Oct 23, 2014

Lessons From Germany: Can the US Succeed With Its Own Energiewende?

Green Tech
Germany
Energy Policy
Admin
7 min
This column comes from Katrina Prutzman, the leader of Urban Green Energy's (UGE) systems desi...

This column comes from Katrina Prutzman, the leader of Urban Green Energy's (UGE) systems design team. She recently returned from a smart grid and energy storage delegation trip to Germany, where they have a target of 80% renewable energy use by 2050 as part of the country's Energiewnde (or "energy transition). These are Katrina's thoughts from the trip, as well as her take on whether the US could and should do the same. This article was originally posted here

What can the U.S. learn from Germany’s remarkable energy transformation?

Germany has put itself on the world map in the past decade as an early adopter of energy generation from renewable sources. In 2013, 25% of the country’s energy came from renewable sources -- the highest percentage in the world. By 2050, as part of the country’s Energiewende nbsp;(or “energy transition”),  Germany expects this number to be at 80%. This is an incredibly ambitious goal, as Germans and the rest of the world will agree, but the country is preparing now to make this happen.  

As part of the Transatlantic Program hosted by the German American Chamber of Commerce, I had the incredible opportunity to meet with many of Germany’s energy influencers and to learn directly about how Germany is transitioning to carbon-free energy. It hasn’t all been smooth sailing, but there are key lessons that the U.S. and the rest of the world can learn from both Germany’s successes and its plans for improvements.

Consistent policy is critical

The Bundesnetzagentur in Bonn is Germany’s Federal Network Agency for electricity, gas, telecommunications, post, and railway, and it has many insights to share about the how such high rates of renewable penetration have been possible. In particular, the agency attributes this achievement to policy, and more specifically, to three aspects of the current renewable energy policy in Germany: guaranteed grid and market access for renewables, priority dispatch of renewables over conventional generators, and guaranteed financial support for twenty years through the feed-in tariff. These three attributes have provided great incentives for installers of renewable energy, paving the way in some cases for high profit as competition from solar producers caused panel prices to drop rapidly. This is a key lesson the U.S. can learn from Germany: consistent policy is critical for a similar large-scale transition to renewables, and it’s currently missing in our market.  

Though policy incentives are often criticized, predictability of returns throughout the expected life of renewable equipment is essential in the early years for a transition of this size. With policies that are inconsistent or even disappear from state to state and year to year, individuals, businesses, and even utilities are hesitant about investment in newer technologies. Germany’s foresight on this front has resulted in solar capital costs that have reached grid parity -- a great thing that much of the world can take advantage of as we follow suit.

Negative pricing is a double-edged sword

The transition to renewables has not been all smooth sailing for Germany. The sudden drop in solar prices as the German market was flooded by low-cost Chinese suppliers was not anticipated. In addition, the large influx of intermittent sources has made grid management difficult. What's more, only 5% of the renewable capacity on the German market is owned by the primary utilities, with the rest being owned by individuals, communities, industry, and smaller utilities. The complexity of planning for these widely dispersed sources (which are guaranteed access to the grid), and existing baseload plants like nuclear or coal that are difficult to shut down quickly, resulted in a perfect storm of sorts, with overproduction of supply and negative pricing on the spot market. This actually caused demand to increase in order to balance supply and demand on the grid and to stabilize the voltage and frequency output of the system.  

Germany is now adjusting its incentive structure to adapt to these unforeseen effects. The feed-in tariff will soon become a feed-in premium, so eligible producers of renewable energy will need to bid their production into the market just like all other providers. They will then receive a bonus or premium price over the resulting market price. In this way, all generators have an incentive to curtail production when the market price and demand are both low (thus avoiding negative pricing) and to produce when the price (and demand) is high.

Though Germany went through some growing pains to arrive at this stronger footing, it has also paved the way for greater understanding and policy structures for other markets. As other nations look to implement a similar transition, we have a head start with Germany's lessons learned, and we can structure incentives that are implemented in a way that rewards responsible installation and management of clean technology projects.

