Germany Has a Math Problem, and It’s about to Get Worse
Dr. Sarah Lohmann is Non-Resident Fellow with the American Institute for Contemporary German Studies at Johns Hopkins University. Dr. Lohmann is an Acting Assistant Professor in the Henry M. Jackson School for International Studies and a Visiting Professor at the U.S. Army War College. Her current teaching and research focus is on cyber and energy security and NATO policy, and she is currently a co-lead for a NATO project on “Energy Security in an Era of Hybrid Warfare”. She joins the Jackson School from UW’s Communications Leadership faculty, where she teaches on emerging technology, big data and disinformation. Previously, she served as the Senior Cyber Fellow with the American Institute for Contemporary German Studies at Johns Hopkins University, where she managed projects which aimed to increase agreement between Germany and the United States on improving cybersecurity and creating cybernorms.
Starting in 2010, Dr. Lohmann served as a university instructor at the Universität der Bundeswehr in Munich, where she taught cybersecurity policy, international human rights, and political science. She achieved her doctorate in political science there in 2013, when she became a senior researcher working for the political science department.
Prior to her tenure at the Universität der Bundeswehr, Dr. Lohmann was a press spokeswoman for the U.S. Department of State for human rights as well as for the Bureau of Near Eastern Affairs (MEPI). Before her government service, she was a journalist and Fulbright scholar. She has been published in multiple books, including a handbook on digital transformation, Redesigning Organizations: Concepts for the Connected Society (Springer, 2020), and has written over a thousand articles in international press outlets.
What the numbers say about the energy landscape
In this traditional state of Bavaria where election banners offering defense of “Heimat” (Homeland) seized the day in the last election, the posters wedged between ancient church domes on cobblestone streets now tout pictures of wind farms and slogans like “New Energy,” “For a clean environment and honest politics,” and “Economics and climate without crisis.” And that’s not just the placards from the pro-environment Green party. The conservative Christian Social Union (CSU), which has ruled the state uninterrupted since 1957, is now making affordable climate neutrality and renewables expansion a key part of its election platform.
While the Christian Democrats and their Bavarian sister party the CSU seem to be borrowing a page from the Greens’ election playbook, the focus on how to make green energy affordable is not a surprise in a country with the highest retail electricity prices in Europe. In fact, the median household pays 43 percent more than the average paid on power bills in 27 other countries in the European Union, thanks to taxes and fees that make up 50 percent of the tab, and that are supposed to pay for the transition to renewables. Germany paid a record $38 billion for green electricity last year, passing the tab for the green energy subsidy directly on to consumers. These prices are set to increase through 2023, even as there will not be enough energy to meet demand.
Unfortunately, in its passion to lead the pack, Germany didn’t quite do its math. It has not created nearly enough renewable energy to replace the nuclear and coal that it is determined to phase out. When the last of the nuclear reactors is turned off next year, there will likely be a shortage of 4.5 gigawatts, or the equivalent of what 10 large coal-fired power plants would provide. This leaves Germany at risk of grid black outs from 2022 to 2025, according to a German federal audit earlier this year. The audit said over $600 billion would be needed through 2025 to maintain a stable grid and warned that the “energy transition will endanger Germany as a business location.”
Why would Germany choose this route when other Paris Climate Accord signatories like France, the United Kingdom, and the United States see nuclear energy as part of the environmental solution, not the problem? Turning off nuclear power too soon was a political gamble from the beginning. Chancellor Merkel had argued shortly before the nuclear disaster in Fukushima that turning off nuclear reactors, which don’t emit carbon dioxide, would be nonsensical. Three days after the 2011 catastrophe, and under extreme political pressure from an emotional public concerned that such a nuclear disaster could happen in Germany, she declared an “Energiewende” or energy revolution. The German nuclear reactors whose operating time she had just lengthened would be taken off-line by 2022 at the latest, she said. Two weeks later, Governor Stefan Mappus, a fellow party member who did not tow the new party line, was badly beaten in conservative Baden-Württemberg by the Greens over his defense of nuclear energy, and the party took note.
While Germany’s population and economy have expanded, and its power consumption has hardly fallen over the last decade, there will be 23 gigawatts less nuclear power capacity and 13.9 GW less from coal by the end of next year due to the energy transition. This is taking place at a time when the Greens, who have made renewable energy a leading campaign issue, could be part of the next governing coalition if their strong numbers continue through election day. Today, the Greens are tied in the polls for second place at 19 percent with the Social Democrats, just 6 points behind the CDU/CSU. With this historically strong showing, the Greens could have strong policy making power in any coalition.
What Germany’s Bad Math Means for Energy Security
So where is Europe’s strongest economy headed on energy policy? There are three main problems with Germany’s current course in its energy transition: 1. Renewable energy sources have not produced enough energy to close the gap left by nuclear and coal leaving the market. 2. The energy shortfall is causing an unstable grid and 3. Even as Germany aims to become more energy independent by producing renewables, it is still too dependent on other nations to supply its other energy sources. The Greens, who are committed to the nuclear phaseout and to getting rid of coal faster than the 2038 deadline set by Merkel’s government, will not be able to change that. But the CDU/CSU, which is committed to making the green transition more affordable and the country less energy dependent, has yet to come up with a workable interim solution.
