Germany in transition

From an economy addicted to coal and nuclear energy, Germany is fast transforming into one driven by renewables. Its aim is to demonstrate to the world that growth and decarbonisation can go hand in hand. Chandra Bhushan and Ankur Paliwal travel to Germany to understand how it is doing so and what it will take to achieve this vision

By Ankur Paliwal, Chandra Bhushan
Last Updated: Thursday 11 June 2015

Germany in transition


“Noise from wind farms is actually music to our ears. We earn more money.” This is how Christian Carstensen, a resident of Ellhöft village on the northern tip of Germany, explains people’s tolerance of the wind turbines set up next to their houses. He himself has invested in wind farms and a solar plant. Ellhöft is in Schleswig-Holstein state that has the highest density of wind turbines in Europe. Wherever one goes in the state, wide plains dotted with wind turbines dominate the view. In most villages and towns the common sight is glittering rooftops, covered with solar panels. People in Germany are pooling in money and setting up wind farms, especially in the windswept north, or solar panels and selling electricity to utilities because the government guarantees them premium tariffs for 20 years.

More than half the renewable energy capacity in Germany is today installed and owned by individuals and farmers’ cooperatives, not big power companies. Close to 1.3 million households are producing energy using solar photovoltaic panels. In the south, where the sun is relatively stronger, the state of Bavaria alone has more installed solar photovoltaic (PV) capacity than the US. Germany is expanding its renewable energy capacity at a staggering pace. In wind installation capacity it now beats all countries other than China and the US.

Germany, the most populous country of the European Union, is carrying out the biggest and the fastest transformation in the world from coal and nuclear energy to clean energy. The official word for this transition is “energiewende”, which in English means energy transition. It is the buzzword in the country.

In the capital city Berlin, energiewende can be seen written on hoardings close to bus stops and train station. Newspapers, TV channels and radio stations are excitedly debating energiewende. People are largely aware of the word. Bernhard Elias publishes works of artists but knows that energiewende is about rethinking the supply and use of energy.

“It is about renewable energy, efficient transport and energy efficiency,” says Elias. He cycles to work and is planning to have energy-efficient lighting in his office on Berlin’s Brunnen Street. Energiewende is also a popular agenda in the general elections scheduled for September 22.

Germany’s targets for 2050
What started this energy transition in Germany? The term “energiewende” was coined in 1980 in a study by the Institute for Applied Ecology in Germany. The groundbreaking study was perhaps the first one to argue that economic growth is possible with lower energy consumption. In fact, Germany was the first country to introduce the concept of feed-in-tariff (FIT) in 1991, even before the Rio Earth summit.

FIT is the high price paid for per unit of electricity generated through renewable energy sources. But it was not before 2000 that FIT was formally introduced in legislation with the passage of Renewable Energy Act, popularly known as EEG. The law specifies that renewables have priority on the grid and that investors in renewables must receive sufficient compensation to provide a return on their investment irrespective of electricity prices on the power exchange.

Then in 2001, the combined majority of the Social Democratic Party and Green Party decided to phase out nuclear power by 2022. The country introduced another piece of legislation to propel energy transition, Renewable Heat Act, in 2009. Its aim is to increase the share of heat generated through renewable sources to 14 per cent by 2020.

Installed capacity of renewableThe next year in 2010, Germany set ambitious targets to have 80 per cent share of renewable energy in the total electricity mix by 2050; to reduce power consumption by 25 per cent below the 2008 level by 2050; to reduce primary energy consumption by 50 per cent below 2008 levels; and to have a carbon-neutral economy by 2050.

But by then Chancellor Angela Merkel-led Christian Democratic Union government developed cold feet over phasing out nuclear power. It passed a law to prolong the life of nuclear plants till 2040. In a few months, though, it had to roll back its decision due to public outcry after the Fukushima disaster in March 2011.

