Towards a sustainable european energy policy: the role of alternative energy sources

Bachelor Thesis, 2007

47 Pages, Grade: 2,0


Table of contents

List of abbreviations

1 Introduction

2 The status and outlook of conventional energy generation
2.1 A general overview
2.2 Natural Gas as primary energy source
2.3 Brown and Hard Coal as primary energy source
2.4 Crude Oil as primary energy source
2.5 Uranium and Nuclear Power as primary energy source

3 Renewable energies and its potentials
3.1 A general overview
3.2 Water power as primary energy source
3.3 Wind power as primary energy source
3.4 Solar irradiation as primary energy source harnessed by phototvoltaic power plants
3.5 Solar irradiation as primary energy source harnessed by solar thermal power plants
3.6 Biomass as primary energy source
3.7 Geothermal power as primary energy source

4 Two alternative energy supply conceptions
4.1 The conception of the organic hydrogen economy
4.1.1 A general overview
4.1.2 The layout of the organic hydrogen economy
4.1.3 The realisation of a sufficient biomass production
4.1.4 The costs for the organic hydrogen economy
4.2 The DESERTEC conception
4.2.1 Solar energy out of the desert
4.2.2 The future European energy supply scenario

5 The role of supply guarantee
5.1 A general overview
5.2 The supply guarantee of renewable energies
5.3 The supply guarantee of conventional primary energy sources
5.4 The supply guarantee with regard to the two conceptions

6 The role of international relations and dependencies
6.1 A general overview
6.2 The example of the European Union’s natural gas relation to Russia

7 Summary and conclusion

Works cited



List of abbreviations

illustration not visible in this excerpt

1 Introduction

„Nach langem Streit beschloss die EU außerdem, den Anteil der erneuerbaren Energien am Verbrauch im selben Zeitraum von derzeit gut 6 auf 20 Prozent zu steigern. Allerdings dürfte es in diesem Punkt in der Zukunft noch zu harten Verhandlungen kommen.“[24]. Since it has been discussed controversial over years, this paper will examine the role and potential of renewable energies (REs) for a future energy mix or even a substitution of the conventional primary energy source (PES) in the EU with respect to four primary aspects. These are imbedded in the question, which PESs respectively which energy mix is the best solution for a long-term energy policy, regarding the highest possible supply guarantee and energetic independence the EU with a minimum of economic costs and negative environmental impacts. Apparently, these four aspects are often merging. For instance, the damage caused by negative environmental impacts partially leads to economical costs for removing them. Further, the dependence on imports of PESs may lead to an interrupted service, if an exporting country stops the consignment as a pressurising medium in negotiations.

The paper is based on the following three assumptions. First of all, the energy industry contains the large area of the generation of current and heat, as well as the fuel sector. The possible present and future drive concepts of vehicles contain current, hydrogen, biomass, crude oil or natural gas as operating power. Since these energy sources have been included within the consideration concerning current and heat generation, the fuel sector will not be observed further.

Second of all, the results regarding the current discussion about the greenhouse gas emissions and global warming in the media and science are controversial. Because of that, the greenhouse gas emissions of the PESs will not be weighted higher within the category of negative environmental impacts in the following analysis.

Third of all, concerning the consideration of the EU, the paper will not relate to several countries of it but will reference Germany. Since it is the country in the EU with the highest energy consumption, Germany seems to be a good benchmark[51]. The investigation of all sources has shown that, apart from regional special conditions, the observations can be presumed EU-wide on a bottom line. Moreover, with a continuously merging Europe it can be assumed, that within a large emerging energy market regional supply insufficiencies will be easily balanced by excesses of other areas.

