The end of the line

In one of the most brilliantly hilarious episodes of “Coupling”, the British response to “Friends”, havoc is wreaked on the friend group by a series of Chinese Whispers-style misunderstandings. I was recently reminded of that series by one of you, dear readers (thanks, Jeff!) and of that particular episode by a number of recent reports about Europe’s energy situation. In bland summary, it’s not good. Now for the details.

Europe Is Reaching a Limit to Its Wind Power Expansion, Bloomberg reported last week, in what was probably a case of impossibility to keep pretending that what’s happening with Europe’s transition is not, in fact, happening. The overbuild of wind power capacity is eroding electricity prices during periods of high production, increasing overall price volatility to stunning levels and, ultimately, damaging the profitability of these installations.

The same appears to be happening in solar, with Reuters just today reporting that new capacity additions in the EU this year totalled just 4% over 2023, down from 50% last year, and 40% in the years 2021 and 2022 each. Investments in new solar fell as overcapacity did the same to solar investors’ profitability that wind overcapacity did to wind investors. This was the first investment decline in ten years.

The official reason is, of course, different. It’s “Grid bottlenecks”, per the industry association, meaning too much solar at certain times and too little at others. Also, the 2022 crisis prices are gone and solar is no longer as financially appealing as it was two years ago. Incidentally, governments can’t keep pumping subsidies into wind and solar because money appears to be a finite resource. Who knew.

One Danish researcher did. “We cannot have an electricity system that’s based solely on wind and solar,” Brian Vad Mathiesen from Denmark’s Aalborg University told Bloomberg and then continued with “There are stark technical and economic limits to how much we can integrate into the grid.” Well, what do you know, it’s not just limits but stark limits. And, of course, no one could have seen this coming, as fellow Energy Realities podcaster David Blackmon likes to say.

Another thing that no one could see coming is what’s currently happening in Germany, namely, a slow unravelling that is threatening to drag the whole of Europe with it. And threatening here means it will drag the whole of Europe with it, except perhaps Sweden and Hungary.