In June that year the phase-out plan was passed with 85 per cent majority in Parliament and immediately eight nuclear power plants were shut down. At present, only nine plants are in operation; they will be shut down in phases by 2022. Reaffirming its targets, the German Parliament unanimously voted to transform its energy sector from nuclear and coal to renewable within next four decades. Energiewende was back into the political system and this time with full force.

The successful FIT scheme has led to the tremendous growth of renewables. Its share in electricity has jumped from 7 per cent in 2000 to the current 23 per cent—among the highest in the world. Unlike other countries where hydropower constitutes the bulk of renewables, in Germany it is solar and wind power.

Germany has onethird of all the solar PV installed in the world. For the past 10 years it has been a net exporter of electricity. This holds true even after eight nuclear power plants were shut down in 2011.

Share of electricity from renewables is rising

The FIT regime has also led to an enormous decline in the cost of key renewable energy technologies, solar PV and wind turbines. The cost of power generated by wind and solar energy has decreased by 50 per cent and 80 per cent respectively since 1990.

And it continues to decrease. According to an estimate by Agora Energie wende, a Berlin-based policy think tank working on Germany’s energy transition, by 2015 it would be possible to generate electricity by newly built wind and PV plants at a cost of 7-10 euro cents per kilowatt-hour (kWh).

Then, it would be on a par with power from new gas and coal plants. “In good locations like Bavaria in south Germany FIT for solar PV has fallen to about 10 cents per kWh.

Electricity from wind in north Germany is possible at about 7 cents per kWh,” says Patrick Graichen, senior associate with Agora Energiewende. EEG, however, ensures that onshore wind farms will continue to get 7-10 cents for every unit of electricity sold and solar PV plants 12-18 cents for 20 years.

Wind and solar have emerged as clear winners among the renewable energy technologies. Wind alone accounts for 8.5 per cent of the total energy produced in the country and solar, 4.5 per cent. “Other renewable sources are either more expensive or have limited potential for expansion,” says Graichen. For example, biomass energy cannot have a big share because agriculture and forest are limited in Germany and the use of biomass for energy competes with other potential uses such as food and paper production. Besides, biomass is an expensive source of energy. Unlike solar and wind, its cost has only increased over the years.

Wind and PV power will be generating 70 per cent of the renewable energy in Germany by 2022, according to the Federal Network Agency, the regulatory authority on the electricity, gas, telecommunication, post and railway networks. But that would be possible only if Germany meets the emerging challenges. Rising cost of electricity has begun to pinch citizens, who are footing the bill for this transition by paying renewable surcharge. Besides, Germany is yet to have enough transmission lines and storage to absorb its increased capacity.

The great energiewende experiment has entered a crucial phase.

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  • Excellent article. Yes.

    Excellent article. Yes. Germany is advancing in leaps and bounds in Renewables. The fact that Germany once a Nuclear country chose to switch over to Renewables is a lesson for other countries to follow.
    Dr.A.Jagadeesh Nellore(AP),India

    Posted by: Anonymous | 7 years ago | Reply
  • Excellent story. It was

    Excellent story. It was mentioned in the article about Ellhoft: electrifying cooperatives.

    Energy Cooperatives

    Citizens, communities and local economy in good company

    The expansion of renewable energies leads to fundamental changes concerning our energy supply. Wind turbines in the landscape, photovoltaic systems on roofs or farms with biogas plants are visible indications for the development in that sector. Heat pumps, wood pellet and woodchip heating plants provide heat and relieve whole villages from fossil fuels.

    Renewable energies do not only protect the climate, but also improve the security of supply, create new jobs and increase the regional income. The decentralized nature of renewable energy gives every citizen the opportunity to make an active contribution to the transformation of energy supply, either by building their own facilities or by participating in community projects.

    In the last three decades, people came together in numerous citizensÔÇÖ groups, local councils and regional businesses to establish common renewable energy projects in their region.

