July 25, 2009
Germans To Pay Much For Offshore Wind Power

Germany is phasing out nuclear power plants before the end of their useful lives, building more coal electric plants, and will make Germans pay thru the nose for expensive offshore wind electric power.

It was the revival of Kohl’s center-right Christian Democratic Union party under Chancellor Angela Merkel that delivered the concessions needed to kick-start the offshore-wind industry. In 2006 Merkel’s government—a coalition that also included the Social Democrats and the Christian Social Union—made power-grid operators responsible for running cables to offshore farms. That shaved about one-fifth off the average cost of a project. And last year Merkel improved the revenue side of the ledger, boosting the offshore tariff to 0.15/kWh (US $0.21/kWh).

The German government had to increase the payment to offshore wind operators in order to get enough investors to put up money to build offshore wind farms. Opposition to closer offshore facilities forced the wind farms into deeper water which drove up costs.

To put that 21 cents per kwh producers price in perspective at the time of this writing Americans on average are paying residential retail prices at 11.28 cents per kwh on average. The 21 cents per kwh that German grid operators will pay will get marked up to higher residential retails prices to pay for distribution and billing costs.

But that cost number for wind electric is even worse than that. Wind is not dispatchable power. You can't order it up when you want it in response to demand spikes. You get it when the wind blows and you don't get it when the air is still. Electric power generators that can ramp up in response to demand spikes normally gets sold for a higher price than baseload power (like a nuclear power plant that runs all the time). But baseload power is at least there when the demand is greatest just like it is there when demand is least. By contrast, wind isn't as reliable as baseload power. So that 21 cents per kwh wholesale for an undependable power source is a really high price to pay.

Update: A wind farm for offshore of Delaware's coast is supposed to come in at a much lower price of maybe 12 cents per kwh before a production tax credit lowers it to 10 cents per kwh. It is not clear to me whether the price is a binding agreement. What accounts for that lower cost? Shallower water? Stronger winds? Less political influence on markets?

Share |      Randall Parker, 2009 July 25 07:22 PM  Energy Wind

Francis Macnaughton said at July 27, 2009 3:01 AM:

OK Randall, if wind is too expensive, which sustainable energy source would you advocate that is available in large quantity for less?

Ned said at July 27, 2009 4:55 AM:

The price doesn't seem that high to the Germans. Residential electricity cost about US$0.23 per KW/h in Germany, so $US0.21 isn't so bad. Everything in Germany (except beer) is expensive. The German electricity market is dysfunctional, and the prices are around the highest in Europe.


James Bowery said at July 27, 2009 6:32 AM:

If they drive the price of baseload electricity high enough, Earth launched solar power satellites start to look viable. Of course, it has to get up around a dollar/kWh, but, hey, it looks like they're on their way!

Garson O'Toole said at July 27, 2009 7:47 AM:

The electricity rate for wind may appear high, but additional benchmarks help provide context. As Ned notes above, Germans already pay substantial electricity rates. A Finfacts data website says that Germans were paying 18.32 eurocents per kWh (26.1 cents per kWh) in 2006 including taxes.

In the United States the electricity rates vary by a remarkable factor of three depending on location. In Hawaii during April 2009 average residential electricity costs were 22.19 cents per kWh. In the continental states, Connecticut was the most expensive at 20.43 cents per kWh. In pricey New England overall the rate was 17.86 cents per kWh. At the other end of the spectrum, Idaho was 7.28 cents per kWh. These figures come from the Energy information Administration of the U.S. Government.

Brocklin Rhone said at July 27, 2009 1:37 PM:

Wind is expensive and unreliable. It is a sucker's play. Boone Pickens got out while the getting was good. Only a fool would sink good money into that rat hole.

happyfeet said at July 27, 2009 1:55 PM:

One often overlooked way you can get high-quality electricities is by burning coal. It's economical too. Faster, please.

m12edt said at July 27, 2009 1:58 PM:

Francis -

"OK Randall, if wind is too expensive, which sustainable energy source would you advocate that is available in large quantity for less?"

Okay, say it with me...NUCLEAR. Solar is ultimately limited to 1000 W/sq.meter at high noon at the equator with no clouds, not that anywhere ever really provides close to that much, but that's the limit. That's it. Collecting 100% of the sunlight. Wind doesn't always blow and requires larger chunks of land than solar. It's a question of energy densities, unless you want to have to have an enormous footprint for power generation. There are several new nuclear technologies that are cleaner, safer, smaller, and more efficient...as well as ultimately cheaper than solar or wind. Funny thing is, Germany pioneered pebble bed reactors, which are very safe and efficient, but freaked out when Chernobyl happened as the result of a really unsafe reactor design that was managed completely wrong. And, regarding James and pumping in solar power from space...one question...if global warming is an issue, then why would you want to pump more energy into the Earth's atmosphere directly from space.

