How to speed up the energy market transformation

Interview with energy expert Peter Röttgen

energy expert Mr. Peter Röttgen
© Fortum

Peter Röttgen, a PhD geologist, was once the head of the E.ON Energy Storage Innovation Center in Düsseldorf. He then became president of the Brussels-based European Association for Storage of Energy and remained in that role for many years. From August 2017 to early 2019, he led German renewable energy federation BEE before he left to work at Finnish energy supplier Fortum’s German office as vice president of public affairs. In March, Fortum became Uniper’s majority shareholder.

Chemours

H2-international: Mr. Röttgen, when you left BEE a bit over a year ago, you said you will be keeping an eye on the industry. What is your current take on the sector now that you are an ‘outsider’?

Röttgen: Sadly, in my view – and I am, of course, still advocating an increase in clean energy capacity – progress has been very slow. The wind energy industry in particular has experienced a painful drop in annual capacity additions. Growing divisions between clean energy supporters and opponents make it hard on policymakers to commit themselves to anything. Today, the issue is no longer if renewable electricity costs too much. Attention is currently shifting to how we can get people to accept clean technology. Spatial planning instruments give us an opportunity to address the concerns they might have and work out a compromise. And besides encouraging more interest in climate action, we need to support enthusiasm for renewables and the innovations they spawn.

HOW

That sounds optimistic. Covid-19 has presented us with new challenges. Do you somehow see the current crisis as a chance to advance the transformation of Germany’s energy market?

The current pandemic is first of all a global human tragedy that fills me with great sadness. Nevertheless, it also highlights issues that are usually difficult to detect but which, if unchecked, could have dramatic consequences. Applying this train of thought to the global warming debate, we must acknowledge that climate change is real and that we need to act soon. What we could reasonably do to address the problem is to transform our energy system – in all sectors. Here is hoping that the Covid-19 experience will lead to a better understanding of climate issues and that we will be able to implement some projects earlier than planned. As an example, the German government’s stimulus package provides financial incentives for investing in clean transportation and building a hydrogen infrastructure. This could very well speed up the transformation.

The government long wanted to eliminate the German clean energy law’s solar cap, which stipulated the stop of incentives at 52 gigawatts of PV capacity. Why did it take the government so much time to remove that provision?

There are fault lines between and within political parties. PV opponents still remember how much money was spent on incentivizing the technology. That is no longer true, though – the prices for PV equipment have tumbled by 90 percent since then. To be frank, tying the solar cap to wind energy setback rules was certainly not a well thought-out move. But that is part of politics, negotiating a compromise. Regardless, the cap is now history thanks to the cabinet-approved stimulus package.

How high do you think the carbon price should go if it is to have a noticeable impact on emissions?

In its road map, the German government tried to find a middle ground between basically not introducing a price at all and setting one that should have been higher if we want to reverse course rapidly. The starting price seems acceptable in light of what was politically possible, not to mention that it has since been revised upward. We will soon get a first glimpse of its impact on the market – when we need to decide what technology we want to rely on to meet future energy needs. However, the government needs to monitor the market and adjust the amount should its clean energy targets be in jeopardy. On a positive note, the price will apply across all relevant economic sectors. The same now needs to happen across the EU. A Union-wide carbon price could help us tremendously in fighting climate change and guaranteeing fair competition. Besides, I hope that in the second half of this year, the German EU council presidency can give some fresh impetus to the sector and that the entire Green Deal will move ahead quickly.

Your company, Fortum, now owns nearly 70 percent of Uniper [an E.ON spin-off], making it the energy provider’s majority shareholder. Just recently, Uniper started up a coal power station named Datteln 4 in the state of North Rhine-Westphalia despite the German government’s planned exit from the coal industry. What future do you see for that kind of power generation in Germany?

Your question ties in with the debate about emissions from coal power plants. Coal-fired electricity generation, especially without carbon capture and storage, stands in stark contrast to climate targets and the transition to a cleaner energy market. However, it would be wrong to point the finger squarely at coal producers and denigrate entire groups of factory employees. The work they do was invaluable and to the benefit of all of society for many years. But the situation has changed. German coal power production no longer has a future, and that will lead to transformative change.

How will you achieve this transformation?

First of all, there is the European Emissions Trading System, which will limit emission allowances gradually. That system is not in dispute among EU members. Even before the Covid-19 outbreak, from 2018 to 2019, the amount of energy produced from coal had fallen significantly, according to Agora Energiewende, the main reason being the rising carbon price. The price boosted both low-emission natural gas and zero-emission renewable sources, leading to a 12 percent reduction in emissions.

Seems like clear statements and hard facts to me.

Röttgen: Indeed. The German Coal Commission has advocated exiting the coal sector by 2038 at the latest, and the government is seeing to that. Operators of coal power stations have now been tasked with transforming their business. This means they need to forget about using conventional equipment and start looking at alternative energy generation methods that are socially, legally, technologically and, last but not least, financially viable. Current coal power plants have to be shut down in a way that guarantees their replacement by inexpensive but reliable and eco-friendly production methods. Things may get difficult, though the goal remains achievable.

Finnish company Wärtsilä believes Covid-19 could speed up the energy market transformation by providing more opportunities for electrification. Do you think so as well?

… Read more in the latest edition of the H2-International October 2020

Interviewed by Niels H. Petersen

Leave a Reply