World‘s most efficient gas turbine to close in Germany - why? in Japanese

It has been a hot item in the press: power provider Eon plans to close a combined-cycle gas turbine made by Siemens. The story is being sold as yet another failure of Germany’s energy transition. But what is good for Siemens is not necessarily good for the Energiewende – or the planet.

Located in Irsching, the turbine has a peak efficiency exceeding 61 percent. And carbon emissions from natural gas are a fraction of those from coal power. Yet, the unit sold no electricity at all in 2014, when it was only rarely used on the reserve market to stabilize the grid. What’s going on?

First, coal is cheaper than natural gas in Europe. Germany has loads of lignite – the largest reserves in Europe (and possibly in the world). This type of coal is unfortunately the dirtiest, but it is also inexpensive. Furthermore, the shale boom in the US led to record hard coal exports. Europe (and Germany) became a major buyer.

Second, the European emissions trading scheme has failed to produce a carbon price high enough for a shift from coal to natural gas in the power sector. It has been estimated that a price of around 30 euros per ton would be needed for a transition from hard coal to natural gas – and around 50-60 euros for the switch from lignite to natural gas. The price this year has come in closer to seven euros.

Third, renewable energy has grown up faster than anyone expected since 2010. And this green electricity offsets conventional generation in the merit order. Because natural gas is more expensive than coal, renewable energy offsets natural gas within the power sector first.

The head of a German think tank made headlines in December (report in German) by claiming that there was “a collective miscalculation among experts that renewables would offset coal power and not new gas plants.” Actually, the only people who made that miscalculation were those who expected the emissions trading platform in Europe to produce a high carbon price (though, admittedly, that was practically all high-level analysts). Those who called for a carbon tax instead of emissions trading did so because they feared the carbon price would otherwise be too low. So there were analysts concerned that renewable energy would offset natural gas, not coal.

Furthermore, by 2010 it had become clear that baseload power plants had no future, as one German parliamentarian stated in the Bundestag (in German); fluctuating wind and solar power require flexible backup generators. Natural gas turbines are generally considered flexible, but combined-cycle units lose efficiency when they ramp up and down. The Irsching unit can ramp up in 30-40 minutes according to Siemens, but it is only 60 percent efficient when running at a high level. In other words, combine-cycle units make gas turbines efficient at the cost of flexibility – they can be efficient or flexible, but not both simultaneously.

In the future, Germany will mainly need flexible open-cycle gas turbines to backup wind and solar. These units can be used for cogeneration if the waste heat is recovered. The efficiency without waste heat recovery is low, but it can reach 95 percent with heat recovery – according to Siemens.

Engineers at Siemens built the combined-cycle gas turbine (CCGT) in Irsching to prove their prowess, not because the Energiewende needed it. With solar and wind often peaking at above 33 percent of demand, CCGT will have to ramp so frequently that it will lose efficiency. Note, however, that the situation is different in countries like Japan, where solar and wind are already getting started. On the Japanese power market, CCGT would be an excellent way to provide relatively low-carbon electricity to replace nuclear and coal, for instance. Wind and solar will need time to reach high penetration levels in Japan, and gas turbines can be a useful backup for Japanese power supply.

The story in Germany, however, is one of a German engineering global player selling its own miscalculation as a failure of governmental policy. The firm has a history of conflating its own interests with the Energiewende’s – and of bad-mouthing German energy policy. In 2011, a company executive stated that the nuclear phaseout would raise German power prices fivefold, but retail rates are now stable. In 2013, it published a list of energy transition proposals that turned out to be nothing more than a list of its own projects; at the time, its CEO added that Germany “must rein in renewables.”

Though the firm has long been in the energy sector, it only entered the wind market in 2004, and it has no PV to sell now that global demand is expected to double by the end of the decade. Instead, the firm’s CEO stated this year that the Energiewende was driving him out abroad and added that PV in Germany made as much sense as “pineapples in Alaska.” Once a manufacturer of highly efficient home appliances, Siemens sold its share of the joint venture to its partner and used the cash to invest in the US oil sector (report in German). The appliance division that Siemens just abandoned posted record sales in 2014 (report in German).

We thus have a long list of poor market assessments. And indeed, Siemens’ commitment to the US oil sector may help get enough carbon out of the ground to make “pineapples in Alaska” more likely. In May, Alaska was hotter than Texas.

Craig Morris (@PPchef) is the lead author of German Energy Transition. He directs Petite Planète and writes every workday for Renewables International.