April 21, 2024

Energy crises: Germany reverses gear on energy transition, destroys wind farms, recommissions abandoned coal mines

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… as Glencore showers dividends on shareholders

Oredola Adeola

Germany, a pioneer in climate protection, perceived as a global role model for its successful energy transition plan, has taken a healthy dose of realism, by slowing down in the execution of its flagship projects within the field of climate-friendly energy, in order to meet its growing energy shortages as winter beckons.

EnergyDay gathered  German energy giant RWE, the world’s number two in offshore wind power and Europe’s third largest in renewable energy, during the week, collapsed its wind farm in Germany, thereby making room for the expansion of new and shuttered coal mines across the country.

This latest development is happening on the sideline of the country’s energy crisis and nationwide protest, amid the ongoing war in Ukraine, shortage of gas supply, and energy price hikes on the road toward winter.

RWE is tearing down wind turbines near the small town of Lützerath to expand a neighbouring open pit coal mine in Garzweiler located in the state of North Rhine-Westphalia.

Guido Steffen, RWE spokesperson, in a statement obtained by EnergyDay, recently disclosed that the wind farm features eight wind turbines. RWE stated that one wind turbine was dismantled last week, two more are scheduled to be deconstructed sometime next year, and the final five will be taken down by the end of 2023.

Steffen noted that the move appears to be “paradoxical.” He said, “We realize this comes across as paradoxical, but that is as matters stand.”

EnergyDay gathered that RWE had in addition to its latest move, revealed plans to reactivate three lignite-fired coal units that were previously on standby. The three lignite units each have a capacity of 300 megawatts (MW).

It was revealed that with the deployment of the standby plants, the facilities are expected to contribute to strengthening the security of supply in Germany during the energy crisis and saving natural gas in electricity generation.

The German power company had earlier in September said,  “Originally, it was planned that the three reserve power plant units affected would be permanently shut down on September 30, 2022, and September 30, 2023, respectively.”

The Ministry of Economy of North Rhine-Westphalia in a statement also said, “If Lützerath were to be preserved, the production volume required to maintain the security of supply over the next eight years could not be achieved.

“The stability of the opencast mine could not be guaranteed and the necessary recultivation could not be carried out.”

The German Government has approved the decision to revive the unused coal units after energy prices skyrocketed because of the sanctions issued due to the Russian invasion of Ukraine.

North Rhine-Westphalia and RWE had previously declared they would stop using fossil fuels by 2030.

Last week, local media reported news showing  thousands of demonstrators in Berlin, Düsseldorf, Frankfurt, Stuttgart, Hanover, and Dresden, who participated in protests against Germany’s high energy prices.

As of September 2021, 60% of Germany’s gas came from Russia, but last month it was down to zero.

Reuters reported that, “Germany imported 37.6% of gas from Norway in September compared with 19.2% in the same month last year, while Dutch deliveries climbed to 29.6% of imports from 13.7%, data from utility industry group BDEW showed.”

EnergyDay further revealed that Germany and some EU member states, affected by the energy crisis, are now investing massively in fossil fuels infrastructure and supplies, in the face of soaring energy prices which threaten to impact the most vulnerable as winter approaches.

Germany and some of the EU countries that are affected by the growing energy crisis, caused by the war in Ukraine,  are the largest importers of natural gas and thermal coal in the world.

EnergyDay gathered that in 2021, Russia, Germany and the UK, Italy, France consumed three-quarters of the continent’s energy from gas.

A recent Wall Street Journal report, customs data collected by Trade Data Monitor revealed that Germany’s coal imports from Australia were up 21% from March through May 2022, compared with the same period in 2021.

Glencore, a London-listed miner and commodity trader, is one of the world’s biggest coal producers.

The commodity trader shifts millions of tonnes of metals, minerals, and oil across the globe, mined more than 100mn tonnes of the commodity in 2021.

The commodity trader’s main profits in 2021, grew through the marketing of thermal coal, which is burnt in power stations to generate electricity, as Glencore delivered record earnings before the interest of $3.7bn.

Gary Nagle, Glencore’s Chief Executive,  had in a recent report published by Financial Times disclosed that his company’s stakes in the volatile commodity market, such as Thermal Coal is expected to show some strong business prospects for the foreseeable future due to dislocations in global decarbonisation drive.

He said that the coal market looked “very good” due to a lack of investment in new mines and a healthy appetite for fossil fuel by developed economies and Asia.

According to Glencore’s Chief,  coal prices have soared in recent months, with benchmarks in Asia trading above $250 a tonne.

EnergyDay’s check showed that Glencore in the first half of 2022, has promised to pay out an additional $4.5 billion, including a $1.45 billion special dividend worth 11 cents per share, and a $ 3 billion to its shareholders.

At the beginning of 2022, the price of coal was approximately $134 per metric ton, EnergyDay gathered that Glencore is currently selling for upwards of $400 per metric ton.

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