Great debate, wrong conclusion

Germany is busy installing offshore wind farms in the North and Baltic seas, but the outlook for further expansion is bleak.

Some companies operating in the sector have already announced redundancies because of the murky political situation.

If we want to create a better energy future — cheaper, cleaner, reliable — by using the strength of winds blowing across the North and Baltic Seas, policymakers must act now. We need to plan ahead, to allow us to tackle climate change and ensure jobs growth.

After a long, agonising debate on the German Energiewende — the movement away from nuclear — the government has submitted a draft to amend the Renewable Energies Act. Its terms for offshore wind include a two-year extension of the so-called acceleration model until the end of 2019 (for which the industry is grateful) but with a single reduction in remuneration of €0.01 ($0.014) per kWh from the current level of €0.19.

It also provides for — and this is new — an expansion path for 6.5GW of offshore wind by 2020 and 15GW by 2030. On the one hand, that may rectify investor uncertainty; on the other, it is paring back Germany’s offshore market by more than 30%. And although 6.5GW by 2020 is realistic (even though we believe that the goal should be more ambitious), the 2030 target of only 15GW puts an end to any thinking that further investments will be made in the German sector.

Markets with more political certainty will be the beneficiaries; this was illustrated in Siemens’ decision in March to build two offshore turbine factories in Hull, northeast England.

The unambitious 2030 target is simply wrong — not only for our sector, but also for climate change mitigation and the Energiewende. The decision fails to recognise that offshore wind is crucial to manufacturing industry, especially in Germany’s coastal states, and it is already providing 18,000 highly qualified jobs across the country. A Windenergie-Agentur study has shown that this number can increase to 33,000 by 2021 — but only with a strong offshore market.

The energy debate is characterised by short-term thinking. If it is the government’s goal to make national energy supply 80% renewable by 2050, then offshore wind is crucial. It can play a stabilising role in a future energy system because of its reliability in the mix alongside other renewables technologies. In the long run, only by exploiting our excellent offshore resource can we guarantee a uniform supply of power and provide enough electricity from renewables.

The waters off Germany’s coasts are some of the windiest in the world, and experience has shown that wind farms in the North and Baltic seas are in operation for more than 90% of the year, achieving up to 4,500 full load hours and guaranteeing a reliable, affordable supply of electricity around the clock.

A mix of renewables that includes a substantial share of offshore wind is more cost-effective in the long run. The full costs of producing a kWh of power will become increasingly similar for wind and solar by 2050.

For overall efficiency, technologies that have a stabilising and balancing effect are decisive when it comes to costs. This is where offshore energy can play a key role. The costs of flexibility — having back-up and storage capacity, and being able to throttle down power plants — with offshore wind are between €2.9bn and €5.6bn ($3.99bn-7.71bn) lower per year than in comparative scenarios with less or even no offshore wind.

The benefits provided by offshore wind completely balance out slightly higher production costs, and even reduce the cost of the overall system. The high number of full load hours generated offshore, and the special characteristics of offshore wind farms, are essential to these positive effects.

Offshore wind farms have highly reliable production times. Their output fluctuates less than onshore output and their forecast error is about half as great. They can be up to ten times better than onshore wind farms for high levels of supply reliability.

However, this cost-optimised scenario is based on the assumption that 54GW of offshore wind will be installed by 2050 — a far cry from Berlin’s timid target of 15GW.

You remember that long, agonising debate we just had? Perhaps it’s time to reopen it.

Ronny Meyer is managing director of the Windenergie-Agentur, a German offshore industry lobby roup

This piece was published as part of the Thought Leaders series. Recharge’s Thought Leaders’ Club brings together leading thinkers and participants from the renewable-energy sector to examine the key challenges facing our industry