Rob said at July 27, 2009 2:01 PM:

Ned: You're missing the point, Randall hints at this in his comments: wind power is unreliable, so you have to have conventional (or at least reliable) generation standing by as spinning reserves so that you can deal with intermittent loss of the wind power. So, that's $0.21 PLUS markup PLUS some large fraction of $0.23 per KWh. When all of your industry has to compete with foreign markets paying $0.10 - $0.15 per KWh, it's going to hurt your competitiveness.

Also, I'm not sure about offshore Germany, but in California and Texas, wind generally blows off-peak. In other words, you generate the most power when you don't really need it. In 2007, at the summer peak (the hottest hours of the hottest days) California wind was generating about 66MW out of 3000MW installed. All of those expensive generators totally failed them when they needed the power the most. Then came the Santa Annas and the fires and the smoke took out the solar as well.

If you propose wind power but do not factor in costs for reserves, costs for transmission and costs for storage, then you're scamming your citizens. Insiders at the California ISO consider that the actual cost for wind power to be about four times what goes on the books as the apparent cost. So, they're probably in the German range, but have just accounted the problems away. Texas is about to OK installing billions of dollars of transmission lines out to the wind farms in West Texas, but they're going to account for that as "infrastructure" and not make it part of the cost of the wind power.

History is not going to treat this era's wind power very nicely.

Yogi Behr said at July 27, 2009 2:05 PM:

"Germany's Green-Energy Gap"

Germany stumbles in its move to replace coal and nuclear power with offshore wind energy

From IEEE Spectrum, July 2009

Herschel Smith said at July 27, 2009 2:11 PM:

Francis Macnaughton said at July 27, 2009 3:01 AM:
OK Randall, if wind is too expensive, which sustainable energy source would you advocate that is available in large quantity for less?

Simple and easy. Nuclear. It's been here all along, will be here in the future, and is the cleanest and best source of large scale energy that the U.S. needs to employ people and keep our economy going. Wind and solar are pipe dreams. Nuclear (that is, existing PWR technology)is the only real option, and my true test of an environmentalist is always is s/he an advocate of nuclear power? If not, then it (the environment) is merely moralistic hype, a cause worth complaining about but not really doing something about. Anti-nuclear "environmentalists" just want something to believe in. They don't really want to solve problems.

bobby b said at July 27, 2009 2:16 PM:

"OK Randall, if wind is too expensive, which sustainable energy source would you advocate that is available in large quantity for less?"
- - - - -

Oil. Technology improves and allows us to extract and use more energy per barrel; rising prices drive renewed exploration and efficacy of "depleted" or just plain minimal sources; finally, the oceans all rise instantaneously, drowning millions clustered along the beaches on Al Gore's directive to watch the event; all of those bodies sink to the ocean floor and are covered with sediment and are eventually subsumed deep into the earth's crust, where they are compressed, heated, and transformed into what becomes known as the Gore Oil and Gas Play, rivaling the entire Saudi field in volume.

Dr. Kenneth Noisewater said at July 27, 2009 2:22 PM:

"Nuclear (that is, existing PWR technology)is the only real option, and my true test of an environmentalist is always is s/he an advocate of nuclear power?"

I'd rather see PBMR and/or local idiot-proof "nuclear batteries" like the Toshiba 4S, along with reprocessing of fuel to reduce waste and increase efficiency.

I mean, for Xenu's sake, the _FRENCH_ reprocess, and they're the biggest pussies in the history of western civilization!

Steven Den Beste said at July 27, 2009 2:31 PM:

Francis Macnaughton, there's no rule that says there has to be such a thing, and I personally don't think there is one. Which is why I think we should continue to get the majority of our power by burning coal, for the next hundred years or so.

exception said at July 27, 2009 2:54 PM:

In this specific situation, using "nuclear power plants before the end of their useful lives" seems a viable alternative.

gareth said at July 27, 2009 2:55 PM:

No ned, the cost you pay as a consumer is not the cost you pay to the generator. Then it gets reticulated through the grid and through power companies to your line to the house. here in NZ the generation cost can be 7-14c per kwh, but the price to the consumer is typically 19-24c per kwh.

So typically assume the retail price is double the generator price. Does it start to sound like a good deal yet.