This work will have a look at the following issues. First of all, the conventional generation of energy with its PESs such as crude oil, natural gas, brown and hard coal and uranium will be dealt with concerning their potentials and risks in the second chapter. Additionally, all groups of REs, as they are increasingly integrated in today's energy mix, will be analysed for their potential. These are biomass, geothermal power, wind and water power, as well as solar irradiation, which is used through solar thermal power and photovoltaics. Furthermore, there will be two concepts with unique selling point presented in chapter four. On the one hand, the organic hydrogen economy (OHE) conception of Karl-Heinz Tetzlaff who demonstrates, that a total supply with regenerative biomass based on biomass gasification to hydrogen is possible today even with huge cost advantages. On the other hand, the DESERTEC concept, which plans to import one sixth of the power, demanded until 2050 from Northern Africa generated by solar thermal power plants. Furthermore, aiming at an almost total energy supply by REs [42: p. 3]. Consecutively, the work goes into detail discussing the role of supply guarantee in the energy mix in chapter five and the role of international relations and dependencies concerning the import of PESs in chapter six. The work will afterwards, referring to the four aspects mentioned at the beginning, sum up if a general strategic decision can be made.

2 The status and outlook of conventional energy generation

2.1 A general overview

The determinant PESs at present are crude oil, natural gas, brown and hard coal and uranium. Whether they are up-to-date regarding supply guarantee and international independence will be observed in chapters 5 and 6.

Concerning the range of coverage of the reserves, the paper will not make further remarks because the sources at hand are giving to different information depending on what premises they are based. In addition, the intensity of the further rate of consumption and eventual new discoveries of each PES are difficult to estimate. Appendix one illustrates the problem through the oil price trend estimations over the decades, which are comparably hard to appraise. Every time the new results where quite different from the ones before in a way that the curve smoothened every time a bit more. Simplified one can assume that uncertainties with regard to the range of coverage exist and that the conventional PESs are limited within a foreseeable period because they are not renewable. This fact affects the price trend by leading to rising prices.

To consider how the conventional PESs could have reached the present significance, it needs to look on the financial aids for their development, which have been given by the government. The financial means of the EURATOM Supply Agency, which is responsible for the development of nuclear power, shall be increased by the EU to 3.1 bn EUR for the next five years, whereas the REs just get 0.4 bn EUR within seven years [11: p. 161]. According to a study of the European Environmental Agency, the following subventions have been granted within the EU-15 states in 2004. They were 13 bn EUR for the extraction of brown and hard coal, 8.7 bn EUR the production of crude oil and natural gas, 2.2 bn EUR for nuclear power and 5.3 bn EUR for REs[10].

Nevertheless, for instance, the specific investment costs of the conventional power plants do not show an economical advantage. They are about 1000 EUR per kW for coal power plants, 1700-2000 EUR for nuclear power plants but only 1000 EUR for wind power plants [19: p. 10]. Also no advantage despite of the high amounts of subventions can be seen in the still occurring external effects which are not properly monetarisable. Those are, for instance, the well-known negative environmental effects in the mining and energetic usage of the conventional PESs. In addition, expenses which are necessary in the present energy industry but not carried by the companies still occur, like the military costs to secure the supply with crude oil, for example. Appendix two illustrates the disproportion of the official costs of a kWh at the consumer with 0.15 EUR to real costs of 0.46 EUR including those expenses mentioned above which try to represent economic costs and burden, which the energy system is carrying with it. They are not found in the prime costs of each kWh because they are not yet internalised or not internalisable at all. Therefore, it is not possible to compare the prime costs of a kWh made out of conventional PESs properly with one made out of REs, which do not have these exceeding costs. This process of internalisation has started with respect to the CO2-emissions due to the introduction of the certificate system.

Until 2020, 40-45 GW of power plant capacity have to be modernised or even replaced which, nevertheless, shall be done with modern, more efficient coal power plants described in subsection 2.3. This is equal to one third of today’s power plant capacity [19: p. 8]. The focus is thereby on the increase of efficiency of power generation and the economisation of their usage afterwards. This can be seen in the decoupling of the economic growth from energy consumption. The consumption of PESs in Germany has just increased by 2 % in 2004 compared to the base year 1973, although the gross domestic product has increased enormously in the same time. Through improved insulation and modern heating systems, it has been possible to avoid an upsurge in energy consumption of the household sector [37: p. 333-334].

For heating purposes, oil and natural gas are used primarily, especially for generating high temperature process heat. Just a small proportion of about 12.4 % of total household heating comes from community heating [confer appendix 3]. This is because of the large-scale power plants often lying to far away from the cities and because of poor developed community pipe networks. So that, for example, even the near Leipzig situated brown coal power plant Lippendorf delivers only around 12 % of its total heat production for community heating[12].