    Energy cooperatives as organisational form are growing a lot in popularity because they offer a variety of possibilities for action and design. Currently, more than 80,000 citizens in Germany hold shares in new energy cooperatives. They can already participate with small amounts. In the last years, more than 500 newly-founded energy cooperatives invested a total of 800 million euros in renewable energy. This is confirmed by a recent study of the DGRV( SourceDGRV).

    The move away from conventional sources of energy in Germany is driven primarily by citizens. An increasing number of people work together by forming cooperatives to build wind farms and solar plants.
    Cooperatives have experienced a revival in Germany. In 2006, eight new energy cooperatives were founded. In 2011 alone, this number was 167. And the German Cooperative and Raiffeisen Confederation expects the figure to be even higher for 2012.
    This kind of growth is vital if Germany wants to phase out its nuclear energy dependency by 2022. By promoting energy policy at the local level, communities all over Germany are profiting from renewable energy sources and the power of cooperatives.
    A typical example of this growth is seen in the Horb Ecumenical Energy Cooperative in Stuttgart, which has implemented several solar power plants. Bernard Bok was a driving force in this task: before his retirement he was on the board of the local cooperative Volksbank, so he was interested in helping the cooperative.

    For him there was no question, the development of renewable energy needed the strong legs of a cooperative to stand on. ÔÇ£We are in a country of cooperatives,ÔÇØ said Bok.
    Nowhere in Germany are cooperatives represented more strongly than in southern German. Small-scale farming was expected to expand so local farmers organized themselves into agricultural cooperatives.

    Citizen participation instead of anonymous investors
    In the mid 19th century, cooperative were born out of necessity. But today, people come together for different reasons: the desire for self-government and citizen participation is growing stronger. People are looking for an alternative to unknown investors and prefer to follow their own agenda istead of being dependent on others.
    Thus, in times of global economic turmoil, local communities and civil societies are a deliberate counterpoint to the international financial markets. Often traditional cooperative banks, such as the Volks- and Raiffeisenbank, participate in the funding and financing of local cooperatives.
    Large projects are possible
    The range of energy cooperatives is large, and it is not limited to just solar or wind power. For example, a cooperative in the community of St. Peter in the Black Forest last year built a plant for local thermal power.
    A modern wood heating plant provides heat for the town of 150 houses, which have made oil heaters obsolete. About 8,500 meters of piping were laid in the village for the cooperative.
    To complete the project, different stakeholders came together from over the region each bringing their own specific professional knowledge. Markus Bohnert, a board member of the citizens cooperative, has worked as a forester. Other supporters had backgrounds in heating construction, building design or marketing.
    The idea for this cooperative started in 2007. A subsequent survey of all citizens of St. Peter showed that people were very receptive. Above all, the major local consumers wanted to be a part of the project including municipal buildings, church facilities, as well as many hotels and restaurants it the town center. As a result, "People's Energy of St. Peter" was founded.

    The number of people required to found a cooperative has dropped from seven to three people. Similarly, the required number of board members was reduced for small cooperatives.
    With these changes, cooperatives have been gaining speed: According to the umbrella organization for cooperatives in Baden-W├╝rttemberg, southern Germany, one in three citizens are a member of a cooperative( Source: Energy Cooperatives are booming in Germany,DW).

    Another area that is advancing in Germnany is Offshore Wind Farms:

    The use of the offshore wind energy in German waters predominantly takes place outside the 12 sea mile zone in the exclusive economic zone (EEZ). With this, the majority of the planned projects and those still in operation is located in the high seas of the German North and Baltic Sea. At the end of August 2013, 520 MW of offshore wind capacity was being connected to the grid in Germany. By 2030, a capacity of 25,000 MW is to be connected to the grid according to the plans of the Federal Government.

    Currently, offshore wind farms (OWP) with a total capacity of about 1,600 MW are being constructed; wind farms with a capacity of 9,000 to around 10,500 MW received an authorization. Moreover, further 94 projects with about 6,600 Off WEA and a total capacity of up to about 30,000 MW are in the process of authorization so that all in all, about 40,000 MW are in the planning stage (as at September 2012). The maps of the German North and Baltic Sea provide an overview of both the location and the status of the projects(Source:OFFSHORE - WINDENERGIE.NET).

