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Quick Look: Renewable Energy Development in Germany

Developers, manufacturers, investors and other renewable energy industry stakeholders need to know where the next big market is going to be so that they can adjust their business decisions accordingly.

Since 2003, global consultancy Ernst & Young has released its Country Attractiveness Indices, which gives a numerical ranking to 30 global renewable energy markets by scoring renewable energy investment strategies and resource availability. The indices are updated on a quarterly basis and the most recent report can be found here.

Here is the firm’s assessment of Germany.

Policy

On 28 September, the German Government presented its new energy plan which puts renewable energy in a central role in the future energy mix of the country. The Government wants to raise the share of renewable energy sources in power generation from the current 16% to 80% by 2050. As part of the “new energy concept,” the Government gave final approval for plans to extend the life of nuclear reactors, reversing a decision of the previous government. It insists that nuclear energy merely serves as a “bridge technology” helping the country to achieve its RE objectives; however, the decision has attracted substantial opposition.

Wind

The new energy plan includes a pledge to invest €5b via low-interest loans to help develop Germany’s offshore wind capacity. The Government estimates around €75b will need to be invested to increase capacity in offshore wind to 25GW by 2030.

In October, it was reported that Germany added 660MW of new wind capacity in the first six months of 2010, raising the country’s total to 26.4GW. Compared with installations totalling 802MW in the first half of 2009, this represents a reduction of nearly 18% and is “lower than expectations,” according to president of the German wind energy association.

The German offshore wind sector, however, received a major boost in October, with news that Sweden’s state-owned utility, Vattenfall will invest in excess of €1b in a huge new offshore wind farm in the North Sea. Vattenfall has entered into a JV with German utility Stadtwerke München to build the DanTysk project, which will have an estimated installed capacity of 288MW and is due to start construction in 2012.

In September, the European Investment Bank (EIB) announced it was considering a loan of up to €500m for a 288MW German offshore wind farm, to be developed by EnBW Energie Baden-Wurttemberg AG at a total cost of €1.2b.

Solar

Following the cuts in July, Germany’s solar FITs have experienced another wave of cuts in October, reducing rates by an additional 3%. Germany experienced a rush to connect projects before subsidies were reduced in July, with the country’s Federal Network Agency estimating a total PV installed capacity of 4.88GW in the year to date, with a record 3.15GW of PV capacity installed between June and August.

According to the agency, the increase in capacity makes a maximum reduction of 13% in subsidy rates for next year 'more than likely.' The country’s renewable energy law sets out a 9% drop in rates at the end of the year if less than 3.5GW are installed, increasing to up to 13% should capacity exceed that. It is expected that growth in Germany’s solar sector will be stunted from 2011 onwards, however.

For more information on renewable energy development in China, contact the report’s authors Dr. Frank J. Matzen or Dr. Florian Ropohl.

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