SWM boss Bieberbach: With nuclear power we are totally on the wrong track

Created: 11/28/2022, 8:00 p.m

By: Matthias Schneider, Wolfgang Hauskrecht

SWM boss Florian Bieberbach: Stadtwerke sees itself as a pioneer when it comes to renewable energies.

© Marcus sleep

The head of Stadtwerke München (SWM), Florian Bieberbach, is preparing households for significant increases in electricity and gas prices next year.

Bieberbach made that clear in the interview.

Munich – Stadtwerke München (SWM) is one of the largest municipal energy suppliers in Germany.

Annual turnover: 8.3 billion euros.

When it comes to renewable energies, the municipal GmbH is a pioneer.

By 2025, SWM wants to produce as much green electricity in its own plants as Munich consumes - 7 terawatt hours.

Florian Bieberbach has been in charge of the company since 2013.

Mr. Bieberbach, many people are shocked by their gas bill.

The advance payment is sometimes several times higher - even though the settlement includes the winter before the Ukraine war.

How does that come about?

This is certainly not the case with us, because we buy for longer periods.

But there are providers who buy their gas at short notice and have already increased the prices significantly at the beginning of the year.

Their customers are now getting the full impact.

The prices didn't just go up when the war started.

Already in the summer of 2021, the Russians did not fill their gas storage facilities here.

The market was nervous, gas prices went up.

Almost exactly a year ago, less gas suddenly came from Russia – and prices continued to shoot up.

At SWM, prices have not risen that much so far.

But we will increase at the turn of the year, our customers will see the high prices next year.

So next winter will be really expensive.

Basically yes – but then the price brake takes effect.

And retrospectively to January 1, as the federal government will now decide.

With gas and also with electricity.

This will then be offset against the 2023 annual accounts.

In the case of gas, the December relief is added.

If you have high advance payments, you can lower the advance yourself with the brake on your back.

Is the brake that fair?

Anyone who used to consume a lot is now getting more cheap electricity.

I share this criticism.

If you didn't want this effect, it would have delayed the introduction even further.

Most tenants have central heating, our customer is the property manager.

They would then have to get a quota of cheaper gas according to the number of apartments.

However, as a municipal utility, we do not know how many apartments there are.

We would have to write to every manager and he would have to prove the number of households.

And then it is difficult to assign who used how much when in the house.

The federal government said: That's too much effort.

The brake is still better than the solution in other countries.

Most have a subsidized price - resulting in nobody saving.

And that is fatal!

Many low-cost providers are bankrupt, and everyone is pushing towards basic suppliers like SWM.

More customers means more gas needs.

Do existing customers pay for this with higher prices?

We went into the crisis with a very high market share and only have to take on customers from our grid area.

That was a few thousand, but compared to the total number, it was manageable.

It is problematic for providers who have lost many customers to low-cost providers.

Suddenly all these customers came back and the suppliers had to buy gas at insanely high prices.

As a result, the prices for everyone have risen sharply.

The federal government saved the gas traders SEFE and Uniper with billions of euros.

How important was that?

Insanely important.

Because we may have bought gas from an upstream supplier who got it himself from SEFE or Uniper.

If such a supply chain breaks down, chaos would erupt - with unforeseeable consequences.

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Why is electricity getting expensive?

The SWM will double the tariff on January 1st.

The electricity price has followed the gas price.

This is because a lot of electricity is still generated from gas.

The price of electricity must be so high that it is worthwhile for the gas-fired power plants to produce.

This has been exacerbated by the catastrophic situation in France, where some of the nuclear power plants have not been available for a long time.

They have been warning of the dilapidated state for years.

Even the middle-aged power plants there have massive corrosion problems.

A large block of power plants is crumbling away from the hands of the French.

And the new buildings are not progressing.

The only new construction project in Flamanville in Normandy has been behind schedule for years and is now scheduled to go into operation in 2023.

Let's wait.

The Czech Republic now relies on mini power plants.

If you talk to experts from the industry, nobody understands why mini power plants should be cheaper than large power plants.

Personally, I believe that nuclear power is totally on the wrong track.

A bad end is now threatening in France.

Nuclear power is no longer a contemporary form of electricity generation.

Nuclear energy is too expensive.

Nuclear power plants are not built for 10 or 20 years, but for 40 or 50 years.

Gas-fired power plants can be built quickly – and converted to hydrogen.

That's the big advantage.

How expensive would electricity from new reactors be?

This is a bit of speculation, because no one has built a nuclear power plant in Germany for decades.

My estimate would be around 110 euros per megawatt hour.

The gas is currently 260 euros.

This is of course insanely expensive.

But if gas prices stabilize, it would be around 70 to 80 euros, which is significantly less.

SWM holds a 25 percent stake in "Isar 2".

Are you still against a longer term?

For us at SWM, "Isar 2" has no strategic importance.

Opinion can be divided as to whether it makes sense for Germany.

You need less coal and gas, but on the other hand, the power plants have been working towards decommissioning for years.

Reactivating all of this would be an immense effort.

And you would need new fuel rods – for which we have no repository.

However, the stretching operation could have been continued with the old fuel elements until July instead of ending it in mid-April.

