Should Catalonia design energy policies looking more at France and less at Germany?
14/05/2021
The EU’s “European Green Deal” did set the very ambitious goal of having Europe become the worlds’ first climate-neutral continent by 2050. The roadmap includes a reduction by 40% of all greenhouse emissions by 2030 as compared to 2019 levels. Hereby, different batteries of policies with strong implications in all sectors of the economy were designed and presented. These include: promoting a circular economy and circular industrial policies, the decarbonization of energy-intensive industries, energy-efficient construction and building renovation, sustainable food production, and sustainable and smart mobility, among others. With respect to energy policy, the major pillars of the European Green Deal are: prioritizing energy efficiency, developing a power sector based largely on renewable resources, securing an affordable EU energy supply, and having a fully integrated, interconnected, and digitalized EU energy market.
As it often happens in European politics, Germany and France determine to a large extent the specifics of how EU’s projects and directives occur in practice. As two of the largest EU countries constituting the Union’s economic, historic and geographic heart, both countries advance in their energy strategies in line with the EU 2030 commitments, envisaging a significant increase in installed renewable wind and solar capacities. Nevertheless, both countries start from very different scenarios and follow diverse paths.
The decarbonization pioneer
Germany, being with its more than 83 million inhabitants the largest EU country in population and also the uncontested European economic powerhouse, is largely perceived as the world’s decarbonization pioneer. Its current energy strategy bets heavily on renewable sources, and in 2011, still under the shock of the Fukushima nuclear disaster, an overwhelming majority of the German Bundestag voted to recover its plan to phase-out of nuclear energy sources until 2022.
Currently, Germany generates about 41% of its electricity from fossil fuels, 12% from nuclear sources, and 45% from renewable sources, with onshore wind being by far the most significant renewable technology. However, in spite of the already large share of renewables in their energy mix, if Germany wants to comply with its climate goals for the year 2030, it still should reduce its electricity generation from fossil fuels down to 50% of current values and, without nuclear technologies, it should increase until 2030 its electricity generation from renewable sources still by 60% of its current capacity. These achievements would grant Germany just a nominal neutral electricity import/export balance with respect to its neighboring countries. An even more ambitious goal of increasing renewables presence by 65% would be envisaged in order to guarantee Germany’s virtual energy independence. As a reference, Germany is today one of the world’s largest importers of gas, coal, and oil.
Share of energy sources in gross German power production in 2020. Source: Germany’s energy consumption and power mix in charts. Clean Energy Wire. December 2020.
Thus, the implications of German energetic goals are to replace about 64 TWh of current nuclear power with other technologies, reduce generation from fossil fuels by about 115 TWh and, therefore, increase renewable generation by about 150 to 160 TWh until 2030, which is approximately equal to doubling the entire currently existing German wind onshore and solar generation, and, for reference, corresponds to approximately all the electricity generated by Ukraine or Norway in an entire year. Probably more if electricity demand continues to increase. Not to mention the enormous legal, financial and logistic challenges that come with it. No humble goals as we can see.
Haste makes waste
Meanwhile, France stands currently at a very different starting scenario. With over 70% of its electricity generated from nuclear sources, France does not have to worry so much about complying with CO2 emission targets. Instead, now that renewable technology prices are sinking dramatically, it seeks to slowly tend towards a higher share of renewables in its electric mix while diversifying its energy sources. Nevertheless, France still has several tens of nuclear power plants whose life span will allow them to stay online beyond 2030. France will not be phasing out of nuclear energy within the next few years. Its aim is to reduce dependency on nuclear power down to 50% by 2030. Nevertheless, the French government has already announced that this goal will not be met.
Electricity generation by source in France in the year 2017. Source: France’s Overall Energy Mix. Planete Energies. August 2018.
In order to best understand France’s strategy with respect to the energy transition, there is one relevant consideration. Currently, and in spite of sinking prices, one of the main technical bottlenecks in the implementation of a cleaner energy model is the lack of technological maturity regarding large-scale electricity storage. A huge effort is being currently invested into the research and development of mature and cheap energy storage technologies. These are needed because energy generation based on renewables is, on the one hand, unpredictable (due to the intermittent nature of the sources) and, more importantly, it does not usually match the electricity demand curve, since most of the electricity is demanded at night when the Sun does not shine. The main currently existing large-scale storage technologies (batteries, pumped hydro, and, to some extent, hydrogen) do not scale very well in their current state due to very high prices, scarce implementation resources, low conversion efficiencies, or combinations of the above.