The Renewables Dilemma
With all of Germany’s technological innovation, and with a chancellor who is a physicist by training, how could it come to such shortfalls? It is certainly not for a lack of will. Germany is leading Europe in cutting greenhouse gases as it strives to keep up with its commitments to the Paris Climate Agreement. It has set a goal of being greenhouse gas neutral by 2045. Germany has targeted cutting gas emissions by 65 percent by 2030 from 1990 levels – 10 percent higher than what the EU considers legally binding as part of the Green Deal – and enshrined this in their national climate law passed in 2019. Currently, they are ahead of their goal, with emissions 40.8 percent below 1990 levels. Germany is leading Europe in its renewable energy generation, with 45 percent of its electricity coming from renewables in 2020. In 2020,
So, with all that progress, where is the rub? The pandemic-induced emissions declines are not set to continue. Emissions from electricity generation were up 25 percent in the first half of 2021, while coal power plant emissions were up 36 percent and those from gas power plants increased 15 percent. And just because a country has built a lot of wind farms and solar panels, does not mean there will be enough wind and sun to make up for the investment. With wind power production down 25 percent in the first half of 2021, and little sunlight charging solar panels in the same period, renewables are not having the impact hoped for. So, with an already large energy gap to fill, Germany’s renewables energy output fell over 8 percent in the first half of 2021. Coal’s energy generation increased by 35.6 percent over last year as bad weather increased demand and the nuclear energy phaseout continued. Even Chancellor Merkel has had to admit two months before the end of her term that Germany is not the leader in stable green energy and climate policy that she wanted it to be at this point.
So, should Germany keep building wind farms and solar panels in the hope that there will be more sunshine and stable wind next season? There is in fact another option, but it will not be able to close the gap overnight. Bioenergy—the use of recently living organisms like waste from wood, crops, and households to produce heat, electricity and fuel—made up 52 percent of renewable energy last year (33 percent for heating, 8 percent for transport and 11percent for electricity). Until now, Germany has tapped into bioenergy mainly as a fallback option, letting it pick up the slack when there hasn’t been enough wind. In addition, an EU-funded study has warned that bioenergy should be focused on aviation and heating so that demand does not outpace supply. But without the weather constraints of solar and wind renewables and without the same land use constraints as hydropower, a focus on increasing the conversion of waste to energy, albeit in the appropriate sectors, could help Germany start to close the gap toward the end of the decade.
Germany’s Unstable Grid
In the near term though, with 12 percent of Germany’s electricity supply coming from nuclear power, and the last nuclear plant to be taken offline next year, the drastic shortfall still leaves Germany with an unstable grid. So, with Germany’s grid at risk for blackouts for the next four years, Germany is turning to digitizing energy efficiency to make power use more efficient. One such development is the SmartGrid, which allows an electricity network to send data and energy in two directions, connecting the power supply to the consumer and allowing electricity flows to alter according to demand. While Germany makes the transition to Smart Grids to optimize its renewable energy infrastructure, it needs to keep in mind that the Internet of Things ¬– the sensors, software, and other connecting technology that allow homes and cities control energy outputs – adds a layer of vulnerabilities to its critical infrastructure. The plug and play concept of the SmartGrid allows diverse actors, including malicious hackers, to become more interactive with the energy supply, if it does not have the proper cybersecurity protections built in from day one. Any error here could make an already unstable grid even more prone to blackouts.
Energy is also made more efficient by Industrial Control Systems (ICS), embedded cyber devices that control physical processes such as generating and distributing renewable power. Like SmartGrids, ICS’ efficiency must be weighed with the cyber vulnerabilities it introduces. The energy sector is the most vulnerable to cyberattacks on ICS of any sector. Cyberattacks on ICS are not just done for espionage purposes, they can cause physical damage and compromise the ICS itself. Germany should know. It has been a testing ground for Kremlin-backed Berserk Bear’s malicious cyber activities, from attacking a number of energy companies and attempting to intrude on Germany’s grid in 2017, to its long-term efforts to compromise the supply chain of critical infrastructure such as energy, water, and power sectors up to the present time. It will continue to be crucial that both the government and private companies servicing critical infrastructure are integrating cybersecurity into the innovation transforming the energy sector, especially in a time where the grid is already unstable due to lack of supply. As Germany launches into its digitized energy future, there is an urgent need for both investment and education in upholding cybersecurity standards across the supply chain. As it is now, the public will be footing the additional bill of $99.77 billion through 2030 in grid fees for network investment.
