E.On’s switch to renewables is a sign of things to come, say experts
Arthur Neslen, The Guardian, 2nd December 2014
German Federal Environment Agency chief and IEA director predict more firms to switch to renewable energy generation
Germany based energy giant E.ON has announced it is switching its focus to renewable energy, away from nuclear, coal and gas energy.
More companies are likely to follow the German utility giant E.ON and shift their energy generation away from coal and nuclear to renewable power, the president of Germany’s Federal Environment Agency (UBA) has told the Guardian.
E.ON’s surprise announcement on Monday, that it would split its operations to focus on clean energy, power grids and energy efficiency services, also increased the prospect of success for Germany’s ambitious Energiewende [Energy Transition] project, Maria Krautzberger said.
Asked whether she expected similar announcements by other German firms, she replied: “Yes I do. RWE announced that they are thinking of shifting their energy generation towards renewables and EnBW is also discussing it, but E.ON is actually the biggest player so it is consequent that they are the first to make this announcement.”
RWE last year announced plans to mothball some 3.1GW of fossil fuel plants, while EnBW said it would double planned asset sales to €3bn (£2.4bn) to free up cash for clean energy investments.
RWE yesterday clarified that it would not be splitting their core business in two, but both firms are struggling with falling demand created by a surge in home power generation from rooftop solar panels.
More importantly, the Energiewende transformation is reconfiguring Germany’s power generating capacity, with a nuclear phase-out planned by 2022 and a renewables roll-out that is slated to provide 35-40% of electricity by 2025, rising to 55-60% by 2035 and at least 80% by 2050.
E.ON’s move would be “a great influence on the Energiewende, making it more possible and probable,” Krautzberger said. “This is a structural change that gives you hope that our big approaches will have success. It is really something.”
About a quarter of Germany’s electricity currently comes from renewables compared to 6.2% in the US and 4.8% in France.
Maria van der Hoeven, the executive director of the International Energy Agency (IEA), said that E.ON’s renewables push was a sign of things to come.
“I think it is very encouraging that a big utility is changing course because when we look at the electricity pie, it is not growing,” she told the Guardian. “Demand is not growing in the EU and if you want to stay in business you have to do something about that. I think E.ON’s decision is a very interesting move.”
A former economics minister in the Netherlands, Van der Hoeven added that she favoured the company’s decision to split its power generation and supply networks.
“I did the unbundling in the Netherlands some years ago and I think it is very important,” she said. “It gives an opportunity to have better production of energy, and better distribution too,” she said.
Van der Hoeven was speaking as the IEA launched a report into the energy policies of the EU countries, which calls for urgent improvement in the bloc’s internal energy market, through market coupling and the integration of power networks, particularly in the continent’s south and east.
EU states should moderate their jealous prizing of national sovereignty where energy policy was concerned – particularly in the field of capacity mechanisms that guarantee the lights stay on – van der Hoeven said.
“In our view, capacity mechanisms are a last resort. You have to look at other instruments first and if you want to have them, then please not at a national level,” she said.
Over half of Europe’s ‘baseload capacity’ comes from nuclear or coal power and the IEA says that shifting that to renewables and gas will require pan-European balancing mechanisms to cover for windless and cloudy days, and a price signal to tip more investment into renewables.
Moves to reform the EU’s Emissions Trading System with a flexible mechanism that could elevate prices “should have started yesterday,” van der Hoeven said. “Let’s start getting the carbon price up to €30-40 a tonne. You have to encourage investments away from coal use and towards renewables with less subsidies, and without a CO2 price signal it won’t happen.”
“Everyone is talking about COP21 [the Paris climate summit in December 2015],” she added. “Wouldn’t that be a very nice moment to have some results to show?”