These Hydro Power Plants Survived WWII Bombs But Maybe Not Merkel

  • Date: 20/03/17
  • Bloomberg

After surviving wartime bombing and Soviet-era seizures, some power plants in central Europe are facing extinction because of flat prices, newer technologies and red tape in Berlin.

The facilities at risk used to make money buying cheap power at night to pump water up mountains, then releasing it downhill to turn generators during the day, when prices were higher. While they were cash cows before the era of wind and solar, market conditions are now so bad for pumped-hydro plants that Sweden’s Vattenfall AB and Norway’s Statkraft AS say they might close plants in Germany, while Alpiq Holding AG wants to unload some units in Switzerland.

Vattenfall’s Goldisthall hydro power plant. – Photographer: Stefan Thomas/picture-alliance/dpa/AP Photos

It’s yet another example of how Chancellor Angela Merkel’s unprecedented Energiewende has gone awry. Designed to start within seconds, pumped storage is ideal for smoothing fluctuations in power supplies exacerbated by the expansion of intermittent renewables. While solar and wind get 20 billion euros ($21 billion) in subsidies per year from Berlin, the pumped-hydro plants get nothing but more regulation and rising bills for grid access.

“I’d be pretty perplexed if all these plants would shut down,” Andreas Gandolfo, an analyst at Bloomberg New Energy Finance, said by phone from London. “You created a reservoir, dug the mountain, you laid the concrete. Why replace a technology that is already there?”

Share of Germany’s power generation

The jump in solar generation has eroded the traditional premium for daytime peak over nightly rates to just 25 percent. It was more than four times that in 2008. Even income from providing near-instant power to the grid at times of high demand has dwindled, dropping as much as 95 percent over the past six years.

On top of that, operators of hydro storage plants more than 20 years old must pay for using the grid when drawing electricity for pumping because they count as consumers by the regulator. This eats up almost all their profit, according to the German Association of Energy and Water Industries, or BDEW.

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