    I have been advocating starting Wind Farm co-operatives in India on the lines of those in Germany,Denmark etc. for over a decade. Hitherto Depreciation benefits were goiven to large industries. A WIND FUND can be created and people( Individual Tax Payers) can be exempted if they invest in this Wind fund under Section 80C. This way there will be wide participation of People in Wind Farms. Another area that needs immediate attention is Offshore Wind Farms. I had been suggesting Offshore Wind Farms since India has long coast line. Winds in the sea are about 30% more than on land and since Power is cube of velocity,offshore wind farms give higher yields.Atleast a Pilot Project can be started by MNRE so that Private Industry follows.

    Dr.A.Jagadeesh Nellore(AP),India
    Wind Energy Expert

    Posted by: Anonymous | 7 years ago | Reply
  • Excellent article. I

    Excellent article. I especially appreciate the detailed coverage of small communities establishing their own energy supply and generating income from supplying energy to the grid. we need more examples of this so that many other communities around the world can start similar initiatives or encourage their legislative bodies to promote this as Germany has.
    Thank you

    Posted by: Anonymous | 7 years ago | Reply
  • Germany's renewable energy

    Germany's renewable energy sector is among the most innovative and successful worldwide. The share of electricity produced from renewable energy in Germany has increased from 6.3 percent of the national total in 2000 to about 25 percent in the first half of 2012. In 2011 20.5% (123.5 TWh) of Germany's electricity supply (603 TWH) was produced from renewable energy sources, more than the 2010 contribution of gas-fired power plants.
    According to official figures, some 370,000 people in Germany were employed in the renewable energy sector in 2010, especially in small and medium sized companies. This is an increase of around 8 percent compared to 2009 (around 339,500 jobs), and well over twice the number of jobs in 2004 (160,500). About two-thirds of these jobs are attributed to the Renewable Energy Sources Act Germany has been called "the world's first major renewable energy economy"
    Since the passage of the Directive on Electricity Production from Renewable Energy Sources in 1997, Germany and the other states of the European Union have been working towards a target of 12% renewable electricity by 2010. Germany passed this target early in 2007 when the renewable energy share in electricity consumption in Germany reached 14%. In September 2010 the German government announced the following new ambitious energy targets:
    ÔÇó Renewable electricity - 35% by 2020, 50% by 2030, 65% by 2040, and 80% by 2050
    ÔÇó Renewable energy - 18% by 2020, 30% by 2030, and 60% by 2050
    ÔÇó Energy efficiency - Cutting the total energy consumption by 20% from 2008 by 2020 and 50% less by 2050
    ÔÇó Total electricity consumption - 10% below 2008 level by 2020 and 25% less by 2050

    Germany's renewable energy sector is among the most innovative and successful worldwide. Nordex, Repower, Fuhrländer and Enercon are wind power companies based in Germany. SolarWorld, Q-Cells and Conergy are solar power companies based in Germany. These companies dominate the world market. Every third solar panel and every second wind rotor is made in Germany, and German turbines and generators used in hydro energy generation are among the most popular worldwide.
    Siemens chief executive, Peter L├Âscher believes that GermanyÔÇÖs target of generating 35 per cent of its energy from renewables by 2020 is achievable ÔÇô and, most probably, profitable for EuropeÔÇÖs largest engineering company. Its ÔÇ£environmental solutionsÔÇØ portfolio, which is firmly focused on renewables, is ÔÇ£already generating more than Ôé¼27 billion a year, 35 per cent of SiemensÔÇÖ total revenue, and the plan is to grow this to Ôé¼40 billion by 2015ÔÇØ. Ending its involvement in nuclear industry will boost the credibility of Siemens as a purveyor of ÔÇ£green technologyÔÇØ.
    Germany's main competitors in solar electricity are Japan, the US and China. In the wind industry it is Denmark, Spain US and the China.