A further difficulty, which the conventional energy industry is carrying because of the high investment costs of the centralised large-scale plants, is the oligopolisation of the market. The reason for that is the economic efficiency that can only be reached by those large-scale plants with the conventional PESs. The big four E.ON, EnBW AG, Vattenfall Europe and RWE AG provide, for instance, over 80 % of the total power plant capacity in Germany with additional shareholdings in public utility companies. The electricity network is also allotted amongst them [45: p. 12].

2.2 Natural Gas as primary energy source

Natural gas is said to be the bridge to the REs and is used besides the power generation to a large extend for heat generation. This is particularly because of it being the cleanest fossil PES emitting about 50% less CO2 compared to a coal power plant[38]. Additionally, natural gas power plants can be used excellently for the provision of reserve and regulatory capacity. Due to the fact that they are easily powered up and shut down and their 50 % smaller specific investment costs compared to coal power plants, they have not to be operated steadily [23: p. 6]. That is also due to their economy even with sizes under 100 MW, whereas coal and nuclear power plants need to be in the GW range [33: p. 206-207].

The euphoria concerning a future with a lot of natural gas power plants, needs to be contained. The United States Department of Energy foresaw in the summer of 2003 a future rise of the natural gas price in the USA of about 50 % until 2025. Today the price there is already 300 % of the one of summer 2003. The reason is found in many new natural gas power plants and the increased usage of natural gas in household heating. This could not be balanced by the ebbing natural gas fields and lead to bankruptcy of gas intensive industries or their migration to foreign countries. An economic crisis did arouse. One might conclude that the same scenario could occur when the same natural gas boom would happen in the EU [11: p. 59].

2.3 Brown and Hard Coal as primary energy source

The problems with the brown coal mining and electrification are commonly known. Thereby it is intensively made use of the environment and cultural goods are being destroyed by digging away whole villages. The result is wasteland, which needs to be recultivated [25: p. 55].

The power generation through coal has been discredited nowadays because it emits the highest amount of CO2 per kWh. This is why new technologies for the separation, gathering and caveation of CO2 are being discussed. However, they are not yet state-of-the-art. Besides, huge effort needs to be invested since the adequate deposits, which can safely keep the CO2, are lying apart from the coal power plants. They are primarily situated near brown coal open pits or hard coal mines from where the CO2 would need to be removed via pipelines“ [36: p. 95].

The newest generation of coal power plants called integrated gasification combined cycle already exists in the EU, for instance, the DEMKOLEC project in Buggenum/Netherlands. First of all, the coal is gasified to a synthesis gas consisting of carbon monoxide and hydrogen and then can be used in a gas and steam power plant with an increase of electrical efficiency of about 50 %. In addition, it is possible to gather pollutants and the CO2 selectively in the exhaust. For instance, sulphur can be obtained and sold as a by-product. However, the prime costs of a kWh out of coal would double from 0.04 EUR today thus leading to the same prime costs of a kWh out of biomass in Germany today [25: p. 52 and 60-61].

2.4 Crude Oil as primary energy source

Crude oil is used in the energy industry mainly for the production of fuel. A further important application is the generation of heat, whereas it has a negligible portion of the power generation.

According to a report of the science magazine Natur from November 2003, 17 times more energy than invested can be obtained by the oil production. 100 years ago, this energy return on investment lay at 100, still with a downward tendency [25: p. 42].

At the competition about the crude oil, the discrepancy of actual costs of today’s PESs compared to full costs including economic costs becomes very apparent. Herman Scheer numbers each barrel of crude oil out of the Middle East with 100 USD only for the costs of a secure supply [35: p. 4-5]. That is why the observed world market energy prices are an unfair comparison to the REs.

2.5 Uranium and Nuclear Power as primary energy source

Nuclear power is continuously in discredit, primarily because of the numerous accidents as occurred in Tschernobyl, Three Mile Island, Majak and Tscheljabinsk [25: p. 69]. Moreover, it has been hardly made public that 20,000 people die yearly because of cancer from uranium mining[2]. Already that should make it actually out of the question. Furthermore, 180,000 m[3]of nuclear waste have yet been accumulated only in Germany. This amount will double until the total exit of nuclear power[4].

