Wind on the Wires1 - Smart Grid (R) Evolution: Electric Power Struggles - page 158

fixed costs of a power plant are spread over each hour the plant operates. A gas-fired
power plant in Germany, for example, needs to operate for at least 4,200 hours per year
to be economically viable, and many have been shuttered. So integrating renewables has
threatened the viability of many conventional generators. The more frequent ramping up
and down reduces the life of conventional power plants, increases wear and tear, reduces
profits,andsendslong-termeconomicsignalstoutilitiesnottoinvestinconventionalfossil
fuel generation. German utilities E.ON and Vattenfall Europe Transmission, who absorb 42
percent and 38 percent of the share of wind power, as well as many other German utilities
have seen their credit ratings drop, raising their cost to borrow capital. For the first time
since 1949, German utilities are projecting losses: RWE posted losses of $3.8 billion and
Vattenfall of $2.3 billion in 2013 (Lacey 2013 ).
Additionally, the German transmission system is managed as part of the European
Electric Grid, and the lack of north-south transmission lines and the “renewables-first”
dispatch policy has created electric spillovers which affect neighbors in the European
Electric Grid. As electricity flows take the path of least resistance, congestion within the
German transmission lines has meant that in times of high wind and solar production,
German renewables operation has affected grid operations (and electricity prices) in
neighboring countries. There have been increasing adverse impacts on links with
Germany's neighbors in Poland and the Czech Republic on days of high wind and solar
generation, and these unanticipated and “unscheduled power flows” have affected
neighboringelectricityoperationsandmarkets.Torectifythissituation,gridoperatorsfrom
both the Czech and the Polish systems are working with the German grid operators to
address the unscheduled power flows and loops. Grid planners are optimistic that the new
north-south lines will alleviate this situation (Boldis 2013 ; Lang and Mutschler 2013 ) .
The Energiewende is an aggressive model of national-level energy transformation,
including electricity use as well as other forms of energy. While its goals are ambitious
- to some, even audacious - it has spurred wind and solar generation more quickly than
previously imagined possible. Not surprisingly, implementation and integration challenges
in the first few years have been significant. Outside forces, like the weak price for carbon
credits in the European Emissions Trading System and the rise of shale gas in the United
States, and resulting exports ofcheaper North American coal, meant that cheaper coal-fired
power generation in Germany increased by 8 percent in the first half of 2013 (Neubacher
2013 ) . Ironically, increased wind and solar capacity, coupled with the phasing out of
nuclear, has been accompanied by increased coal use and higher greenhouse gas emissions
in Germany. So in the near-term some pieces of the larger energy transition have, at least
temporarily, moved greenhouse gas emissions in the wrong direction. These additional