Don’t Follow the Leader: Learning From Europe’s Renewable Energy Disaster

Europe’s wind and solar ‘transition’ is like watching a train wreck on constant repeat. Germany led the charge and is suffering the inevitable and entirely predictable consequences, with crushing power prices and routine power rationing.

Some of Germany’s neighbours had the wit and temerity to not play follow the leader, or were in a position to backtrack before it was too late. The French sit within the former category, the Swedes in the latter, recently ditching self-destructive plans to rely on wind and solar, plumping for new nuclear power, instead.

The French were, and remain, Europe’s biggest nuclear power generator, delivering reliable and affordable electricity to the German and British neighbours, among others – which is the reason the French are demanding that their dependents start building their own nuclear power generation capacity, instead of sponging off the French every time the sun sets or calm weather sets in.

The example set by Europe’s renewable energy leaders might provide plenty of lessons for the inquisitive and careful. However, neither of those attributes is evident among Australia’s energy intelligentsia, as Judith Sloan explains below.

Bowen’s plan A is a shambles, it’s time to consider a plan B
The Australian
Judith Sloan
18 July 2023

Everyone knows words are easier than deeds, but it would seem Climate Change and Energy Minister Chris Bowen is reluctant to accept this reality.

He hasn’t given up on his dream of having the national electricity market powered by 82 per cent renewable energy by 2030 and thereby contributing to another dream – to have emissions lower by 43 per cent in 2030 relative to 2005.

Indeed, this emissions reduction target is enshrined in legislation, but having the aspiration in an act of parliament won’t make it miraculously happen. Many developed economies are finding this out as their grand ambitions meet the grim reality of engineering, economics and shortages of materials and workers. In many ways, Germany is the standout example of disappointment – failure to meet emissions reduction targets, soaring power prices, reinstating coal-fired power stations, the scuttling of programs such as the compulsory end of gas and coal-fired home heating and delaying the phase-out of internal combustion engine vehicles.

The plan had been for Germany’s emissions to be 65 per cent lower in 2030 compared with 1990, but no one believes this will be possible.

It is therefore ironic that our Prime Minister had no hesitation in signing us up to the German-sponsored Climate Club.

The common factor binding the members of this recently created association is the loftiness of their climate ambitions rather than their practical progression towards achieving them. A principal aim of the club is to establish a global carbon price.

No doubt there will be lots of backslapping, but when it comes to achieving the trifecta of affordable, reliable and sustainable energy, it’s not clear there are any real benefits from joining that club, particularly as the largest emitter in the world (China) is not a member.

Of course, Germany is not alone in encountering problems on the decarbonisation journey.

For example, the British government’s insistence that heat pumps replace gas boilers used for home heating is in tatters. Heat pumps are expensive, there are not enough installers and there are insufficient incentives for households to ditch their boilers.

At the grid level, there has been virtually no investment in onshore wind power for nearly a decade after the approval process was handed back to local authorities. There is a review of wind power being conducted and the investors are keen to ramp up the subsidies as well as ease the conditions attached to the approval of new installations.

For an industry that sought subsidies on the basis of it being an infant industry – it’s well over 20 years old – there is a distinct absence of any maturing of the wind power industry.

The investors and operators continue to seek preferential treatment. The only really significant development in Britain is the recognition that nuclear power must play a role in the legislated path to net zero.

Having allowed the industry to wallow, a new large plant is not far off being completed and another one has been approved. There are also plans to install small nuclear reactors to generate electricity.

Sweden is following suit by re-establishing the importance of nuclear to achieve its net-zero ambitions, having previously taken the view that the promotion of renewable energy would be sufficient.

Newly installed Swedish Finance Minister Elisabeth Svantesson has declared: “We need more electricity production, we need clean electricity and we need a stable energy system.”

The Swedish government has replaced its target of 100 per cent renewable energy by 2040 to now read 100 per cent fossil-free. The mandated biofuel mix for petrol/diesel also has been diluted.

There are several consistent themes emerging overseas that are relevant to Australia.

There is broad acknowledgment that fossil fuels will be required for many years, notwithstanding ambitious decarbonisation plans. If we look at global energy use, fossil fuels still make up more than 90 per cent of the total, having fallen by only five percentage points in the past four decades.

High and rising electricity prices are common in most countries aiming to reduce emissions significantly and promote renewable energy. To claim a greater penetration of wind and solar will lead to lower prices has no empirical basis, at least at this stage.

Nuclear power is making a rapid comeback in many countries, not just in Britain and Sweden. Canada is heading towards complete reliance on nuclear and hydro to generate electricity.

For many countries, short-term emissions reduction targets, to 2030, say, won’t be met and longer-term ambitions – net zero by 2050 and in some cases earlier – are really just hot air on the part of politicians.

Having targets in legislation doesn’t make much difference, apart from thwarting some potentially useful energy-related invest­ments.

Building new transmission lines to link up renewable energy projects is proving problematic, slow and expensive everywhere. Local opposition, as well as the shortage of workers and materials, are significantly slowing the pace of rollouts.

Offshore wind projects are proving to be extremely expensive and require costly ongoing maintenance. The turbines also have a much shorter lifespan than onshore ones – about 15 years. (Salt water and engineering are not a good mix, something most sensible people understand.)

The disposal of used turbines and solar panels is a looming problem with the limited scope to undertake any recycling of the equipment.

Government schemes that affect households such as insisting on heat pumps, replacement of gas stoves and electric vehicles are being delayed or shelved in many countries, particularly in the context of high rates of inflation. Whether these are lessons the Albanese government is prepared to absorb is unclear; other countries are moving, but we seem to be stuck in yesterday’s thinking.

That the lifespan of one coal-fired power station in NSW – and possibly two – is being extended is indicative of a belief that Bowen’s plan A won’t work. The question now is what is plan B.

His current strategy is to accelerate offshore wind. But, as an example, it will require at least 200 gigantic turbines to replace the Eraring coal-fired plant alone, working on a generous 40 per cent output relative to nameplate capacity. At a cost of $11bn, the earliest date for commissioning is the end of this decade.

Bowen may have been too busy to catch up with the current problems that Siemens Energy is encountering with its wind turbine division. It is one of the largest companies in the world involved in offshore wind installations. In just three months the division managed to lose $500m, imperilling the sustainability of the whole company.

Inflation, supply-side problems and delays in commissioning projects were mentioned as contributing factors.

It is high time the Albanese government reconsiders its opposition to nuclear power, particularly having signed on to AUKUS. At a minimum the legislative barriers to its development should be removed, at which point the market can sort out whether it’s too expensive.

While plan B inevitably will involve extending the lifespans of coal-fired plants, this is an expensive option that must come to an end. It’s time for forward thinking and learning from other countries.
The Australian