Nevertheless, the nuclear power still exists, what is justified by its often cited economic efficiency and its cheap power. These arguments already include tax exemptions for nuclear fuel, hold-harmless agreements, preferential loans and investment grants. The OECD granted 168 bn USD financial aids for nuclear power between 1974 and 1992, whereas the REs got only 22 bn USD [36: p. 112].

VDEW president Werner Brinker, however, already points out the further development: “Die Investitionskosten für Atomkraftwerke sind so hoch, dass an einen Neubau gar nicht zu denken ist.“ [25: p. 73]. Therefore, Austria, Belgium, Germany, Italy, the Netherlands and Sweden have agreed to the nuclear power phase-out. Nuclear power plants are not profitable until decades have passed because of their height investment costs, thus are poorly flexible. Greenpeace shows this inadequacy of investment costs to power output with France by calculating, that for the sum of 3-3.5 bn EUR for the planned nuclear power plant instead of 10 tWh of current, 24 tWh could be produced yearly, if wind power plants would be installed. Additionally, five times more jobs would be created [25: p. 70].

Hence, the portion of nuclear power in the EU will sink from 23 % in 1995 to 9 % in 2025 and 1 % in 2035. The DILEMMA report of the EU makes clear: “Nuclear power is not generally perceived to have fulfilled the great expectations of its early days. It is marginally economic at best at present in most countries in Europe.” [9: p. 1].

Besides those facts, the coverage of the uranium reserves including expensive and not yet assured deposits with the current rate of consumption accounts for about another 80 years. However, nuclear power is covering only 2.5 % of the world total energy consumption [11: p. 23]. According to a study of a professor from the Massachusetts Institute of Technology, the uranium mines are not able to satisfy the demand since decades. That is why the amount of uranium that had been stocked before has halved since 1985[26].

The perspective concerning two great with hope nuclear power plant technologies, namely the fast breeder and the nuclear fusion have moved beyond reach. In 1965, the nuclear research centre of Karlsruhe aimed a capacity of 80 GW of fast breeders in Germany in the year 2000 and 1955 the first fusion reactor has been focused on in 1975 by the atom conference of the UN in Geneva. The latter is now forecasted to be ready not before 2060 and with hardly competitive prime costs of 0.14-0.38 EUR. A similar time frame does now apply for the fast breeder[43][44].

3 Renewable energies and its potentials

3.1 A general overview

Due to the solar irradiation, an average energy flow of about 1.3 kW/m[2]to the earth is existing. This flow is usable for humankind as wind and water movements, directly as irradiation energy or indirectly as biomass grown through it. Additionally, radioactive processes of disintegration cause the creation of geothermal power. The potential of REs is much larger than the one of conventional PESs [19: p. 5]. Their great advantage is the lack of environmental problems, in contrast to the use of fossil PESs concerning exhausts and CO2-emissions, the accumulation of radioactive waste, the highly energy intensive supply with PESs and the environmental damage due to their extraction. Only the use of biomass is related to CO2 emissions but quantitative as high as it has absorbed it within its growth. Moreover, the primary energy extraction uses much less environment, if the biomass has been cultivated ecologically.

It is differentiated between the natural and the technical potential of REs. Furthermore, the social potential, which means how many people can be convinced of the idea, must not be underestimated. That is why besides the administrative, technical and economical mainly the mental hurdles need to be overcome [36: p. 23 and 32]. The determination of those technical potentials has to consider different criteria. Besides the technical restrictions of efficiency, plant size and the potential of technical development are structural constraints in their usability because of the location boundedness as well as ecological limitations reduce the natural potential of REs to a very small portion. Appendix four shows that explicitly [8: p. 23-24].

In the case of biomass, it appears obviously how differentiated and controversial the estimations of the potential are with respect to the REs, like the analysis will show later in subsection 3.6. That is why deeply analysing the REs concerning their realisable potential will not lead to a proper result. Nobody is able to forecast meaningfully how fast technology and costs will develop. The findings distinguish completely depending on the very different assumptions, which have been made. Hence, questions like which subventions and financial aids shall be granted arise. The World Energy Council means, that it would shortly make the REs competitive, if they would get all subventions of the fossil and nuclear energies (about 15 bn EUR within the EU). The four aspects considered by this paper, nevertheless, can be answered quite well with regard to the actual realised state of development and its costs [25: p. 71].