    Increases in installed renewable electric power capacity and generation in recent years is shown in the table below:
    Year Installed
    [MW] Hydropower
    [GWh] Wind energy
    [GWh] Biomass
    [GWh] Biogenic share
    of waste
    [GWh] Photovoltaics
    [GWh] Geothermal
    [GWh] Total electricity
    [GWh] Share of gross

    1990 4,069 15,580 71 221 1,213 0.6 17,086 3.1
    1991 4,097 15,402 100 260 1,211 1.6 16,974 3.1
    1992 4,331 18,091 275 296 1,262 3.2 19,927 3.7
    1993 4,483 18,526 600 433 1,203 5.8 20,768 3.9
    1994 4,864 19,501 909 569 1,306 8.0 22,293 4.2
    1995 5,464 20,747 1,500 665 1,348 11 24,271 4.5
    1996 5,874 18,340 2,032 759 1,343 16 22,490 4.1
    1997 6,477 18,453 2,966 880 1,397 26 23,722 4.3
    1998 7,473 18,452 4,489 1,642 1,618 32 26,233 4.7
    1999 9,012 20,686 5,528 1,849 1,740 42 29,845 5.4
    2000 10,875 24,867 9,513 2,893 1,844 64 39,181 6.8
    2001 13,756 23,241 10,509 3,348 1,859 76 39,033 6.7
    2002 17,487 23,662 15,786 4,089 1,949 162 45,648 7.8
    2003 20,857 17,722 18,713 6,086 2,161 313 44,995 7.5
    2004 24,074 19,910 25,509 7,960 2,117 556 0.2 56,052 9.2
    2005 28,122 19,576 27,229 10,978 3,047 1,282 0.2 62,112 10.1
    2006 31,883 20,042 30,710 14,841 3,844 2,220 0.4 71,657 11.6
    2007 35,479 21,169 39,713 19,760 4,521 3,075 0.4 88,238 14.3
    2008 39,597 20,446 40,574 22,872 4,659 4,420 17.6 92,989 15.1
    2009 46,584 19,036 38,602 38 25,989 4,352 6,583 18.8 94,618 16.4
    2010 55,742 20,956 37,619 174 29,085 4,781 11,683 27.7 104,372 17.1
    2011 65,843 17,674 48,315 568 31,920 5,000 19,340 18.8 123,519 20.5
    2012 76,017 21,200 45,325 675 35,950 4,900 28,000 25.4 136,075 22.9

    Source: B├Âhme, Dieter (February 2013). "Entwicklung der erneuerbaren Energien in Deutschland im Jahr 2012"(PDF). Federal Ministry for Environment, Nature Conservation and Nuclear Safety. Retrieved 20 April 2013.
    Indeed Germany has shown the path for a gradual transition from Conventional Energy to Renewable Energy and it is hoped other countries will follow the fine Example of Germany.
    Dr.A.Jagadeesh Nellor(AP),India

    Posted by: Anonymous | 7 years ago | Reply
  • A very thorough and

    A very thorough and well-researched article!
    It is right that the Energiewende is quite expensive, but on the other hand the Germans are strongly against nuclear power and more than happy to get rid of it. The other thing is that we don't have a lot of fossil resources. We buy gas from Russia and coal from China and India, so it seems like a sensible thing to use renewable sources to become more independent.
    People aren't buying electric cars just yet, but that will be the next step: To fuel cars with electricity from renewable sources. This will keep the automobile industry going (sadly that is the most important thing in Germany), but it will also reduce pollution and the need for oil.

    Posted by: Anonymous | 7 years ago | Reply
  • What is the source/reference

    What is the source/reference used for the figure of 1.3 million households using solar PV? I have been unable to find this exact data anywhere else online.

    Posted by: Anonymous | 6 years ago | Reply