Due to this reason, and while better storage technologies continue being developed, renewable generation capacity is mostly complemented with generation capacity that can be spontaneously activated on short notice when there is an electricity supply gap. This role cannot be played by nuclear power plants, as they are designed to play the role of baseload generators (very cheap electricity and constant output) and the cost of retrofitting them for flexible generation is huge, as we will discuss later. Flexibly complementing renewable generation is currently carried out mostly by so-called “peaking” or “peaker” plants, which mostly feature open-cycle or combined-cycle natural gas turbines. It is, therefore, worth mentioning that these plants, on the one hand, do emit CO2, and, on the other hand, the electricity they produce is expensive, as they are only switched on when demand is high.
Taking the above considerations into account, and from the security of already being a low CO2 emitter, France wants to proceed slowly with its energy transition, and it wants it for a number of reasons. First, France’s electricity generation from fossil fuels is about 10% of its energy mix, most of which (about 8%) is natural gas. Thus, its overall energy CO2 footprint cannot be reduced much further in light of the current technological constraints, as currently some share of gas peaker plants are needed. Moreover, as discussed above, since peaker plants produce expensive electricity, the side effect of increasing renewables in a nuclear-dominated mix is, in practice, to increase the total cost of electricity due to higher operating costs. In contrast, nuclear power plants present high construction upfront costs, but for high capacity factors, they produce one of the cheapest forms of electricity.
Second, also related to the shortcomings of the renewable energies discussed above, the introduction of a significant share of renewable energies in an energy mix absolutely dominated by nuclear introduces the requirement for nuclear plants to operate more flexibly, which increases operation costs of nuclear power plants exponentially with decreasing percentage of operation time. As an example, in 2030, a nuclear power plant operating at 75% capacity could present higher operation costs than the same energy produced in photovoltaic plants. From this scenario, if France doesn’t want to just give up on past investments made on its nuclear plants, it can be calculated that only a share of renewables of up to 40% makes so far economic sense for the French energy landscape. Anything beyond that would mean increasing total operation costs or rendering stranded assets. All for no improvement in CO2 emissions, since the share of natural gas cannot currently go completely away.
And last, but not least, by keeping most of its nuclear power plants online, France can further leverage its role as a major European electricity exporter, thereby partly financing its own energy transition, and offering cheap nuclear electricity to neighboring countries that struggle in meeting their emissions targets on fully-renewable strategies. It shall not be forgotten that France is the world’s largest net electricity exporter and currently generates about 3000M€ revenue every year by selling its nuclear over-capacity to its neighbors.
Due to the above reasons, France prefers to wait until nuclear power plants naturally run out of life span, waiting for more mature pan-European cross-border interconnections that allow it to sell more electricity and soften the effect of variable electricity generation, all while gaining time to replace decommissioned nuclear plants with more mature technology.
Planning like Germany, living like France?
In light of the two very different strategies to approach the energy transition shown by both Germany and France, Catalonia seems in the past years to have followed the former’s lead, while its current situation might actually be closer to the latter. Currently, approximately 50% of the electricity generated in Catalonia comes from nuclear sources, by far the highest nuclear share in the whole of Spain, while electricity from renewable sources amounts to approximately just 20%. Currently, although Catalonia has enough power generation installed capacity to cover for its energy needs, it does usually import between 8 and 15% of its electricity, mostly from the neighboring Spanish region of Aragon, in order to avoid generating that electricity with more expensive peaker plants that would negatively impact the total cost of electricity.
Energy production by source in Catalonia in the year 2018. Source: Balanç energètic de Catalunya 2017 i balanç elèctric 2018. Institut Català d‘Energia. June 2020 (Catalan)
Despite having an electricity mix closer to that of France, the Catalan Parliament did commit in the year 2017 through the “Climate Change Bill” to a complete phase-out of nuclear energy until the year 2027, covering for most of the decommissioned capacity with renewable sources, especially promoting self-consumption, local generation, and aiming to stabilize or lower electricity demand by means of energy efficiency measures. On the one hand, this policy aimed to follow the European Zeitgeist by which nuclear energy has become an old-fashioned and dangerous technology that, in light of recent advances in renewable technologies, is not needed anymore. On the other hand, self-consumption and local generation is seen by Catalan independentist policymakers as an energy model more centered in local small and medium businesses, and less bound by the interests of Madrid-controlled large energy corporations. This trend seems to continue since the recent last regional elections, where independentist parties have seen their parliament majority increased, and a majority of regional MPs belong to left-wing parties with clear anti-nuclear policies.
