State of Transition

For Energy Engineering magazine. Report on Germany's energiewende

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Spend any time travelling through Germany, as I did on a recent tour of low carbon sites in Berlin and further west in the state of Saxony-Anhalt, and the scale of the country’s investment in renewable energy is visible in the frequency with which one encounters wind farms. However, pick up a German newspaper and you are just as likely to read a piece challenging Chancellor Merkel’s energy policy.

My visit to Germany coincided with a lively period in German politics. Merkel’s Christian Democrats had won the recent election and coalition talks to determine the composition of the new government were ongoing. Energy policy was, by many commentators, considered to be a key issue and a source of contention amongst the parties.

The German Energiewende, or ‘energy transition’ in English, has seen Germany set some of the most ambitious targets across Europe for renewable energy usage. Following the 2011 Fukushima nuclear disaster, Merkel rejected nuclear as part of Germany’s future energy mix deciding to focus low carbon generation firmly on renewables. By 2050 the country is to derive 80 per cent of its electricity consumption and 60 per cent of its total energy consumption from renewable sources. A 40 per cent reduction in CO2 emissions is called (against 1990 levels) is called for by 2020, double to 80 per cent by 2050.

The German government has offered developers attractive feed-in tariffs as part of a suite of policy mechanisms designed to encourage the installation and uptake of renewable energy. Certainly, Germany leads Europe in terms of installed renewable capacity. According to EWEA statistics at the end of 2011 the country had 29.1GW installed capacity of wind (the overwhelming majority of which is onshore) and 34.8GW installed capacity of solar PV (figures from BSW solar). The UK, by comparison has approximately 10GW installed wind capacity and 1GW solar PV.

However, despite success in terms of building renewable energy capacity and ensuring Germany looks likely to meet its 2020 target of generating 35 per cent of its electricity from renewable sources, the Energiewende is far from universally popular. There is anger, from both industrial and domestic users, at the rising cost of energy with many increasingly frustrated with what they deem to be overly generous subsidy for solar PV and wind developments. Advocates of the Energiewende praise its ambition in helping Germany to lead the way in renewable energy deployment believing it has helped German industry whilst ensuring a sustainable energy future; critics believe that the transition is too expensive, damaging to industry and risks destabilising the grid through building an over-reliance on intermittent generation.

Frank Brehm of the Berlin energy research centre InnoZ articulates one of the central concerns relating to the Energiewende. “The problem of installing too much wind or solar is that energy bills have raised as developers have taken advantage of the feed-in tariffs,” he says. “We have a feed-in tariff bill of €20 billion that needs to be paid by consumers – that\s a problem. On the one hand it was good that there were big investors coming in to build large PV plants so the cost for the PV modules dropped. However, now you have the situation whereby consumers have to pay a premium for this.”

Brehm continues: ‘This [the Energiewende] is the most important issue for the new government – it’s a big challenge. We have a very strong movement from the federal state, but need an integrated and coordinated approach.”

Andreas Dietrich, tonnage account manager at the industrial gas manufacturers Linde Group, is concerned that the policy framework unfairly favours renewable energy developers over conventional producers. “Runners of conventional generation plants have to buy feed stock but operators of solar and wind have no costs at this stage – this is a problem for conventional power plants but we still need them,” he says.

Dietrich believes that the pace of Germany’s energy transition could be harmful to industry. “We need to pass on the increasing cost of energy to customers in the value chain, but this is more and more difficult because of international competition,” he says. “The outcome is we are losing industrial production in Germany. Germany is trying to be number one in Europe when it comes to renewable energy but we need to be careful that we are not losing our competitiveness in industry.”

However, Tobias Rothacher, renewables manager at Germany Trade and Invest, believes that Germany’s energy policies have attracted investment into the country and helped German businesses. “Foreign companies want to come here to find partners,” he explains. “Suppliers from overseas want to team up with the downstream companies that we have. We see this happening in the solar PV area – the cells come from Asia but you need a local business to build a system around it.”

Rothacher believes that feed-in tariffs have done their job in “kickstarting’ the wind and, especially, the solar PV industries in Germany. However, he admits that there was a lack of flexibility in the legislation which has caused problems in terms of the burden of subsidies falling on energy consumers.

Nevertheless, there is a consensus that German public opinion still supports a transition to renewable energy, even if there are frustrations about the implementation of certain policies. “You see the drive for renewable energy amongst all the electors,” comments Rothacher. “Across the parties there is some agreement in pursuing the goal of 80 per cent of electricity from renewable energy.”

“The public will is still there to pursue a renewables agenda, they are only complaining about the cost,” admits Linde’s Dietrich. Meanwhile, Mandy Bunge of Saxony-Anhlat’s regional investment agency argues that “compared to other European countries the German people have the best attitude in terms of thinking environmentally.”

Watching the German experience in the country’s transition to renewable energy is interesting from a UK perspective as we are beginning to see many of the arguments around the Energiewende play out in relation to the UK’s energy policy. Rising household energy bills have focused political and public debate on renewable subsidies and support mechanisms. Germany is both a model and a warning: its energy policies have been mightily successful in increasing the installed capacity of renewables, yet there is a sense that certain mistakes have been made on the way.