind, Solar Power, May 9, 2016, http://www.wsj.com/articles/u-s-utilities-boost-investments-in-wind-solar-power-1462825903?cb=logged0.7233327499593762

[iii] Think Progress, The 4th Largest Economy in the World Just Generated 90 Percent of the Power It Needs from Renewables, May 9, 2016, http://thinkprogress.org/climate/2016/05/09/3776629/germany-renewable-generation/

[iv] Daily Caller, Germany Forcing People to waste Traditional Electricity To Prevent Green Energy Meltdown, May 11, 2016, http://dailycaller.com/2016/05/11/germany-forced-people-to-use-traditional-electricity-to-prevent-green-energy-meltdown/

[v] Ibid.

[vi] Wall Street Journal, Fossil Fuels Will Save the World (Really), March 13, 2015, http://www.wsj.com/articles/fossil-fuels-will-save-the-world-really-1426282420?cb=logged0.35594982684026716

[vii] Energy Information Administration, International Energy Outlook 2016, May 11, 2016, http://www.eia.gov/forecasts/ieo/?src=home-b1

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