Snow Everywhere - European Electricity Supply on Thin Ice

​Keywords: Electricity Exporter, Heating, Power Plant, Germany, Snow in Rome, E.On, RWE.

• Germany is a net exporter overall, not a net importer from Czech Republic and France.  Germany seldom heats with electricity, but rather uses gas and “Fernwärme”, which is the usage of heat from a combined heat and power plant.
• France is a net exporter, but actually imports electricity as it uses it for heating in winter.  France produces 75% of its electricity with Nuclear Port Plants (NPP)
• Czech is a net exporter, especially to Austria and Germany, the reason is nuclear energy, which the country plans to focus on
• Italy has the great advantage that it does not need to care about heating much.  In the contrary, the country needs electricity for air conditioning in summer.  Italy has undercapacity and the production level is still declining, while demand constantly grows.  Italy is heavily dependent on imported French and Swiss electricity.
• Norway is a unique:  Hydroelectricity was 98.5 % of electricity generation in 2008. 141 TWh hydropower in 2008 was 4.3 % of the world total. The installed capacity of hydropower was 29 GW in 2007.  Still the country is a net importer of electricity, and the hydro energy is very volatile, leading to electricity prices that change with a factor of 8 during the year, and are impacted seasonally as well as by rain and snowfall.  This worked well for residents in a regulated market, but after it was deregulated, many consumers started to curse. Prices could climb up to above 1.4/kWh, which is more than 10 times higher than peak prices in Europe in 2011.
• Austria is a net importer of electricity see CZ, Germany, and France (via Italy).  Generation is based mainly on renewable sources (hydro, biomass, and industrial waste).
• Switzerland depends on domestic hydro and nuclear power and on imported nuclear power from France.  There is a small base of installed gas turbines. 
• The Benelux transfer countries and are all net importers of electricity from the neighboring states.  Belgium and the Netherlands host energy intensive industries. 

Situation in Germany

The long established trade flows changed when Germany announced the next final nuclear phase out.

Now, let us begin with a little background, German readers can probably skip this:  On January the 13th 1999 the coalition of the green party and the social democrats in Germany decided the nuclear phase out, a consensus was reached in June 2000 and became law in April 2002. Phase out one included the following main topics:

• No new reactors were allowed to be constructed
• On average existing reactors are allowed to run 32 years, based on the so called „Reststrommengen”, which was allocated to each reactor by its age but could be handled flexible.  It was calculated that the last reactor will shut down in 2021
• Recycling of fuel was forbidden and the German government was in charge of the final deposit.
• The government also introduced a tax on nuclear fuel

2009 the coalition of the German liberal party (FDP)  and conservative party (CDU) decided to lengthened the time old reactors are able to operate, and introduced a tax on fuel in 2010.

Fukushima changed everything.  First there was a moratorium for the seven oldest reactors, and in June the Laufzeitverlängerungen of fall 2010 were taken back.  In June 2011, the parliament approved "13. Gesetz zur Änderung des Atomgesetzes“, which should speed up the phase out and the transition to renewable energy sources.  On August 6th, 2011, Biblis A, Neckarwestheim 1, Biblis B, Brunsbüttel, Isar 1, Unterweser, Philippsburg 1, and Krümmel were shut down.

How did the German utilities react?  RWE plans to cut 8,000 of its worldwide 72,000 jobs, which includes the jobs cut by the closing of the Biblis NPP (700 jobs) and selling parts of the company.  The companies also will invest in more modern automation for conventional power plants, which saves staff in the coal plants.  E.On, the largest German utility, plans to cut 11.000 jobs, about 13 percent of its total number.  Another reason for the losses of E.On are contracts with Gazprom, a Russian natural gas company, where E.On speculated on higher prices. 

Still, Germany is a net exporter of electricity, if wind is blowing strong in the North and Baltic Sea.  See chart.  The latest data on electricity exports suggest an export of 5TWh in 2011, while it was 17.7TWh in 2010.  For emergencies, there is a backup installed base, which includes older coal and gas power plants that have been shut down, but could be ramped up rather quickly.  The backup power totals to 1GW plus 1.1GW in Austria, which equal around 2 blocks in a NPP. 

The imports now are mainly from France, where electricity from NPP is cheaper than the old coal and gas fired power plants.  Also, some French power plants are in the south-east, and closer to the electricity intensive industries in Germany than the wind parks in the north, which can’t even reach the southern part of Germany due to the current state of the grid.  The German grid agency calculates that between 4,500km of grid has to be constructed by 2020.  

Many industrial users are now complaining about very short outages below 3 minutes.  In process industries, such as chemical, steel, glass, paper, and cement industry, shorter outages can be very costly.  This lower the German competitiveness.

This Winter…
… is cold, very cold.  It was warm until mid-January, and is right now experiencing a very cold phase with temperatures far below zero, and there is snow in Italy, as well as in Algeria, Northern Africa.

This is a problem, as France turns on the heat, and 30 percent of the French households heat with electricity, a number which increased during the last years.  Even with 58 reactors producing electricity, France is now importing the expensive electricity from the old German gas and coal power plants, which were supposed to serve as a backup.  RTE, the French grid operator, warns it customers to leave the room temperature at only 19°C, but still prices at the European energy exchange, EEX, peak at 19:00, when the French come home from work and turn on their radiators (see chart).

So, because of the freezing temperatures, which freeze rivers, canals, and lakes, the European electricity supply is currently on thin ice.