Confused utility views on renewables

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Germany's powerful utilities association admits that wind energy will make by far the biggest contribution to the expansion of renewables over the next ten years. But at the same time the Vereiningung Deutscher Elektrizitätswerke (VDEW), maintains that wind is uneconomical and will suffer if electricity markets are liberalised.

Even including external costs, wind and solar are uneconomic according to Joachim Grawe, VDEW's managing director. Results of studies carried out in various countries show that external costs range from DEM 0.005-0.01/kWh for wind, DEM 0.002-0.05/kWh for photovoltaics, DEM 0.001-0.005/kWh for nuclear and DEM 0.013-0.022/kWh for coal, he reports. If these are taken into account it would make little difference to the profitability of wind and solar, according to Grawe. But he adds that the external costs on which he bases his findings on do not include those associated with climate change. These are impossible to estimate, says Grawe.

The introduction of competition to the electricity market will not help the situation for renewable energies, Grawe continues. The utilities have to operate a strict cost management regime and can only buy renewable electricity at market prices. Nevertheless: "They will continue to use and promote renewable energies as a security measure for the future."

His views were echoed recently by Preussenelektra chairman Hans-Dieter Harig. He argues that there is sufficient generating capacity in Germany without wind energy. According to Harig, wind currently displaces existing capacity, capacity which if compared internationally is environmentally compatible in the extreme.

Despite these dismal predictions from its bosses, VDEW nonetheless estimates that between 1995 and 2005 an additional 3300 wind turbines will be installed in Germany, amounting to 2340 MW, capable of generating 6.1 billion kWh a year. This compares with a total anticipated growth in renewables over the ten years of 2978 MW, capable of generating 8.7 billion kWh annually or 6-7% of public electricity consumption in Germany.

In 1995, wind power generation doubled compared with 1994 to around 1.8 billion kWh, according to VDEW, while renewable output as a whole increased by 14% to 24 billion kWh. This constitutes 5.2% of electricity consumption from the public grid, up from 4.7% in 1994. Hydro energy accounts for 80% of renewables production with 19 billion kWh, up from 17.5 billion kWh in 1994. And 83% of renewables electricity is generated by utilities with the remaining 17% stemming from independent operators. Seen in terms of micro economics, heat pumps are considered by VDEW to be "the most interesting possibility" in the renewables stable -- perhaps because they also consume electricity and would boost sales at a time when German electricity consumption is stagnating.

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