The sharply diverging models of power generation in Germany and the Czech Republic have far-reaching economic and political consequences.


The British economist, E.F. Schumacher, published his most widely read work, a collection of essays entitled "Small Is Beautiful: economics as if people mattered" in 1973, during an energy crisis. He was an early champion of small-scale, locally-controlled power generation, arguing that so-called ‘economies of scale’ are, more often than not, false economies.

As Chief Economic Advisor to Britain’s National Coal Board for twenty years in the 1950s and 60s, he knew all about problems of scale. The NCB controlled Britain’s coal mining industry and employed over half a million people. For comparison, the state-controlled CEZ Group employs some thirty thousand people.

If Schumacher were alive today, he would have had lots to say about the sharply diverging models of power generation in Germany and the Czech Republic in 2013. And there is little doubt which model he would have preferred.

Schumacher would have approved wholeheartedly of the German retreat from nuclear, and its emphasis on the efficient consumption of energy (in addition to its efficient production) and locally-controlled power generation. In Germany, he would have said, electricity is being generated as if people mattered.

You will all be familiar with the Czech approach to power generation. It is sufficient to know two things: that almost all electricity in this country is generated by one, state-owned company whose management is appointed by, and therefore accountable to and controlled by politicians; and that the political and business establishment is committed to increasing, not only the market share of that state-owned company, but the share of nuclear generated electricity in the country’s overall energy mix as well.

It was only a year ago that the Czech government’s energy draft recommended that, in addition to the planned two new nuclear reactors at Temelin, a further eight 1,000-MW reactors be added to the existing generation fleet by 2060. The draft presented four superficial scenarios, all of which assumed that between 80-90% of Czech electricity would be generated from nuclear in the future. The four scenarios differed only in the amount of renewable and gas-based generation they assumed, and the scenarios with the least amount of these two types of generation were recommended.

This nightmarish vision of the future must be one of the most absurd pieces of central policy planning ever to cross the table of a cabinet meeting. One of the visionaries behind the state’s energy priorities is the former head of the Czech Academy of Sciences, Professor Vaclav Paces, the head of the body of wise men and women, half of whom were from the nuclear energy sector, appointed by the then prime minister Mirek Topolanek to recommend the way forward for the next half century.

Last December, Professor Paces said: “Topolanek told me that he needed a trustworthy person to head the energy commission, someone who is distant from the energy industry and resists all pressures." And last week, he was appointed to the supervisory board of CEZ.

When I heard Martin Kocourek, the disgraced former minister and chairman of the supervisory board of CEZ, presenting the nuclear dreams of the Czech government, I was reminded of Stanley Kubrick’s Dr. Strangelove urging Mr. President to fill a deep mine shaft with lots of good Americans at a ratio of ten females to every male. In this way, he assured Mr. President, the US would repopulate itself faster than the USSR after the nuclear war triggered by Brigadier General Jack D. Ripper.


Deep mine shaft...

At this point, I would like to share with readers a little known peculiarity of the clique of state capitalists that control the Czech energy sector: Their great admiration for what in Czech is called ‘výtlak’ and in English,‘displacement’, the measure of a ship’s power to thrust aside the water through which it travels.

Whilst you and I might admire a person for his honesty, modesty, courage and kindness, the men that control the commanding heights of the Czech energy sector measure each other by their ability to push others aside -little do they know how soon they will be pushed aside, not, to be sure by voters, but by innovation.

So much, then, for the Czech approach to power generation. In Germany, the generation of electricity is much more fragmented, and it is becoming rapidly more so each year thanks to the Energiewende—the revolutionary energy reform set in motion in 2010. The short term costs of giving up nuclear will be vast. But it is a cost that all countries with nuclear power plants will have to face the moment a technological breakthrough is achieved in the storage of electricity. It is simply a question of when you bite the bullet.

This is how the CEO of GE Energy Germany puts it: “Today, what we know is that the energy market will be decentralized; it will be a fragmented market. Before, we had four utility companies. Today we have 350 companies generating power, going up to a thousand, and going up to a million if you count everyone with a solar panel on the roof.” (To learn more about the German approach, click here for an article on the subject from MIT Technology Review.)

For someone with lots of ‘výtlak’, such remarks must seem utterly incomprehensible. Just as Kubrick's Brigadier General Jack D Ripper sees water fluoridation as a Commie plot to weaken American bodily fluids, so the Czech energy elite, epitomised by Vaclav Klaus and his ardent admirers, Martin Koucourek/Kuba/Roman (if you have the stomach for it, watch this Youtube video of Martin Kuba praising Klaus –click here), label renewable energy as an eco terrorist plot aimed at weakening traditional Czech values.

Being a highly centralised, self-serving establishment, one would hardly expect Klaus and his acolytes to embrace the idea of fragmentation. But nor should we forget that they all have deeply entrenched, personal and professional economic and political interests in maintaining a vertically-integrated CEZ.

E.F Schumacher would have labelled the approach of the Czech energy establishment as the myth that "bigger is better”. He would have seen it for exactly what it is –the means by which an incumbent preserves its privileges and maintains its economic rents at the expense of the rest of society.

The German response is much less simplistic. It is to develop technical solutions to the difficulties that come with fragmentation, above all through the better management of power. Essentially, this means virtual power plants, in which software intelligently controls, or rather synchronizes, hundreds of thousands of small scale power sources, with the goal being to transform them into a vast network that produces stable blocks of power, stable enough for larger scale utilities to depend upon to top-up the grid when needed.

I can just imagine Mr Klaus and Mr Kuba scoffing at the very idea of a ‘virtual power plant’ –no steel, no cement and above all no cuts for politicians.

The German approach will cut out politicians -eventually. It will serve to reduce further the central power of an already decentralised state. And it makes people, or rather citizens, more self-reliant.

In the US, many people believe that the right to own a firearm is a condition of freedom. Maybe that was the case and perhaps, in parts of the world, it still is. In the future, the right to generate and store your own electricity, either at home or in your neighbourhood, will be similarly regarded as an essential condition of individual freedom.

Instead of participating in the German endeavour, with its myriad commercial applications, the Czech Republic, or at least its politicians, prefer to make fun of it. Instead of empowering its people, the politicians of this country are determined to empower themselves (and their sponsors abroad) by embarking upon the construction of two more nuclear power plants at Temelin, a project the country neither needs nor can afford. The stated goal is that domestic heavy industry is guaranteed plentiful and cheap power for many decades to come, and for what is left, to be exported, apparently to Germany.

Here we are back in Dr Strangelove’s deep mine shaft again. All this means is that Czech households will be rendered even more dependent upon, and even more indebted to, CEZ’s real owner, a cartel of politicians and businessmen serving its own interests and quite possibly the interests of a foreign power determined to regain control of its neighbours' energy sector.

To borrow Schumacher’s memorable phrase, this is electricity as if politicians mattered.