“Our goal used to be climate protection”

Interviewed by Jörg-Rainer Zimmermann, 20 Jun 13
Until last year Matthias Kurth headed the Federal Network Agency, where he was responsible for speeding up the expansion of the German grid. He has remained in the network sector: several months ago, he was appointed executive chairman of the Cable Europe trade association in Brussels. As a lawyer, he continues to advise clients in the energy sector. He was recently awarded the Officer’s Cross of the Order of Merit of the Federal Republic of Germany for his work, including his services to the country’s switch to renewables.

new energy: In many areas, the switch to renewables is not progressing at the necessary pace. In your opinion, what is the problem?

Matthias Kurth: There are so many stakeholders involved in the debate. And it’s not just the political parties – the federal states are also getting involved in the discussion. Every minister-president wants to come off best from the expansion of renewable energies, the Renewable Energy Sources Act surcharge, the grid charges and so on. The sector is becoming more and more politicised, which is making it increasingly difficult to establish good, stringent planning. And, of course, swift decisions do not tend to be made in the run-up to a general election.

ne: How would you sum up Peter Altmaier’s first year as federal minister for the environment?

Kurth: Mr Altmaier has certainly always managed to lend the discussion new impetus, although I don’t want to evaluate specific measures. With the “electricity price brake” concept he really caught his sparring partner on the wrong foot – and we shouldn’t believe that such a move was made without the agreement of Chancellor Merkel. However, it was also surely clear to him that not much would be done in terms of key issues from a cross-party perspective. The question is whether we will see a change after the election. But it is also worth noting that discussions on the expansion of renewables can hardly be predicted correctly by a parliamentary conciliation committee – something that has already been proved with photovoltaics (PV).

ne: Does the PV sector not represent a complete policy failure?

Kurth: It was clear that the solar industry would experience surplus capacities and that its technological development would not remain in Germany. That is the uncomfortable truth. Of course, people always enjoy a bit of China-bashing. However, it’s not as if China produces any old tat.  Now Bosch and Siemens are exiting the PV sector – these are companies that have lost hundreds of millions of euros and see no future for PV production in Germany. We should not ignore this. And of course you can also argue that it makes no difference in the switch to renewables where the modules actually come from. In fact, a fall in panel prices would allow for the international division of labour, resulting in less need for domestic solar funding. It will make no difference to German technicians where the modules they install on roofs are produced. And people are saying that panels used by households to generate their own electricity will soon break even. I strongly believe, however, that the wind sector must be treated differently, simply because in this country we can produce a much greater amount of electricity and a more constant supply with wind.

ne: Basically you are referring to the cost of switching to renewables. However, many experts point out that this topic is not being debated seriously at the federal level.

Kurth: Well, are politicians always serious? And particularly during an election campaign? I can’t answer that (laughs). There are, of course, many variables associated with long-term scenarios. For example, take the claim that the price of fossil fuels is going to explode soon. If you factor in the impact of shale gas – which wasn’t taken into consideration for a long time – then I really don’t know whether this is still true. In the US, the drop in the price of gas has resulted in all other types of power plants now being unprofitable. I am sure that all of a sudden we are going to see the scenarios for global gas reserves extended by 20 or 30 years. A hugely catastrophic consequence of this will be that in America, coal will be replaced by the cheaper alternative of gas. And where will the coal go? To Europe. One of our goals, if you recall, used to be climate protection (smiles). So now renewables are not replacing nuclear power – coal is.  And the result – which is also due to the price of carbon emission certificates – is that we can basically just throw our climate targets out the window. This is the reality that we are slowly facing up to. Long-term scenarios remain difficult. Either way, an installation boom caused by last-minute panic in the face of upcoming legal amendments is never a good thing, because grid expansion is actually advancing very slowly due to the lengthy planning processes. At the same time, we have actually seen improvements due to the Grid Expansion Acceleration Act and the current concentration of responsibilities at the federal level. This used to be the responsibility of the individual federal states, which ended up slowing down the process.

ne: But lawyers are still arguing about whether it is even constitutional for the Federal Network Agency to take on these new tasks.