The Geopolitical Risks to Germany’s Energy Dependence
The CDU/CSU wants to make sure that the energy transition is affordable for the public, and the Greens want to ensure that energy solutions are environmentally friendly, but neither have adequately addressed Germany’s energy dependence. Germany will need to import energy produced in nuclear plants in France, Belgium, and the Netherlands to make up for the closing of its own, basically just shifting the nuclear waste challenges somewhere else. Already in January 2007, a Deutsche Bank report warned Germany that closing down its nuclear plants would cause a drastic increase in emissions, higher electricity prices, increased blackouts, and force a dependence on gas imports from Russia to make up for the energy gap. In 2021, the results are in. Germany has the highest electricity prices in Europe, and this is only set to increase this decade. By 2025, Germany will have spent $580 billion in renewables investment. But despite that, its electricity production is 10 times more carbon emissions intensive and twice as expensive as France, which has decided to keep nuclear energy.
And in addition to relying on its neighbors for nuclear energy, it turns out it is relying on Russia for gas as predicted. Overall, Germany has a 68 percent energy import dependency, with 94 percent of its gas needs met by imports. The July agreement by Chancellor Merkel and President Biden to allow the Nord Stream 2 gas pipeline from Russia to Germany to be completed is not only having an impact on transatlantic relations now, but also it could affect the balance of power within Europe in the future.
The Greens argue that the Nord Stream 2 deal is not only bad for the environment, but also for Europe’s security and economy. Greens leader Annalena Baerbock, who is hoping to win the chancellorship next month, has maintained a hard line on stopping Russia’s pipeline both due to the environmental impacts and geopolitical ramifications for Europe. Similarly, U.S. Senate Foreign Affairs Committee Chairman Menendez was joined by the Foreign Affairs Committee Chairmen of Estonia, the Czech Republic, Ireland, Latvia, Poland, Ukraine, the United Kingdom, and Lithuania in condemning the deal and saying this provided Russia with a tool to “pressure and blackmail” Ukraine. Sen. Menendez and his European counterparts warned that the deal “will strengthen the impact of Russian gas in the European energy mix, endanger the national security of EU member states and the United States, and threaten the already precarious security and sovereignty of Ukraine.” They called for future diplomacy to include the “transatlantic family” and to adhere to the concept of “countering malign Russian aggression” for the protection of the national security of the Central and Eastern European countries and NATO as a whole.
In the end, it is European institutions that will have to make the final decision on what happens with Gazprom. Gas can’t flow through the pipeline unless Russia complies with EU law, which mandates that Gazprom cannot both provide the gas and control the pipeline. So far, it isn’t looking good for Russia. On August 25, Germany’s Dusseldorf Higher Regional Court ruled that the Nord Stream 2 gas pipeline is not exempt from these rules. The European Court of Justice already ruled last month in favor of Poland in Germany v. Poland (OPAL), arguing that Russia couldn’t have 100 percent of the Opal pipeline’s capacity because energy solidarity enshrined in EU law is indeed a legal principle, not just a political one. This means that energy suppliers cannot threaten the energy networks and supply throughout the EU. Poland had argued that in this case the safe delivery of gas to Eastern Europe was threatened. While Nord Stream 2 runs off the coast of Estonia, Latvia, Lithuania and Poland, the countries are still concerned not only about competition and supply, but also that Russia will use its presence there to gain military and geopolitical power. With Gazprom wanting 100 percent of capacity on the new pipeline as well, the ECJ is not likely to rule differently on Nord Stream 2 than it did on the Opal pipeline.
After inclement weather in the winter months and the two quarters when Russia has dialed back its gas delivery, the gas reserves in Germany, Austria, and the Czech Republic are down to 51, 36, and 57 percent, as compared to 89, 87, and 89 percent last year. With those reserves urgently needing to be refilled by fall, European countries serviced by Russia and via Germany are fearing a cold winter ahead. While current cuts in delivery from Russia via the Yamal-Europe pipeline, halved in the beginning of August, and down 40 percent on August 11 alone, are being attributed by Gazprom to a fire at one of its plants in Russia, Europeans are still worried that Russia is withholding supply and driving up prices in order to blackmail Germany and Europe into ensuring the opening of the pipeline. Statements by the Gazprom Export’s Director General Elena Burmistrova that additional demand would be met once Nord Stream 2 was commissioned have not helped.
Germany’s desire to go green is commendable, but its actions to phase out its own nuclear power, increase coal production and emissions, and increase its gas imports are not going to get Germany to its goal. At this point, the new German government will not have any easy choices to ensure that its citizens have enough electricity and heat to make it through the next four winters while meeting its green energy targets. It could delay shutting off the last of its nuclear reactors while increasing bioenergy, though the former would be challenging legislatively. If it decides to continue with shutting down the last of its nuclear plants, it will need to increase coal consumption and nuclear and gas imports to have enough energy to fill demand, creating uncomfortable dependencies and missing its green energy targets. If the new German government continues the current course anyway, it can expect to pay the price for its energy unilateralism in Brussels. At home, it can expect the cost of its expensive and inconsistent green energy policy to result in grid blackouts and citizens’ unrest in the streets. Germany’s energy revolution is becoming an energy crisis.