Diverse and rapid innovations

Despite the challenges, Germany’s negative pricing phenomenon led to the need for very creative energy solutions. The country has been able to achieve unparalleled development and deployment of new and emerging energy technologies, many of which now have strong potential to scale. Our delegation met with many of these new companies, and it was exciting to see what’s on the horizon:

  • Researchers at EFZN in Goslar are evaluating the feasibility and economics of wind-powered pumped water storage in abandoned mines in Germany.  A storage capacity of 40 GWh is likely available in 100 existing mines at a current cost of €0.05-0.10 per kWh.  When the market price of electricity drops below zero, grid electricity can be used to pump the stored water to a higher elevation.  When the grid price is high, the potential energy in the water is used to generate electricity and sell it to the grid, and the economics of this solution start to become viable.  
  • A delegation tour of a hydrogen fuel production station revealed a similar economic concept, though the technology involved is significantly newer and still more expensive. Hydrogen technology has received much criticism for the high cost and safety concerns associated with producing, storing, and transporting compressed hydrogen gas. However, the hydrogen production and fueling station in Hamburg’s HafenCity, provided byVattenfall, is proving that the technology is feasible. The plant was designed to produce hydrogen gas through electrolysis of filtered city tap water from renewable energy at low or negative cost, and sell the hydrogen to fuel the city’s fleet of hydrogen fuel cell city buses and personal cars.
  • Many battery storage technologies are also undergoing research and demonstration for expanded uses in the transition. Lead-acid batteries remain the most common technology for use with renewable energy systems due to their low cost and high availability. However, this solution is bulky, heavy, and limited to low-power applications. The battery research center at MEET in Münster is conducting extensive testing with lithium-ion batteries, which provide many advantages in terms of both mobile and stationary applications and performance as part of the energy transition. Better understanding of this technology coupled with industry partnerships at the research center will allow for more widespread adoption and lower costs.  
  • In another energy storage development, the delegation met with the project manager of the Smart Region Pellworm project, an island community that generates all of its energy plus some through renewable sources on the island. As part of this project, a vanadium flow battery has been installed to help with response to grid demand for electricity and improve the economics of the renewable investment. This type of battery is new to the market, but it has the potential for tremendous benefits and applications for community-scale renewable microgrid systems, which are larger than what is practical for traditional batteries. This installation was reported to have been very reliable so far, and it is expected to have at least a twenty-year life with only minor maintenance requirements.  

Though the technology and progress enabled by the Energiewende is incredible to behold, it still comes at a cost. The renewable feed-in tariff is funded by ratepayers, and many in Germany agree that its implementation created excessive windfalls for some. Though the rate of the FIT is declining for new installations, projects that are already operational are still reaping massive benefits. With all of its ups and downs along the way, Germany is leading the world in the energy transition, and we can all learn from its experience.

***
Katrina Prutzman leads the system design team at UGE and recently returned from the Transatlantic Program for Young Technology Leaders. 

Share article

Jul 29, 2021

Carbon dioxide removal revenues worth £2bn a year by 2030

Energy
technology
CCUS
Netzero
Dominic Ellis
4 min
Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades says the UK's National Infrastructure Commission

Carbon dioxide removal revenues could reach £2bn a year by 2030 in the UK with costs per megatonne totalling up to £400 million, according to the National Infrastructure Commission

Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades - although costs are uncertain given removal technologies are in their infancy - and revenues could match that of the UK’s water sector by 2050. The Commission’s analysis suggests engineered removals technologies need to have capacity to remove five to ten megatonnes of carbon dioxide no later than 2030, and between 40 and 100 megatonnes by 2050.

The Commission states technologies fit into two categories: extracting carbon dioxide directly out of the air; and bioenergy with carbon capture technology – processing biomass to recapture carbon dioxide absorbed as the fuel grew. In both cases, the captured CO2 is then stored permanently out of the atmosphere, typically under the seabed.