In a nutshell: In order to imitate the strategy that Germany has set in motion with respect to its coal industry, Catalonia aims to get rid ahead of time of the means of electricity generation that currently account more than 50% of the electricity generation, to cover all that demand exclusively with renewable sources, and still reduce its CO2 emissions without using nuclear. All of it within the next six to nine years. This means that, in the best-case scenario, and assuming a constant electricity demand until 2030, 90% of the electricity produced today in nuclear plants would be generated by renewable means, and the remaining 10% demand would arguably have to be covered with generation from peaker plants, thereby actually increasing the total CO2 emissions as compared to 2019 levels.
One possible alternative to that scenario, much as Germany aims for, could be to generate until 2030 an even higher share of renewable electricity, for example, 60%, so that the entire Catalan demand is covered by renewables, and sell the over-capacity to neighboring countries or regions. In spite of how even realistic could it be to transition from 20% to 60% renewables in just nine years or less, electricity demand from neighboring regions should be secured, and, as discussed above, France is not going to need Catalan electricity, and neither will Aragon, which is currently a net electricity provider for Catalonia. As it has been seen elsewhere, uncontrolled generation of renewable over-capacity can very much worsen the problem, like it is the case for California, whose erratic over-installation of renewable generation has led to a market of negative prices and forces it to pay the neighboring state of Nevada to take its excess electricity away.
One could argue that another option could be to store the renewables excess capacity in current technology batteries since they have become cheaper and weight or size do not matter for static applications anyway. Some countries, like Australia in the year 2016, have experimented with this option. They have been able to somewhat cover for episodes of peak demand, but still not profitably as compared to traditional gas peakers. The consultancy group Wood Mackenzie did carry out a performance and profitability study of this Australian project and came to the conclusion that, currently, the combination renewables+batteries is not competitive enough for displacing gas peakers. According to their study, the profitability of this combo is expected to surpass that of gas peakers the earliest by 2025, and replacement of baseload capacity with this strategy cannot be expected earlier than 2035.
Hydroelectricity as a generation and/or storage option for excess capacity also presents serious handicaps, since besides its environmental impact, most potential locations in developed countries are already exploited, and its room for further growth is, therefore, minor. „Pumped hydro“ (pumping water uphill with excess electricity and releasing the energy when needed) as a storage technology is one of the few contributions that hydro can still make to the energy transition in most developed countries. Nevertheless, not all plants can be retrofitted for playing that role, and for those in which it is possible huge costs must be counted with.
On the contrary, if it were decided only to generate with renewables that 90% that today is covered with nuclear, yet another possible alternative would be to import the remaining flexible 10% from elsewhere, which, as discussed above, is exactly the strategy that electricity exporters, like France, would like. Taking into account that Catalonia accounts for 18% of the Spanish electricity demand, importing 10% of Catalan electricity from France would mean increasing the overall Spanish demand by almost 2%. This increase in demand could actually hit the limits of the current electrical connection between Spain and France, which currently amounts to just 6% of the combined Spanish demand. Even though the EU’s goal of electrical interconnection between member states is of 10%, no project involving the increase in electrical connection between Catalonia and France is currently part of the EU’s Projects of Common Interest (PIC), and no important improvements in the electrical connection Catalonia-France can be expected until 2027 or even 2030. Even if the needed infrastructure would be there, this alternative would in practice mean to get rid of nuclear power plants for subsequently importing electricity from nuclear sources abroad.
Furthermore, and as discussed in the case of France, the rapid introduction of renewable energies in the energy mix carries further challenges with it. On the one hand, using renewables for replacing electricity from nuclear sources leads in practice (for the time being) to increased electricity prices and CO2 emissions. This scenario can be somewhat mitigated if a larger grid interconnection with neighboring countries can be provided (since a local supply gap could be covered by excess production coming from elsewhere), something over which Catalonia does not have control. On the other hand, using renewables for replacing the current 30% of more expensive fossil electricity generation can trigger the so-called “cannibalization” effect: as they incrementally replace more expensive technologies and the overall price of electricity gradually declines, so do the benefit margins of power plant contractors and the overall interest of the private sector in pursuing the energy transition. In the worst-case scenario, some share of the replacing renewable capacity would require government bonuses or some other form of taxpayer money. And even if that investment of public money would be carried out, the resulting situation would not comply with the goals of the Catalan Climate Change Bill.
