January 1, 2012

U.S. Confronts Pipeline Gaps While Europe Juggles Renewables and Debt

By Kennedy Maize, Charles Butcher, and Dr. Robert Peltier, PE

No Unity on Nuclear

Nuclear power is one issue on which Brussels will never be able to control national decisions.

The big news was Germany’s decision to close all of its 17 reactors by 2022, in the wake of the Fukushima Daiichi crisis in Japan. In one sense this was no surprise. German public opinion is strongly anti-nuclear, and in 2000 the government ruled that Germany would phase out nuclear by 2020. Not until 2010 did it grant a reprieve based on the impossibility of meeting CO₂ emissions targets without nuclear help.

What was a shock was the decision not to restart the seven oldest reactors shut down immediately after Fukushima. Despite Germany’s strong investment in renewables, critics say that this decision is likely to increase both carbon emissions and imports of nuclear power from neighboring France and the Czech Republic. Utilities including E.ON and RWE accept the decision but are demanding compensation, and Siemens is pulling out of nuclear engineering.

Italy has abandoned plans to restart its mothballed nuclear program, and Switzerland has said it will not replace its five nuclear plants once they reach the end of their lives, between 2019 and 2034. Belgium has conditionally agreed to phase out nuclear between 2015 and 2025.

France remains committed to new nuclear, though the new Franco-German EPR units being built at Flamanville in France and Olkiluoto in Finland continue to suffer serious delays, construction quality problems, and huge cost overruns. Olkiluoto 3 is now planned to start up at the end of 2014 (originally November 2011); Flamanville is now due to start generating in 2016.

Despite much time-wasting, the UK, too, remains politically committed to new nuclear. In November, a proposed plant to be built by EDF at the existing Hinkley Point nuclear site for startup around 2020 formally began the planning process. Other planned UK plants to be built by RWE and E.ON may fall victim to Germany’s loss of enthusiasm for nuclear, however.

Lithuania and Poland are also planning new nuclear capacity.

Swedish reactors at Oskarshamn and Ringhals, both operated by Vattenfall, shut down temporarily last year following two separate fire incidents. In light of the serious fire at Ringhals, the second since 2006, Sweden’s nuclear safety authority threatened to withdraw the plant’s operating license.

European Renewables Remain Promising, Despite Subsidy Cuts

European renewable energy projects, notably offshore wind and solar, continue to look as promising as the tough financial conditions allow. The European Wind Energy Association (EWEA) forecasts around 40 GW of offshore wind capacity by 2020, including 8 GW in Germany, 4 GW in France, 4.5 GW to 6 GW in the Netherlands, and 13 GW to 20 GW in the UK.

The most ambitious plan comes from Scotland, whose parliament says it wants 100% of its electricity consumption to come from renewables by 2020. The plan to add up to 5 GW of offshore capacity by that date is not unreasonable, considering that Scotland has a quarter of Europe’s total wind resource.

Finding enough engineering capacity could, however, be a barrier to expansion. Apart from the need to manufacture the turbines themselves, offshore wind depends on a small number of specialist installation vessels. And transmission grid operator TenneT says it is struggling to cope with the demands of hooking up nine offshore wind farms in Germany.

As always, money is a key issue. In November, the Dutch government decided that subsidizing wind power was too expensive and cut feed-in tariffs (FITs) to 50% to 85% of their former values. At that rate, the EWEA’s optimistic outlook for the Netherlands is unlikely to become reality. The UK government has said it will continue to support offshore wind as long as the costs come down: The target reduction is from the current £190/MWh ($295/MWh) to £100/MWh by 2020.

One way to cut the cost of offshore wind is to build bigger turbines. In the past year manufacturers including Vestas, Siemens, Enercon, Gamesa, Alstom, and Sinovel have all announced wind turbines in the range of 5 MW to 7.5 MW.

Another way to improve economics is to create a production-line approach, says Anders Eldrup, CEO of Dong Energy, the current leader in offshore wind capacity. In an interview with European Energy Review, Eldrup said that firm partnerships with suppliers—such as ordering 500 Siemens wind turbines at a time—are allowing his company to escape the current project-by-project approach.

Solar photovoltaic (PV) power, meanwhile, could realistically provide up to 12% of Europe’s electricity by 2020 and reach grid parity as early as 2013, according to the European Photovoltaic Industry Association (EPIA). The EU is the world’s largest PV market, with almost 30 GW of installed capacity by the end of 2010 and around 16 GW added in 2011.

By far the largest share of PV is in Germany, showing that relatively cloudy countries with well-managed FITs can perform better than sunnier nations with less-stable subsidy regimes, notes Reinhold Buttgereit, EPIA secretary general. For several years Germany’s FITs have declined steadily, in line with the falling costs of solar. The UK, in contrast, is proposing drastic FIT cuts— of more than 50% for installations below 50 kW—which threaten to strangle the country’s solar industry at birth.