Analysis: Germany's 10% wind, solar rise piles pressure on power

https://www.chemnet.com   Feb 10,2015 Platts

*Wind adds record 5 GW in 2014, solar slows to 2 GW, lowest since 2007
*Total wind, solar exceeds 80 GW, pushing power prices to 10-year-low
*Repowering, offshore wind exempt from annual cap in renewables reform



Germany boosted its wind and solar capacity by a further 10% in 2014, adding a combined 6,800 MW of newly installed wind turbines and solar panels, putting further downward pressure on power prices, which already dropped to their lowest level in over ten years, a Platts analysis shows.

Total installed solar and wind capacity including offshore now stands at 77,400 MW in Germany.

Adding Austria with 2,800 MW of installed wind and solar capacity, the total for the German/Austrian (Phelix) market has already exceeded 80,000 MW.

Spot power prices in January for the German/Austrian market area averaged Eur29.15/MWh, down 20% from last year's January average price and only the third month below Eur30/MWh since 2007 with only the summer months of June 2013 and August 2014 having a lower average price, Platts pricing data shows.

Wind power output in January hit an all-time high for a second month in a row with more than 18 TWh generated over the December/January period alone, averaging above 12,000 MW/hour and for the first time exceeding nuclear output over such a period, according to grid data compiled by Platts PowerVision.

The growth in intermittent renewables also comes against continued demand decline with Germany's power demand already at its lowest level since 1999, down 4% at 576 TWh for 2014, averaging a theoretical 65,787 MW/hour, according to data from utility lobby group BDEW.

German wind power developers installed a total of 4,750 MW of new onshore wind capacity in 2014, 58% more than in 2013 and the biggest annual gain on record, according to the annual report by wind lobby BWE.

Overall, capacity gains from so-called "repowering" or upgrading older units with more powerful turbines were 1,148 MW.

Repowering is exempt from the new annual caps for onshore wind power set at 2,500 MW/year in reform of the renewable energy law last year.

For 2015, the BWE therefore expects another significant increase of up to 4,000 MW.

Offshore wind capacity in Germany has also reached the 1 GW mark as new installations in the North and Baltic Sea more than doubled in 2014.

According to the annual statistic compiled by Deutsche Windguard, 529 MW came online in 2014, bringing total offshore wind capacity to 1,049 MW.

A further 1,218 MW capacity were fully completed in 2014 and are just awaiting grid connection with a number of other projects also in advanced construction phase.

The BWE estimates that by the end of 2015, a total of 3,000 MW installed offshore wind capacity will be online.

SOLAR ECLIPSED

By contrast, solar PV additions fell in 2014 for a second straight year, down 42% from 2013 at just 1.9 GW, its lowest annual growth since 2007. This takes total installed solar PV capacity in Germany to 38.2 GW.

The sharp slowdown in solar since 2013 after more than 20 GW were added in 2010-2012 and a return to record growth for wind, means that wind again has become Germany's single largest energy source measured by installed capacity.

Solar output in 2014 increased by 14% on the year to 35 TWh, contributing almost 6% to national power demand, while wind turbines generated 52 TWh of electricity, contributing almost 9% to national demand, according to BDEW.

In a rather extreme example, the intermittent nature of renewables will be briefly illustrated with a total solar eclipse on March 20 in North Europe.

The eclipse will be an unprecedented test for European power grids, French TSO RTE said.

"According to our calculations, the impact could be a drop in production of as much as 30,000 MW across Europe. It is the equivalent of a six degrees Celsius drop in temperatures in half an hour," RTE CEO Dominique Maillard said last November at RTE's winter outlook.

Total wind and solar power generation this year is set to exceed nuclear power output for the first time.

Germany's four TSOs estimate in their annual outlook some 67 TWh of onshore wind and 11.2 TWh of offshore wind, based on 40 GW of installed onshore and 3.3 GW of offshore capacity by the end of 2015.

But applying the annual wind installation growth rate of just over 15% to the actual 2014 wind generation data and assuming a fairly average wind year, Platts analysis estimates around 60 TWh in annual 2015 wind generation, a gain of around 8 TWh from 2014.

Using Platts' renewable energy calculator, the 8 TWh in annual wind power output from the newly installed wind turbines in 2014 equates to 1.5 billion cubic meters/year of gas burn (HHV 50% efficiency), still the most likely form of power generation to be replaced in the merit order.

For solar, the TSOs estimate some 36 TWh output for 2015 based on 39 GW of installed capacity, just slightly below actual installations and in line with Platts analysis based on actual 2014 solar generation data and the slower growth in installations, likely to continue this year.

For nuclear, the decommissioning of the 1.3 GW Grafenrheinfeld reactor, seven months earlier than planned in May, is set to to reduce total annual nuclear generation by around 6-7 TWh from 96.9 TWh generated by Germany's nine reactors in 2014.

German electricity consumers will have to pay an estimated Eur23 billion ($26 billion) this year for subsidies to renewable power producers through the green levy, which finances the gap between feed-in-tariffs and wholesale power prices, which have fallen to their lowest level in over ten years.

Year-ahead power prices in Germany have dropped below Eur32/MWh for the first time since 2004, closing January 6 at Eur31.45/MWh.

The average 2014 closing price for OTC year-ahead baseload power was Eur35.08/MWh, down 10% from an Eur39.07/MWh average in 2013, which in turn was a 21% drop from the 2012 average of Eur49.27/MWh. In 2011, the German year-ahead contract averaged Eur56.05/MWh, Platts pricing data shows.

Contracts for 2017 and 2018 delivery are trading even lower, with the German system forecast to remain oversupplied until the final phase of the nuclear exit with six modern nuclear reactors set to operate until the early 2020s.

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