More than a decade ago, Germany embarked on its aggressive energy transition, known as Energiewende. With the expectation that wind and solar energy alone could someday power Europe’s largest economy, the country set about aggressively shutting down coal and nuclear power plants. It ended up with an unstable power grid and reliance on unfriendly foreign powers for energy supplies, not exactly the goal they had in mind. What happens now?
Despite a massive buildout of renewable energy, Germany receives much of its electricity from natural gas imports. At the beginning of 2022, around half of those imports came from Russia. However, Russia has repeatedly cut exports in response to the global outrage over its invasion of Ukraine. These supply cuts have put Germany and much of Europe in a precarious position, potentially facing supply cuts and even rationing this winter.
We wrote in July that the German government was considering keeping existing nuclear plants online a few years longer in order as Russian oil and gas imports become less of a certainty. That move seemed to make sense, given that nuclear energy is highly reliable and produces no carbon dioxide emissions. However, Germany seems to have taken that option off the table.
Instead, the country will restart mothballed coal-fired power plants. German utility Uniper SE announced it would start producing electricity for the market at its Heyden 4 hard-coal-fired power plant. The move comes after Russia announced a halt in natural gas supplies to Europe for three days at the end of the month, piling pressure on a continent already struggling to refuel.
Bringing coal-fired power plants back online makes sense. Coal is highly reliable and Germany already has ample reserves on hand. However, we are a little surprised that Berlin chose coal over nuclear power. Clean, emission-free nuclear power is in line with German emission reduction goals. In fact, when recently faced with a similar decision, California opted to try to keep its nuclear reactors online.
Additionally, the German government will partner with Canada for future natural gas supplies. This partnership will allow the country to become less reliant on Russia for energy and possibly even prevent an energy crisis. However, researchers have cast doubt on whether the plan will work, noting that Canada currently does not have the expert capability to support overseas LNG exports. It may be years before Canadian exports become a viable option. Still, Germany seems committed to leaning on Canada in its time of need.
“As Germany is moving away from Russian energy at warp speed, Canada is our partner of choice,” says Chancellor Olaf Scholz.
While it’s encouraging that the German government is looking to multiple types of energy to keep the lights on, this situation could have been avoided entirely. By actively shutting down the most reliable energy resources in favor of intermittent supplies and imports, Germany created a situation where shortages could almost be guaranteed. Let’s hope U.S. lawmakers are watching closely to avoid this sort of scenario in the U.S.