Can we achieve the energy transition without nuclear power?

Yes.

But we will need natural gas for decades to come, there is no denying that.

Or coal, but you want to get out sooner.

We will have to use natural gas until we are fully into the hydrogen economy or can store renewable electricity on a large scale.

When will hydrogen be useful?

The manufacturers believe that in 2030 you can buy hydrogen power plants.

The question is: where does he come from?

Green hydrogen can only be produced with enough renewable electricity.

At the moment we don't even have enough green electricity to meet today's electricity needs.

So we have to build an incredible amount of renewable electricity.

That will definitely last until the mid-2030s.

Do more stable gas prices depend on the Ukraine war?

In principle, they are independent of the course of the war.

The question is how quickly they will become more stable.

If Russia supplies gas again, things can happen very quickly.

If not, we'll have to see how quickly more LNG hits the market and we have import terminals.

That can take five years.

Are you happy with the policy there?

There is a lot of criticism of Robert Habeck.

I do think they're doing a good job.

Who would have thought that in a year or two we would be planning, building and commissioning several LNG terminals.

If you had asked me two years ago whether something like this was possible in Germany, I would have said: No, it will take at least ten years.

SWM is involved in many green power plants.

Why is the price of electricity doubling?

We sell the electricity on the wholesale market, our sales department then buys it back from wholesale – and sells the electricity to our customers.

One could say that the end customer price is subsidized with the profits from the wind farms.

But: The federal government has a relatively harsh law in preparation that you only get the feed-in tariff with a risk premium.

The remaining profit is skimmed off and distributed nationwide via the electricity price brake.

The federal government does not skim off everything, but we have decided not to subsidize the electricity price, but to set up a "heating fund".

What is that exactly?

A hardship fund.

Many can pay higher electricity prices.

But there will be people who are completely overwhelmed financially.

The federal government takes the watering can, we want to provide additional targeted help.

The federal government says it cannot examine millions of individual cases.

In Munich, however, we have very efficient social structures and social associations - and they say they can do it.

Affected people go there directly.

The associations can check exactly whether someone is in need.

We can't do that, if only for data protection reasons.

The pot is distributed in a targeted manner by the city, the social community centers and the associations.

We have now provided 20 million euros.

If that's not enough, we're also ready to top it up.

The blackout fear is raging.

Is the danger real?

The Federal Network Agency and everyone in the know say: The danger is not much greater than it used to be.

Of course the situation is tense, but for widespread blackouts you have to go into very extreme scenarios.

We've already had blackouts in Germany, for example in 2005 in Münsterland a snowstorm damaged lines.

Many communities had no electricity for days.

Politicians are asking citizens to save energy.

Are we saving yet?

Savings are made across Germany.

Gas consumption is well below what is usual for this time of year.

About half of this is due to the milder weather, the rest is savings.

Unfortunately, we haven't been able to see any savings in Munich apart from the milder temperatures.

Will we have to make do with less energy in the future anyway?

In principle, we don't have a lack of energy on this planet. The sun provides a great deal, and there is also geothermal energy.

With wind and solar systems, much more energy can be generated worldwide than humanity will ever begin to consume.

But it will take time to unlock that.

Until then, it makes sense to save energy.

In industry, energy efficiency has improved significantly over the past 20 years.

It has stagnated in households, it has deteriorated in the transport sector – the trend in mobility is quite negative.

Cars are getting bigger and heavier, we have more and more truck traffic.

Will prices ever fall back to the known low levels?

They will calm down but not return to old levels.

LNG will always be significantly more expensive than natural gas.

In addition, there is a rising CO2 price, which is being added by the state.

Even if the situation with Russia stabilizes, the CO2 surcharge will remain – also for electricity.

What will your municipal utilities look like in 2040?

We definitely no longer have nuclear and coal-fired power plants.

I really hope that the gas-fired power plants will be running on hydrogen by then.

We will have a lot of wind power.

In terms of heat, it will be predominantly geothermal energy, flanked by biomass and hydrogen.

Heat pumps will dominate decentrally.

Wind and solar power will cover most of the base load, hydrogen will be more of a stopgap.

You have wind turbines in the North Sea and in a number of European countries - but only two in Bavaria.

A few projects were planned in Bavaria, then the 10H rule came and it was over.

Interestingly, even where the rule does not apply.

But the mood towards wind turbines was so negative that even these locations could not be enforced because the municipalities no longer wanted it.

And in the future?

Markus Söder has just mutated into a wind power fan.

I have the feeling that the mood has improved significantly.

We are looking for locations again - but the 10H rule is only slightly relaxed.

In our view, they should be abolished.

There are enough rules at the federal level to ensure that wind turbines do not end up in the front yard.

I think the best approach is to designate specific areas where many wind turbines will be built.

Many say it's not worth it because there's not enough wind in Bavaria.

I live in Schäftlarn.

The wind turbines are almost right on the doorstep there and the people who took part say that they are very satisfied.

In Bavaria they have to build relatively high.

Of course, a wind turbine on the coast brings more, but you don't have to transport the electricity to Bavaria for that.

It makes perfect sense to build wind turbines in Bavaria.