We need all zero-emission technologies available
Of course, parallel to all of this, there is the more general discussion about to which extent the energy transition is at all possible without nuclear energy. The UN’s Intergovernmental Panel on Climate Change (IPCC) issued in 2018 its famous report “Global warming of 1.5°C”, commissioned by the governments involved in the 2015 Paris climate negotiations. In it, the IPCC explores four proposed pathways, based on different societal approaches and assumptions, all of which shall lead to a rise in average world temperature lower than 1.5°C with respect to the pre-industrial period by the year 2100. Interestingly, all the pathways envisage the need of an increase in the total nuclear installed capacity between 59 and 106% by the year 2030, and between 98 and 501% until the year 2050 as compared to the nuclear capacity installed in the year 2010 in order to reach the temperature target. In particular, the scenario that assumes the continuation of the current and historical social trends envisages a sixfold increase in energy production from nuclear sources in order to comply with the goal. Additionally, the IPCC analyses 85 different scientific scenarios that shall lead to an increase in temperature lower than 1.5°C, and the median value for nuclear generation more than doubles between 2020 and 2050, lying at an approximate 9% of the projected energy mix. As the energy expert and long-term European Commission staff Christopher Wingfield Jones stated in 2019, the European energy transition goals for 2030 will be difficult to attain without counting on nuclear.
Indeed, most of today’s operating nuclear power plants are designed and built with several decades-old technologies, and other, more mature, efficient, and secure nuclear technologies are going to be needed going forward (fast reactors, TWRs, generation IV reactors, breeder reactors, molten salt reactors, nuclear co-generation, thorium fuel cycles, AI-controlled processes for minimizing failure chance, etc.). World electricity demand increases fast, and nuclear fuel is the most energy-dense one we currently have, while it does not emit CO2. From an energy density point of view, phasing out of nuclear technologies for moving fully towards low-density energy farming is a step backward. Nuclear power generation produces waste, an issue which the aforementioned novel nuclear technologies are aiming to solve. However, decommissioned solar panels and wind turbines also generate significant amounts of waste, often hard or impossible to recycle, and the impact of renewable power plants on the environment (landscape, flora, and natural ecosystems) is as well dramatic, though seldom discussed.
Conclusions
In summary, in light of the current electricity generation mix in Catalonia, with approximately 50% nuclear, 20% renewables, and 30% fossil, to eliminate nuclear energy generation and to cover its demand entirely with renewables until 2027, and thereby even reduce the CO2 footprint looks like an unrealistic goal that can benefit from a thorough review. Catalonia currently lacks legislative as well as borrowing capacity or of political maneuver required for getting rid of 50% of its electricity production until 2027. All in all, the best strategy to accomplish the EU’s 2030 goals, or even the need for nuclear at all in the Catalan energetic transition might be debatable, but in light of the political, economic, social and technological landscape in the year 2016 (and now) it very much looks like Catalan policymakers did commit to an energy bill they either were insufficiently informed about, or they knew it could not be accomplished. Uninspiring either way.
The transition to a decentralized, renewables-based energy system does indeed have many and obvious advantages, and renewable and storage technologies are steadily maturing and rapidly sinking in price. Judging by current trends, they will eventually displace the current fossil generation technologies, arguably also nuclear in the medium run. Nevertheless, until that happens, Catalonia should reflect on its short-term strategy and try to focus on slowly deploying its renewables strategy, focused on local generation and self-consumption while finding the sweet spot between the two evils: On the one hand, replacing too much nuclear, and thereby raising the overall price of electricity and actually ending up increasing its CO2 emissions; and, on the other hand, replacing too much fossil technologies, so that renewable plants cannot cover their own installation costs in the free market due to cannibalization. Furthermore, Catalonia should avoid phasing out of nuclear for ending up having to import nuclear electricity from France. In the medium run, Catalonia will be in a better position to replace outdated technologies with more mature combinations of renewables and storage that can truly replace baseload generation, instead of deploying premature and still expensive technologies that, in the best-case scenario, can only cope with peak demand if at all.
Due to its large share of nuclear power, Catalonia currently enjoys a much lower CO2 emission rate per MWh than the Spanish average. It could take advantage of this situation and design a slower and more ordered energy transition that allows for recovery of past investments and helps to gain time until they can be replaced with more mature technologies and a larger electrical interconnection with its neighbors is available.
Daniel Moseguí holds a doctorate in Physics from the Technische Universität München. He has researched and worked in renewable energy, engineering, data software, and aviation technology.
The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of the CGI or its contributors. The designations employed in this publication and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the CGI concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers.