It is decisive whether microeconomical or macroeconomical costs are taken for cost comparisons. The REs will be competitive microeconomically in the short run, macroeconomical they are already [36: p. 63].

It has been made clear, why numerous criticisms about REs are widely spread, amongst others the insufficiently available potential, the long period of time until technological maturity and the insufficient profitability. Herein, the reason for the decreasing portion of REs between 1989 and 1999 with respect to total energy generation might lie. For instance, it has sunk from 42.1 to 29.1 % in Finland, from 80.5 to 34.6 % in Portugal and from 88.9 to 59.8 % in Switzerland. Whereas in Greek coal power is expensively sent to windy islands over see cable, instead of installing eco-friendly wind power plants, only in Denmark and Germany exist a slight increase in the usage of REs since the beginning of 1990 [36: p. 24-26 and 39].

Opposite to all criticism, economic advantages are existent. Besides general implications, like their domestic availability and thus less dependency on imports and their potential of property diversification, one can find cost effecting benefits, like the saving of foreign currency, cost- free PESs as well as avoidance of international security and ecological costs [36: p. 83-84].

All REs excellently and partially exclusively qualify themselves for decentralised energy generation and consumption. Thus, economising effects can be experienced through a shortened transport via power cables. This makes an expensive and time consuming infrastructural construction redundant with respect to the power grids and does not have to be made in poorly developed EU countries like Romania [36: p. 63].

The already realised speed of launch of the REs in Germany is 3 GW capacity installed per year. If this speed would be linear extrapolated until 2035 a totally installed capacity of 108 GW would be built up (the complete installed power plant capacity in Germany in 2006 was about 115 GW[46]). Now, the abilities of REs are no longer deniable [36: p. 62].

To get an overview over the capacity needed to replace the conventional PESs it will be shown how much area for photovoltaic power plants would be needed, if they should solely cover the yearly worldwide power demand of about 15 trillion kWh. Therefore, an area of 210,000 km[2]with a yearly performance of 75 kWh per m[2](for German conditions of solar irradiation a relatively low value) has to be overbuilt. It is necessary to imagine, that this is considerably less than the overbuilt area of the EU in which such plants could be integrated [36: p. 55].

3.2 Water power as primary energy source

Water power is the oldest energy used. Thereby, three main types of water power plants are existent which will be described now in short. River power plants yield steadily and constantly power, thus are base load compatible (that is the minimum power, which the demand falls not short of through 24 hours). Storage power stations, however, are seasonally dependent because they store melt water in mountainous regions. They can be powered up quickly and supply peak load (that is a spontaneous short excess of ordinary power demand). Pumped storage power plants solely are energy storages in which water is pumped to a higher level, if excess current is produced and is discharged later through a turbine if peak load is demanded [50: p. 20]. Besides, some other types of water power plants are existing, like the tidal, osmotic or wave power plant. Their profitability and ecological defensibleness is partially low, furthermore, only a small mostly regional potential exists for the most types. Wave power plants, for instance can be used well for coast protection, whereas large-scale plants broadly influence the ecosystem. Coastal areas are already used manifold, that an area extensive integration is difficult [15: p. 72 and 74].

The portion of power coming from water power plants of 3-4 % of the total power supply in Germany is steady since years. Unlike in the Alpine countries and Scandinavia, the potential in Germany and many other EU countries is rather low. Globally, the water power with a portion of 18 % actually has the same significance in the power generation like nuclear power. Decisive for that are the large-scale water power plants in the GW-range at the moment, like the one at the Three Gorges Dam in China with a capacity of about 18 GW, which accords to 14 nuclear power plant blocs[49]. In Germany, in contrast the small-scale power plants below 1 MW still have some potential of development.

The advantage of water power plants is besides the steadiness of power supply, also the durability and the with 90 % highly efficient water turbines. The latter, additionally, shows the hardly anymore tappable potential of technical development [19: p. 5].