Economic activity is mobile - business will move to the lower cost energy environment. that means industry moving production out of germany to Eastern Europe. The net effect on emissions, probably negative as the developing economies care less about air quality, the net effect on germany's economy - well it aint going to be be pretty. But at least they showed they cared about the planet?

Francis Macnaughton said at July 27, 2009 3:04 PM:

All I have read suggests that coal, oil and nuclear are unsustainable so I'm still waiting for an answer!

Fat Man said at July 27, 2009 3:05 PM:

Analysis of Danish network. The Germans are fishing in the same water as the Danes. The only reason the Danes can make their system work is the spinning reserve supplied by Scandinavian hydro power.

Chris said at July 27, 2009 3:05 PM:

Herschel, the anti nuke crowd does not "want something to believe in," rather they are looking to oppose any viable solution.

Whitehall said at July 27, 2009 3:28 PM:

Yes, the solution is NUCLEAR.

Please, no need to quibble about which nuclear technology should be chosen. There are a variety to suit many markets and applications. PWR, BWR, LMFBR, PBMR, and so on.

BTW, the pebble bed design is based on nuclear rocket engine technology from the 50's and 60's. I like it a lot but it is not the best for base load generation on big grids.

Also, the Germans have had to invest in large and expensive pumped storage facility because of depending so heavily on wind. That's a hidden cost seldom considered.

JorgXMcKie said at July 27, 2009 3:31 PM:

Francis Macnaughton said at July 27, 2009 3:04 PM:

All I have read suggests that coal, oil and nuclear are unsustainable so I'm still waiting for an answer!

Read more!! (And attempt to understand it.)

An Engineer said at July 27, 2009 3:34 PM:

Wind has a utilization rate of 30% on a lifetime ROI at rated load versus 90% for Nuclear - because the wind does not blow all the time and due to maintenance costs. Most costs for wind do not include the cost of maintenance in years 5 and on which are usually WAY under-estimated. Once the maintenance costs are phased in for wind, it becomes even more unnattractive. Then there are the plants that must be around to produce power for days when the wind does not blow.

Wind is not sustainable because the turbines and towers must be maintained and this cost/KWH actually generated is much higher than for nukes.

Nuclear is more sustainable by any measure over wind when one looks at the lifetime resource consumption footprint.

Vash said at July 27, 2009 3:40 PM:

Nuclear is not technically sustainable, we will run out of possible sources one day. But:
1. Uranium is not a rare element. There is tons of it.
2. One Kg or uranium has as much energy as 640 ton of oil
3. When we are out of uranium there are plenty of other fuels we can still use.

Idrathernot said at July 27, 2009 3:54 PM:


There is sufficient nuclear fuel (Uranium-235, 238, and Thorium) to satisfy the entire world energy needs for a couple of centuries at least. How long does it have to last until its considered close enough to "sustainable?" Surely by then we will have solved nuclear fusion or have solar power that doesn't suck or something.

Flan said at July 27, 2009 4:55 PM:

What Francis means by "sustainable" is "perfect, with no trade offs".

This definition is applied to all potential energy sources except the politically correct energy sources, which are exempt.

egoist said at July 27, 2009 6:03 PM:

*If* we had a free culture (USA or Germany), whether wind, water or fire won out would not be the gamble of the chosen few masters, but rather the profit / loss riskers - brave & greedy biz-men. Something that's been scrubbed from our modern life by those who presume to know better.

Chaz706 said at July 27, 2009 6:07 PM:

Francis: if the Nuclear Fuel should satisfy the world for a couple of centuries (at least) we should be on a planet farther out than Alpha Centauri mining for Dilithium by that point.

That is of course if the Socialists haven't destroyed ALL incentive to create new technologies by that point.

Curmudgeon Geographer said at July 27, 2009 6:29 PM:

Wind is not sustainable, Francis.

It takes more energy to put _manufacture_, _ship_, _assemble_, and _maintain_ a wind turbine than a wind turbine will EVER put out over the course of its life. You hasn't read enough about wind energy, Francis. But I bet saying "sustainable" fills you with a warm glow as you think you've caught anti-wind people in a trap.

Randall Parker said at July 27, 2009 6:31 PM:

Francis Macnaughton,

I do not think that we should view sustainability as an end in itself. Consider the historical context. While oil has been much maligned if it was not for oil we would not have had the energy to free up human physical labor so that more humans could do mental labor to advance science and technology. So we'd suffer more diseases and live worse lives. Oil, an unsustainable energy source, has been a really big net benefit to humanity.

