The World's #1 Renewable Energy Network for News, Information, and Companies.

Renewable Energy Review: 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.

Policy Tensions as Electricity Prices Rise

Grid operators announced on 15 October that the surcharge on retail electricity prices, which funds renewable energy subsidies, will increase by 47% to just over €0.053/kWh in 2013. Given politicians’ earlier claims that the surcharge would remain at €0.036/kWh, this announcement is likely to spark both a public and political backlash.

The dilemma for Chancellor Merkel is how to balance the need for additional renewable capacity in response to the Government bringing forward the planned phase-out of nuclear power from 2036 to 2022, with a desire to keep consumer costs as low as possible in the run-up to next year’s election. The Government intends to raise its renewable electricity target from 35% to 40% by 2020, however, it seems almost inevitable that it will also need to rein in support for renewables in some way to cushion the blow to consumers.

Indeed, less than a week before the surcharge announcement, the new Environment Minister, Peter Altmeier, announced that he is considering a reform to the renewables system that would cap subsidies for wind and biomass power once government targets are reached. This could supplement the plan announced in June to cap solar payments at 52 GW.

However, this is just one of a range of options that the Government is looking at while it seeks to revise the German support scheme. Industry has called for a reduction in the number of surcharge exemptions for energy-intensive companies, while others are proposing a quota system as an alternative to the FIT. Merkel has already announced a review of exemptions, as well as a plan to prevent utilities from closing unprofitable gas plants to ensure security of supply.

It’s unlikely any of the proposed reforms will be completed before the Federal election next year, therefore energy reform proposals will be a hot topic for the 2013 election. However, it should also be noted that Article 14 Para 3 of the German Constitution stipulates that existing rights can only be withdrawn for an important reason and not without compensation. The Environment Minister has emphasized that existing FIT-qualified renewable energy installations will not face any retroactive changes in the renewable support scheme.

Notwithstanding the likely period of energy reform ahead, Ernst & Young’s German Energy Transition Index (DEX), jointly published with German grid agency, DENA, indicates sentiment over the German renewables sector has improved for most stakeholders since Q2. The index, which seeks to reflect the industry’s opinions on the progress of the transition from traditional to renewable energy, increased to 102.8 out of 200 from 100.8 earlier in the year, although grid operators and consumers in the country remain concerned security of supply.

Wind Still Key but Grid Issues Remain

Wind power is expected to remain the backbone of Germany’s energy switchover — in the first half of the year, an additional 1 GW of wind power was installed, taking total installations past the 30GW mark. This is in the context of 2020 targets of 35GW onshore capacity and 10GW offshore capacity. 

The pace of offshore developments, however, remains slower than expected, with only 200MW installed as of June 2012. While some projects are under construction, a string of high-profile postponements due to grid connection issues highlights the importance of a quick implementation of new liability regulations agreed by the Government on 15 August (due to be ratified in December).

This energy law amendment aims to raise investments and increase clarity over grid connection liability compensation, after utilities threatened to halt projects and grid operators struggled to raise financing and complete projects on time. In the meantime, DONG announced in late October that it will continue to postpone any further works on its Riffgrund 2 wind park until grid operator, TenneT provides a connection date, while TenneT has called for a moratorium on new connections until it has a clearer view on government plans.

The draft bill would make power consumers pay up to €0.25/kWh if turbine connection delays result in operators being unable to sell their electricity, while grid operators will have to pay up to 20% of damages subject to a cap of €100 million per claim. This cap limits the compensation to approximately four months of delay; in context, RWE’s Nordsee Ost wind project is currently experiencing delays of one to two years, therefore, it is unlikely this legislative amendment alone will completely solve the grid-related woes of the offshore industry.

Solar Growth Exceeds Target

According to data release by DENA, installed solar PV capacity increased by 4.9 GW peak in the first half of 2012, well above the Government’s target of 3.0 GW for the whole year. It is likely this was primarily driven by developers rushing to beat the deadline for 20%—40% FIT cuts that took effect on 1 July.

Initial data for Q3 already indicates a dramatic slowdown in installations as consumers respond to the new monthly routine of FIT cuts, which aims to avoid demand peaks. Nevertheless, total installed solar capacity now exceeds 30GW and despite the FIT cuts, the solar sector is still expected to see healthy growth as a result of module prices continuing to fall dramatically.

For more information on renewable energy development in Germany, contact the report's authors Dr. Frank J. Matzen and Dr. Florian Ropohl.

Lead image: German flag via Shutterstock

RELATED ARTICLES

Renewable energy jobs

Global Renewable Energy Employment Surges 18 Percent to 7.7 Million

Andrew Burger, Correspondent Ongoing growth in renewable energy investment and deployment is creating jobs worldwide — and lots of them. This job growth is helping governments address a fundamental economic problem plaguing developed and developing cou...
Beach sand

Italian Company Uses Sun-Heated Sand to Produce Energy

Flavia Rotondi and Alessandra Migliaccio, Bloomberg

Italy’s well-known sun and sand form the basis of many beach holidays. An Italian company has also found another purpose for the combination: energy production.

Panasonic Japan solar module manufacturing

Panasonic Ramps Up Japanese Solar Manufacturing to Meet Domestic Rooftop Demand

Junko Movellan, Correspondent Panasonic Corp, a Japanese electronics company, announced that it will expand its domestic solar cell and module production to meet the rooftop solar demand in Japan. The company will invest a total of 9.5 billion yen (US$7...

Renewable Energy Is Beginning To Power Africa

Andrew Burger, Contributor According to the International Energy Agency, sub-Saharan Africa will require more than $300 billion in investment to achieve universal electricity access by 2030. Committing more than $7 billion in U.S. government support ...

CURRENT MAGAZINE ISSUE

Volume 18, Issue 3
1505REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

EU PVSEC 2015 (European PV Solar Energy Conference and Exhibition)

The EU PVSEC is the largest international Conference for Photovoltaic re...

Sponsor/Exhibitor: MIREC Week 2015

Solectria, Pillar, and Variadores together are co-Silver Sponsors! Come ...

More Power, More Profit Tour - San Diego

Register for the SMA More Power, More Profit Tour for free, in-person sa...

COMPANY BLOGS

Can We Just Allow Florida To Be The Sunshine State?

We attended Solar Power Southeast, a regional solar show put on by&...

The Outlook for Midwest Solar

Our whirlwind solar conference tour continues! Yesterday we touched down...

Well, Hello There Southeast — We Are Excited To Be Here

We’ve traveled 651 miles into the heart of the Deep South to atten...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS