Broken model

For many, Germany is the model for Ontario’s energy future. It has invested heavily in a renewable energy supply. It has built more than 21,000 industrial wind turbines and erected 185,000 acres of solar panels. Combined, they have the potential to produce about 10 per cent of Germany’s electricity’s needs—when the sun shines and the wind blows just right. The wind industry in Germany estimates it employs 96,000 people. Many Germans are proud of their leadership in renewable energy. This self-satisfied feeling helps take the sting out of the fact that they pay three times more for electricity (and rising rapidly) than do consumers in North America and many parts of the world. Paying renewable generators $18 billion a year in rich feed-in tariff contracts (yes, FIT contracts were created here too) is, they have been convinced, a small price to pay to wean their country off nuclear and fossil fuel-powered energy.

It is a heartwarming and inspiring story of human ingenuity and public policy determination, mightily harnessing the power of the wind and sun so as to idle the fossil-fuelled engines that power that economy. It is easy to see how politicians like Ontario’s Dalton McGuinty lined up to become disciples of the German model.

But the story was a lie. It was always an illusion— a fairy tale sold to consumers in which the developers, industrial manufacturers and grid operators played along—for it meant they might get a share of the vast amount of euros that would chase this fantasy. Besides, there was little to be gained in puncturing this hopeful bit of misdirection.

Yet as far back as 2003 Germany’s large grid operators were emitting weak signals to policy makers that renewable energy had a bright future as long as everyone understood three things. It would never be more than a very small component of the nation’s energy supply; it would always be breathtakingly expensive; and, by the way, it would require rebuilding the country’s entire electricity grid to manage an intermittent energy supply.

Buoyed by public sentiment, Germany pushed ahead. But nearly a decade after those warnings were uttered, the illusion is in tatters.

Much has been written in recent weeks of Germany’s expansion of its coal-fired electricity plants. A few weeks ago their Environment Minister, Peter Altmaier, opened a brand spanking new coal-burning generator in Cologne. Twentythree more coal-fired plants are on the way in Germany alone. Fifty coal-fired plants are set to open across Europe before this decade is over.

Europe’s carbon trading system has become so twisted and broken that the cost of natural gas (a much cleaner energy source) is too expensive to drive Germany’s electricity generators. As some observers have noted Europe’s emission trading scheme has created an incentive for Germany to replace its nuclear capacity with coal.

Just as troublesome, Germany’s grid has become increasingly wobbly as it struggles to manage unpredictable and intermittent generation from renewable sources. Short surges and outages have become commonplace—a minor inconvenience to most consumers, but a critical challenge for many businesses and industries.

Many of these folks have seen enough. More red signs marking closure are appearing before German industries, like the one that hangs on the gates of the steelmaker in Krefeld on the Rhine. ThyssenKrupp has sold the production of this plant to a Finnish firm that pays a third less for electricity than does its German counterpart Four hundred more workers in this troubled region are out of work. More will follow.

As Der Spiegel noted earlier this year, the thousands of jobs being lost in that country due to unreliable and expensive electricity “cannot be blamed on low-cost competition from the Far East or mismanagement, but rather on the misguided policies of the German government.”

In Ontario, Dalton McGuinty has witnessed the exodus of thouands of manufacturing, refining, smelting, and steelmaking jobs to Quebec and elsewhere. lured away with cheaper power. Google Xtrata, for example. More will follow. With few alternatives, McGuinty has made huge concessions to others to shelter these multinational corporations from the full cost of Ontario’s rising electricity costs in order to persuade them to build here. The Cliffs Resources deal offers a fresh example. The cost of these arrangements simply gets added to the consumer’s hydro bill.

For the better part of a decade Dalton McGuinty has told Ontarians this province had to rush down the renewable energy road so that he could close child-killing coal plants. It turns out—at least in Germany—renewable energy means more coalfired plants, not fewer.

Germany’s energy policies are broken and beginning to be dismantled. Dalton McGuinty has ushered Ontario down the same dead-end road. Do we really have to follow? Or can we choose another path?

rick@wellingtontimes.ca