By helping to build a highly technology civilization oil has also enabled us to develop nuclear, wind, solar, and other energy sources. Without oil we would not have the current scale of specialization of labor to enable the development of very tricky processes for solar photovoltaic manufacturing lines or nuclear power plant designs.

We shouldn't make a striving for a currently unreachable perfect to become the enemy of an improved good. At this point I would be satisfied with cleaner energy sources that will last longer than oil and give us time to develop even cleaner and longer lasting energy sources.

I agree with Vash and a few others that nuclear fission (especially with thorium and ideas for U-238 reactors that each could last for a couple of centuries) can buy us enough time to develop other energy sources. With nuclear fission as an energy source in the medium term we can perfect solar and fusion.

Now, maybe solar will reach grid parity in 5-10 years. First Solar forecasts another halving of photovoltaics prices and much improved efficiencies for their lower cost thin films. The polysilicon PV providers can't be counted out yet in the cost cutting race.

bobby b,

Oil is a very expensive source of BTUs and has been mostly phased out in the US as an electricity generation source in favor of coal, natural gas, and nuclear.


Yes, wind turbine farms have to be backed up with peaking electric power generators - mostly powered by natural gas. Subsidized wind tends to displace nuclear and coal and increase the demand for dispatchable natural gas. Since these natural gas generators are not operated all the time they get less invested in efficiency of equipment. So natural gas for electric generation surges when the wind doesn't blow tends to be less efficient.

Randall Parker said at July 27, 2009 6:48 PM:


I remember in the comments section of a previous post I did on wind reliability your comments about wind unreliability in California with good links about this problem.

Wind increases the amount of money that has to be spent on peaking generators. Some people think wind will just cause a coal electric plant to be shut down more of the time. But the baseload electric power plants do not have fast start-up times. To compensate for wind variability you need more quick surge capacity.

Smart meters can help vary demand some. But smart meters aren't good at shifting demand many hours or days. Wind requires more demand shifting than smart meters can deliver. So with more wind we end up needing more surge capacity driven mostly by natural gas. That adds costs. I'm still looking for good analyses on those costs.

inspectorudy said at July 27, 2009 7:48 PM:

What we need are large and I mean large capacitors that can collect the wind/solar energy and store it for peak periods. In the mean time wind/solar is a novelty because the old fashioned power producing equipment must be maintained and fueled to back calm/cloudy days. This cost has to be factored into the wind/solar equation and that runs the cost way up. Nuclear power is the only thing that makes sense in the near future.

Rich Rostrom said at July 27, 2009 8:10 PM:

There's an obvious desirable energy alternative for Germany: natural gas. Russia has enormous reserves of natural gas, and would be highly reliable and low-cost supplier, with none of the problems of hostile geopolitics that oil imports cause. (Anybody believing the last part of that sentence, please contact me to make arrangements for collecting your Nigerian lottery winnings.)

Seriously, natural gas will be the fallback solution when windpower crashes and burns. It's "cleaner" than coal, has a short lead time, doesn't use dangerous nuclears, and is low-carbon. As a result, Germany will become critically dependent on the goodwill of the Putin dictatorship. Won't that be wonderful?

Jim said at July 27, 2009 9:24 PM:

Germany in few years will begin to built nuclear plants to produce electricity. Wind is very expensive and unreliable.
Germany industry needs cheap electricity to compete in world economy and German households will pay less monthly for their electricity. When a German leader explains the saving to the people he or she will be elected.

Chris M said at July 28, 2009 4:34 AM:

Here in Australia we are paying around $0.19 to $0.21 per KwH for regular coal fired non-greenie electricity. You folk in the USA don't realise how good you have it.... we being fleeced.

Patrick said at July 28, 2009 5:07 AM:

This article is pretty much BS. As several comments noted, comparing energy rates between Germany and the U.S. is meaningless. Wind power has its flaws, but there is certainly a place for it in the 21st century along with coal, nuclear and solar.

The Danes have invested heavily in it, and I believe they are generally very happy with it; of course Denmark is almost perfectly suitated to take advantage of it because Denmark sits between two large bodies of water: The North sea and the Baltic, each at different temperatures, so they are guaranteed a constant breeze across their completely flat land mass.

Valerio Zazzeri said at July 28, 2009 9:27 AM:

@Rich Rostrom
... not speaking of Gerhard Schroder actual position in the board of Gazprom..... yes the same man that once cancellor had the power to decide to phase out nuclear in Germany (in favour of Putin's gas) now receive a salary from Gazprom.....
And if this is not enough read the wikipedia page on that "man".

