Green Energy And Nuclear Power From A Nordic Perspective

Frankfurter Allgemeine Zeitung has:

There are lots of technical problems in connection with”green energy” and the replacement of nuclear power.

If you look at the graphics I’ve pinced from the FAZ, it illustrates on major problem – the blue dots are net German EXPORTS and the red are net IMPORTS.

1)      The lack of sufficient transmission capacity.

The net import from Denmark (and not marked as it is domestic), in  North-western Germany cannot be led on the major population centres and industry, so it has to be dumped into the Netherlands. The surplus from Sweden (and indeed some parts of Denmark as far as I can tell) cannot be totally absorbed either in East Germany – which then leads it into Poland – that doesn’t know what to do with it either – so they lead it on into the Czech Republic – which doesn’t know what to do with it either – and then sends it back into Germany further south.

The south has a similar problem with its solar power, where they dump peak load off into Switzerland and Austria. And apparently get it back from France.

So there is a lot to be said for HVDC (High Voltage Direct Current) transmission line in terms of efficiency.

2)      “Green Energy” does require management – and lots of it.

Both solar and wind generated power come at rather unpredictable times and in unpredictable volumes. This means that the more traditional power works need to counter produce. The wind may be free, but the power plant that takes up the slack certainly isn’t.

The Netherlands produces a great deal of power with natural gas which is not too difficult to take down, the brown coal plants in the former German Democratic Republic are not so flexible. One part of the solution is to connect better to the Swedish and Norwegian hydropower plants. I think the regulatory capacity of the Swiss hydro electrical plant is already used to capacity.

Another possibility is to use district heating systems as a power sink. Normally district heating systems are using the heat in exhaust gasses from coal, gas and oil power generating plants. But that is a large investment as well. An “emergency” measure is to switch on the street light – looks odd on a summers day. Other options are to use large plants, such as plants producing sulphuric acid to provide some slack – but if these plants are several hundred miles from where the power was generated – it plays right back at transmission capacity.

3)      A revised system for calculating the price of electricity is needed.

Last Christmas Germany had to dump massive amounts of electricity – due to much generated wind power – into the Netherlands at a NEGATIVE price – so much for Christmas spirit, but it did light up not only the Christmas trees – but an entire country of 15 million people! It was a minor problem to power down the Dutch generating.

It does however challenge the entire concept of the value of electricity – the fuel equivalent is perhaps not the best measure, as the value of the power generated has very little relevance to the actual fuel cost. By far a larger proportion of the value lies tied up in plants of different nature – not because they necessarily generate a lot of power in the kilowatt-hour sense, but because they can put out a lot of amps when needed. That is indeed the case with the Swedish hydro electrical plants. Their max water magazine capacity is 3 weeks – and even much less after light snowfall during winter. These plants have a value out of all proportion to the kilowatt-hour production, as they can deliver when clouds and low winds hit other parts of Europe.

The same thing could be said of a power transmission line from Norway through Denmark – which neither Norway nor Denmark need particularly much.

4)      Economy through efficiency.

Many have shed oceans of tears of joyous pride in the tree-hugging community that the German nuclear plants are closing down by 2020. Without raining on that parade: The reason is probably more, that these plants are getting on in years and don’t last forever – what is often overlooked is that such old plants are expensive to run, as technology isn’t up to scratch – not only is there more manual surveillance but spare parts become a problem. (One reason the military uses old trucks is that the supplier eventually wants to cut inventory and thus give an unusual price – and then the phase out can use cannibalisation)

What is much more “environmentally” sound is phasing out the East German brown coal plants which are terrible in pollution, efficiency and labour cost.

Finally, a better use of the electricity does indeed have potential – say 50-60 years ago many Norwegian houses did not have electrical switches as the new hydro electrical power plant produced vast amounts of electricity for nearly free. There have been tales from Russia, where building blocks didn’t have the ability to shut off the heating – sounds wasteful – and it is, but it could actually be the cheapest way to cool a power plant – really using the radiator as a – radiator.

5)      Financing is really complex as a state concern is turned federal.

There is no real alternative to state financing. One problem is that the HVDC power line passes through Slesvig-Holsten, which is agricultural and broke and has major rail and road infrastructural programmes connected with the tunnel to Denmark. Where the local interest in a power line (or rather two) is marginal, as the benefits to local industry are also marginal (Denmark is not going to build a major iron smelting plant – trust me!).

Now, the German problem centres on the local governments really like the jobs, but can’t find the money – and anyhow they are not satisfied with their bonds having – by German standard a high interest rate – especially considering paying that interest for what is essentially a federal concern. The solution will be – if my hunch is right, the issue of a sovereign bond underwritten by both the state and the federation. That in itself shouldn’t be an conflict point, as the world is starved of high quality sovereign bonds.

6)      Political considerations.

The other part is that a large proportion of the investment will be in Denmark. Again the job aspect is clearly attractive, but would really like some long term industry jobs as well to get some of the jobs lost to China back. But that is mixed up with a banking sector that is as pitiful as a Greek tragedy – especially the mortgage banking sector about ½ trillion USD in loans of which only a fifth can be considered good. That will need backing with sovereign muscle – but then additional investment burdens could push towards a Spanish scenario, where a rotten banking system is hamstringing the real economy. So some sort of arrangement will have to be found – though perhaps not to the liking of the Danish mortgage banking.

The German domestic situation is not easy either. The financing with common Bund/Länder bonds will solve some problems; but that will be entering onto the firm ground of the Bundesrat which is sort of a senate – the Bundesrat has a majority against the federal government. In this matter the Bundesrat will have a veto, as it involves the distribution of authority between federal and local government. It will give 4-7 handy votes (out of 69) – for something benefiting local governments enormously, so it will not be done for free! The federal government has its problems getting agreements concerning the tax-evaders in Switzerland through the Bundesrat – not to mention the Finance Minister having trouble reforming the tax-scale to give tax-reductions to low incomes.

And then there is the bone of contention: Financing the rescue of southern European banks through the ECB.

Of course these investments and the sovereign bond financing will be used as leverage – the problem is the ability to sway the Bundesrat in general – the other local governments will of course be ticked off if they don’t get their cookies. Three heavy pro-government states are up for election this year (17 votes) and none against the government – and none that are liable to benefit in particular.

That is so far as domestic policy goes, but just after her New Years speech, the Danish PM issued a request to her ministers to the effect of calling for investment programs to put into action – specifically mentioning both the tunnel under Femarn Belt and the high voltage power line – with special consideration to productivity increasing public investments.