Kurth: In my opinion, the decisive factor is that legislators are concluding the Federal Requirement Plan Act, which will provide the basis for further planning, and not just be some administrative act. German unification – and the situation is comparable – prompted the same kind of requirement plan acts. The Federal Network Agency is taking responsibility for the planning with the approval of the federal states. As such, it is pretty unlikely that this development will be found to be unconstitutional. And, at the end of the day, the relevant courts are aware that there is an urgent need to drive forward transmission-line planning if the switch to renewables is to succeed. I'll just say that at present only a fairly low number of wind turbines are having to be taken temporarily offline, but this practice will certainly increase in the future, especially as it will take another ten or 15 years to develop solutions such as capacity management and smart metering. We have our expectations all wrong – after all, mobile phones were around for 20 years before smart phones appeared on the market.

ne: What do you think about Altmaier complaining that the Renewable Energy Sources Act surcharge could rise from EUR 0.053 to EUR 0.07, while the Federal Ministry of Economics and Technology is blocking price increases on carbon emission certificates in Brussels, which would cause a decrease in the surcharge in Germany?

Kurth: It’s always been the case that the Federal Government has not acted entirely consistently. And it makes no secret of it either.

ne: So has the chancellor, the former champion of the switch to renewables, allowed the Free Democratic Party (FDP) to put a stop to her plans?

Kurth: The FDP wants the market economy to play a greater role and so it makes sense for them to counter any interference – otherwise you would have a planned economy. But then again, the parties often contradict themselves. After all, there was also a decision that can force energy suppliers to keep power plants online in the future in order to prevent electricity black-outs. There are no two ways about it – that’s a planned economy. But at the heart of all this, there remains the question of how we achieve sensible feed-in tariffs, given the many variables that will have an impact in the long term. Everyone is thinking too much about their own position here. They’re just trying to preserve the status quo.

ne: You could certainly say that for all the special regulations too.

Kurth: You only have to look at industry privileges such as the exemptions from grid charges and the Renewable Energy Sources Act surcharge. I said early on that it was all too much and that any exemptions had to be justified with real cost reductions. That didn’t just make me any friends in Berlin, as the prevailing opinion there was the fewer restrictions on industry, the better. Now people are starting to backpedal on that, saying that there should not be any privileges for businesses that cannot leave Germany. Ironically, Deutsche Bahn, Germany’s railway operator, will be most affected by this, and it just increases ticket prices when the company has to pay more for electricity. The discussion has been shifted to a sort of shunting yard level, where the burden on the public is not really reduced. In fact, the public has to pay higher ticket prices for only a minimal increase in electricity prices. Anyone wanting to put an end to this zero-sum game must finally tackle the basic flaws in the system. In addition, hardly anyone – not even at the Federal Network Agency – has an overview of this complex mass of regulations with all their exemptions and special cases.

ne: You have called for better energy-policy coordination at the European level. That seems to be an urgent necessity, given the disaster with carbon emission certificates.

Kurth: Action is certainly needed at the European level, but the situation there is similar to the one in Germany. The EU Parliament elections will take place in a year’s time and that means any initiative will have to get off the ground before the summer recess if it is to have any chance of success. Any later than that and no one will dare to make a decision. Then there will be a new European Commission. It’s a tricky situation.

ne: So what has to happen for the system to change?

Kurth: In my opinion, the funding system needs to be adjusted to reflect the changing significance of renewable energies. Solar, wind and other renewable technologies are no longer a niche sector; they are shaping the German electricity market. The regulations currently in place are no longer suitable, and that applies as much to funding policy as it does to grid integration. Coordination needs to be dramatically improved. All the tinkering with the Renewable Energy Sources Act and exemptions has only led to us pushing forward installations in an uncoordinated way. There are no solutions in sight for achieving synchronisation with intelligent solutions, grid expansion and site planning. Not addressing these issues is at best expensive and at worst dangerous. In addition, we have lost time that we could have spent funding underdeveloped technologies, such as power-to-gas. When this becomes more affordable in ten or 15 years’ time, it will be the only storage solution we have that is consistent with the concept behind the switch to renewables – quite simply because the gas grid is already there. If someone had said early on that a lack of storage facilities would be an Achilles’ heel of the switch to renewables, the government would have had to allocate the necessary funding. The situation is much the same with smart meters and smart grids. But it will be a long time before all that is effectively incorporated into the system.

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