Ahhhh here in Europe we are masters in doing self-damage to ourselves.....

(I Apologize for my English)


Francis Macnaughton said at July 28, 2009 1:35 PM:


Thanks for the historical perspective and I fully agree the point that we probably wouldn't be where we are now in terms of technology if we hadn't had these cheap and convenient energy sources. But they aren't going to last much longer and the current global population (let alone the projected population) can only survive if it has a substantial energy input. I suspect that things have been too late for anything other than a substantial nuclear contribution to keep the lights on and people fed.

I am no more an advocate of the perfect solution than you - not least because I don't think there is one anyway. The possible nuclear options that are mentioned sound promising in principle but didn't fast breeders offer similar promise a couple of decades ago? Also how long will it take to licence such developments for US or European use and how long would conventional fission supplies last if every country took this technology up? Finally, I don't think that we really know the true cost of nuclear power, not least because long term waste disposal method is still undefined here in UK. Given that, how can we be sure of the actual costs of nuclear power? These points all came from doing the UK Open University course on future energy which looks across all technologies and their possible contribution to future energy solutions. For all these reasons I hesitate to call nuclear a sustainable option, let alone cheap. Wind isn't perfect, but is fairly well understood, does repay its energy input to build, erect etc by a factor of over 20 in a reasonable site (oil is around 18) and is the cheapest large scale renewable - hence my original question!

Nick G said at July 28, 2009 4:44 PM:

It's awfully important to keep in mind that Germany doesn't really have a great wind resource. Their average turbine utilisation number is 18% - compare that to the US, which varies around 30%. Germany also gets less sun than the US, and yet they're pursuing solar very strongly. You have to give them credit: they've subsidized a lot of the R&D that will benefit the rest of the world. Of course, they've created an export industry (like Denmark). They're not so dumb.

Also, don't forget the European Green movement's anti-war history. The Green movement developed during the cold war, and was in large part a reaction to being the expected path of any Warsaw pact invasion, and the battleground of any US-USSR conflict. They cut their teeth on opposition to Neutron bombs, and other nuclear emplacements. So, I think that a very large part of nuclear opposition in Europe is really opposition to nuclear proliferation, and a desire to set an example for unstable countries contemplating nuclear power and the weapons that so often accompany them (e.g., Iran).

Randall Parker said at July 28, 2009 10:22 PM:

Francis Macnaughton,

I see nuclear materials disposal as more a political problem than a technical one. People who oppose nuclear power work to block development of disposal methods because they want the waste disposal problem there as an obstacle. Hence opposition to the development of disposal sites. There are plenty of underground places around the world that haven't changed in thousands or even tens of thousands of years.

New nuclear designs and future promise: If we really are in a pickle with declining reserves of oil (and I believe we are) then we owe it to ourselves to try a lot harder to develop newer and better nuclear reactor designs. But we do not need new designs in order to greatly increase the output of nuclear power plants. We could do a lot in the next 10 years with building new nukes if the sense of urgency was there.

My sense of it is that the urgency is not there yet. I think we need a couple more big oil price spikes and a couple of more recessions to drive home the lesson that the fossil fuels era won't last forever.

Conventional uranium supplies: We really need to develop thorium and U-238. If the U-238 design ideas can be made to work then the whole world could embrace nuclear fission on a massive scale. U-235, which current reactors burn, amounts to less than 1% of total natural uranium. So a way to burn U-238 would be a game changer.

Actual cost of nuclear power: Certainly Areva's performance in building the new Olkiluoto 3 reactor does not inspire confidence. But the $2.4 billion cost overrun has an upside: If that is all it ends up being it certainly puts a ceiling price on new nuclear reactor construction costs. My guess is that Areva won't do as badly next time.

I also haven't read of cost overruns in East Asian for new nukes like this nuke in Finland.

We have no cheap great option. Moving away from coal electric means we pay more.

Nick G said at July 28, 2009 11:59 PM:

Randall, old coal is cheap, but new coal is just as expensive as wind (or nuclear).

Nick G said at July 29, 2009 12:06 AM:

Also, the price of electricity doesn't matter very much. The price of oil matters because so much is imported: that kills trade balances, and hurts economies. Electricity is domestic, and so cheap for what you get in the US that a 50% cost increase wouldn't mean that much.

Nick G said at July 29, 2009 10:33 AM:

boosting the offshore tariff to 0.15/kWh (US $0.21/kWh).

You can't really convert using exchange rates: you have to use Purchasing Parity, which is likely about 1.1:1, rather than 1.4:1.

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