By virtue of regional concentration and the massive intervention into the ecological system with the construction of water power plants, their significance concerning a future power supply is unpredictable. Within an EU-wide power grid, it would be possible to use and integrate the regional water power of Scandinavia completely.

3.3 Wind power as primary energy source

Through technical innovations, it was possible, that wind power plants have increased their capacity 90 times within the past 25 years. This increased, furthermore, the efficiency to about 50 % [25: p. 122].

Germany is the worldwide leader in the development of wind power plants. However, the majority of proper locations at land have been made accessible. That is why offshore power plants will be constructed at next [19: p. 5-6]. The performance of those plants is 40-50 % higher 40 km from the coast as on the coast itself and larger areas are available [22: p. 15].

Criticism about onshore power plants arouse mainly because of the noise emission, the impairment of landscape and the danger for birds getting into the rotors [19: S 5-6]. The latter two points seem less important thinking of the damage occurred through the extraction of conventional PESs and the plants in which they are electrified which has been accepted until know [25: p. 114].

There is a theoretical limit for the portion of wind power of the total power generation lying at 25 % [25: p. 101]. The reason for that is found in the fluctuating availability, which needs to be compensated by the power grid. This problem might be solved in the future using improved wind energy prognosis programmes and the introduction of shorter trade periods (intraday trading) at the energy stock exchange. This shall integrate the storms and calms better and it can be used for the fluctuations at photovoltaic power plants [22: p. 16-17].

3.4 Solar irradiation as primary energy source harnessed by phototvoltaic power plants

Photovoltaic power plants directly dissipate the solar irradiation into power. Their great disadvantage are the high prime costs of 0.40-0.50 EUR per kWh in Middle Europe at the moment. The incompetitiveness compared to other REs in this point has started to diminish with a rising mass production and a more inexpensive technology [19: p. 7].

Nevertheless, a great advantage especially concerning a decentralised power generation is that such units can be customised according to the available spacing and thus can be integrated into existing constructional structures. Other power plants, like solar thermal ones, require extra space. The Phoenix Sonnenstrom AG, for instance built a 180 kW photovoltaic power plant onto a noise barrier at the railway line near Vaterstetten/Germany in 2004. The transmission losses are being reduced because the energy is consumed where it is generated. Therefore, the existing power grid does not need to be further extended and will be discharged instead. Solely the costs of network access account for 0.06 EUR per kWh of the total energy price of a kWh for the end customer [25: p. 99].

A photovoltaic power plant is utilisable EU-wide, although the energy yield differs locally with respect to sunshine duration and intensity. However, in contrast to solar thermal power plants the superiority exists insofar, that they also work with diffuse light and thus even in Middle Europe [31: p. 24].

3.5 Solar irradiation as primary energy source harnessed by solar thermal power plants

Solar thermal power plants work according to the principle of fossil power plants. By means of solar panels, the solar irradiation is concentrated for heating up a working fluid. Heated up to at least 300°C, the pressure within the fluid rises and expands through a power-generating turbine. Because of the high temperature needed such power plants can only be operated economically between the 35th Southern and Northern latitude. Since the sun is not shining at night either heat must be stored at day and used at night or the power plants use fossil fuels then [31: p. 24].

For reaching a decisive influence of solar thermal power plants with regard to power generation, they must, hence, be centralised in Southern Europe and must be integrated into an EU power grid, like the water power. For an independent power supply of many Northern EU countries, solar thermal power is inapplicable.

If one draws the attention to the generation of heat for hot water generation and building heating even in the Northern EU countries solar panels on the roof can contribute to it since lower sun intensity is sufficient. This is why each household in Germany could cover at least 50 % of its yearly hot water generation through solar thermal energy[39].


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Towards a sustainable european energy policy: the role of alternative energy sources
Martin Luther University  (Wirtschaftswissenschaften)
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Europa, Energiepolitik, Energiewirtschaft, Erneuerbare Energien, Desertec, Wasserstoffwirtschaft, Nachhaltigkeit
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Andre Schröter (Author), 2007, Towards a sustainable european energy policy: the role of alternative energy sources, Munich, GRIN Verlag,


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