Opinions - 03.04.2012 - 00:00 

Rethinking energy

One year after Fukushima is the energy policy in Europe in transition? Have the changes interrupted the energy supply? A comment by Prof. Dr. Rolf Wüstenhagen.


21 March 2012. Just over a year ago, the accident in the Fukushima nuclear power plant jolted the energy policies of European countries. There have been many discussions about the effects this has on the strategies of Swiss energy providers since then.

An interesting pointer was recently supplied by a large German power company, whose chairman stated that there were three reasons for a decrease in profitability in 2011. Firstly, the burden of high prices in connection with the company’s long-term gas purchasing agreements – a clear indication of the fuel price risks which result from many European countries’ dependence on energy imports from non-renewable sources. These risks not only manifest themselves on the electricity market but also in other important areas of energy consumption. For example, the airline, Swiss, has recently issued a warning that it expects 300 million francs in additional fuel costs this year. Also, one of the central points of departure for the 2050 energy concept of the City of St.Gallen was the question as to how we would be able to succeed in continuing to offer citizens a warm living-room at affordable costs.

Solar energy curbs price increase
The second explanation which the energy supplier adduced for the decrease in profitability was a fundamental change in electricity trading. Owing to the strong expansion of renewable energies, particularly photovoltaic, the price structure has shifted.

If formerly, good money could be earned with coal and gas-fired power plants at midday peak times, now solar energy – whose production also peaks at midday – has a curbing impact on prices. The background is that the variable costs of solar and wind power are practically zero, which means that owing to the so-called “merit order effect”, conventional power plants with higher variable costs are crowded out. This change also affects the Swiss energy suppliers which are involved in the electricity trade, and which now have to adapt to new trading patterns.

French heating systems as power guzzlers

Only in third place did the EVU chairman mention the emotional and hotly debated nuclear phase-out. After all, Germany is basically steering a similar course to Switzerland, albeit with a decidedly ambitious schedule. Only a few weeks after Fukushima, nine out of the 17 German nuclear power plants were decommissioned, and the rest will follow within the coming decade. Given the cold winter, this created the widespread worry that Germany may only be able to maintain its power supply on the basis of nuclear power imported from France.

An analysis of the situation on the European electricity market conducted by Avenir Suisse in February 2012 and a similar study by the International Renewable Energy Industry Institute (IWR) in Münster, have resulted in surprising findings. During the particularly cold days, it was precisely France’s energy supply that was stretched to its limits, owing to the widespread electric heating systems and the low degree of flexibility in the generation of nuclear power. Even at the height of the cold spell, Germany was still exporting electricity – as, indeed, were Spain and Italy, i.e. three countries which may have short-term reserves in conventional power plants but have also expanded their solar power production in the last few years, with about 40,000 megawatt of newly installed output.

Unusual situations on the European electricity market need not necessarily disadvantage Swiss companies – according to the grid operators, a kilowatt hour of exported Swiss electricity once fetched a price of the equivalent of 3.60 Swiss francs at the height of the cold spell in early February.

Diversification pays off

What conclusions can be drawn from these observations for the changing strategies for Swiss energy suppliers? Firstly, in view of the interconnectedness of the European electricity market, the discussion about imminent bottlenecks in the electricity supply may be conducted with slightly more equanimity. This may also apply to the ruling by the Federal Administrative Court with regard to the Mühleberg nuclear power plant - which accounts for about 5% of Switzerland’s power generation – even though action will have to be taken in the medium term. Secondly, the rapid growth in renewable energies in our neighbouring countries, particularly in solar and wind energy, is leading to strong changes in trading patterns. Those who hold on to their previous strategies will be running the risk of seeing their margins dwindle – whereas those who establish a well-founded understanding of the new realities in the electricity market will be able to profit from new opportunities. And thirdly, if we consistently invest in the energy efficiency and diversification of our electricity supply portfolio in the coming years, our western neighbour might one day well develop an interest in energy innovation fabriqué en Suisse.

photo: Photocase / Suze

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