The report sets out how the engineered removal and storage of carbon dioxide offers the most realistic way to mitigate the final slice of emissions expected to remain by the 2040s from sources that don’t currently have a decarbonisation solution, like aviation and agriculture. 

It stresses that the potential of these technologies is “not an excuse to delay necessary action elsewhere” and cannot replace efforts to reduce emissions from sectors like road transport or power, where removals would be a more expensive alternative.  

The critical role these technologies will play in meeting climate targets means government must rapidly kick start the sector so that it becomes viable by the 2030s, according to the report, which was commissioned by government in November 2020. 

Early movement by the UK to develop the expertise and capacity in greenhouse gas removal technologies could create a comparative advantage, with the prospect of other countries needing to procure the knowledge and skills the UK develops.

The Commission recommends that government should support the development of this new sector in the short term with policies that drive delivery of these technologies and create demand through obligations on polluting industries, which will over time enable a competitive market to develop. Robust independent regulation must also be put in place from the start to help build public and investor confidence.

While the burden of these costs could be shared by different parts of industries required to pay for removals or in part shared with government, the report acknowledges that, over the longer term, the aim should be to have polluting sectors pay for removals they need to reach carbon targets.

Polluting industries are likely to pass a proportion of the costs onto consumers. While those with bigger household expenditures will pay more than those on lower incomes, the report underlines that government will need to identify ways of protecting vulnerable consumers and to decide where in relevant industry supply chains the costs should fall.

Chair of the National Infrastructure Commission, Sir John Armitt, said taking steps to clean our air is something we’re going to have to get used to, just as we already manage our wastewater and household refuse. 

"While engineered removals will not be everyone’s favourite device in the toolkit, they are there for the hardest jobs. And in the overall project of mitigating our impact on the planet for the sake of generations to come, we need every tool we can find," he said.

“But to get close to having the sector operating where and when we need it to, the government needs to get ahead of the game now. The adaptive approach to market building we recommend will create the best environment for emerging technologies to develop quickly and show their worth, avoiding the need for government to pick winners. We know from the dramatic fall in the cost of renewables that this approach works and we must apply the lessons learned to this novel, but necessary, technology.” 

The Intergovernmental Panel on Climate Change and International Energy Agency estimate a global capacity for engineered removals of 2,000 to 16,000 megatonnes of carbon dioxide each year by 2050 will be needed in order to meet global reduction targets. 

Yesterday Summit Carbon Solutions received "a strategic investment" from John Deere to advance a major CCUS project (click here). The project will accelerate decarbonisation efforts across the agriculture industry by enabling the production of low carbon ethanol, resulting in the production of more sustainable food, feed, and fuel. Summit Carbon Solutions has partnered with 31 biorefineries across the Midwest United States to capture and permanently sequester their CO2 emissions.  

Cory Reed, President, Agriculture & Turf Division of John Deere, said: "Carbon neutral ethanol would have a positive impact on the environment and bolster the long-term sustainability of the agriculture industry. The work Summit Carbon Solutions is doing will be critical in delivering on these goals."

McKinsey highlights a number of CCUS methods which can drive CO2 to net zero:

  • Today’s leader: Enhanced oil recovery Among CO2 uses by industry, enhanced oil recovery leads the field. It accounts for around 90 percent of all CO2 usage today
  • Cementing in CO2 for the ages New processes could lock up CO2 permanently in concrete, “storing” CO2 in buildings, sidewalks, or anywhere else concrete is used
  • Carbon neutral fuel for jets Technically, CO2 could be used to create virtually any type of fuel. Through a chemical reaction, CO2 captured from industry can be combined with hydrogen to create synthetic gasoline, jet fuel, and diesel
  • Capturing CO2 from ambient air - anywhere Direct air capture (DAC) could push CO2 emissions into negative territory in a big way
  • The biomass-energy cycle: CO2 neutral or even negative Bioenergy with carbon capture and storage relies on nature to remove CO2 from the atmosphere for use elsewhere

Share article