The urgent and ever-growing threat of climate change, coupled with the reminder of the potency of nuclear disasters (most recently, Fukushima), have led to Germany's push in instigating sweeping political reform in transforming the country's energy supply system to renewables. The resulting Energiewende - designating a significant transition in Germany's energy policy - was passed in 2011. The Energiewende is considered by far the most aggressive clean energy effort among the G20. [1] Key aspects include an 80-95% reduction of greenhouse gases by 2050 and a 40% reduction of its carbon dioxide emissions with the ultimate goal of abolition in nuclear and petroleum energy. [2]
By 2014, renewables were generating 27.3 percent of Germany's electricity. This was double America's 2014 renewables percentage of 13 percent. [1] Key elements stimulating the expansion of renewables' market share are the generous state subsidies (called feed-in tariffs) for renewables, and a so-called democratization of energy (decentralized renewable energy production, PV systems set up by individuals). The German public is vastly in favor of renewables, with more than one million people involved in the Energiewende. [2]
However, despite the Energiewende's seeming success in numbers, the energy transition has met with its fair share of pointed criticisms. The same techniques that have led to a surge in renewable energy have triggered major problems that critics in Germany and from countries such as the United States who are facing pressure to implement policies of a similar scale are quick to point out.
First of all, the system has been described as "massively expensive." [3] The annual price tag for consumers is around 24 billion euros, in large part due to the guaranteed above-market fixed price for each kilowatt-hour of energy fed to the grid that the government offers to those producing wind and solar power. [4] The government has come up with more than 4,000 different subsidy categories for renewable energy. [3] As a result, many Germans rushed into renewables production, whether through installing solar panels on their homes or buying shares to help finance wind farms. These above-market subsidies are funded by the ever-rising surcharges on electricity bills to consumers. This surcharge levied on consumers has nearly tripled since 2010 and now accounts for about 18% of a German household's electric bill. [4] Needless to say, German consumers pay among the highest electricity rates in Europe. [3]
Meanwhile, perhaps even more damning is Germany's egregious coal habit, which is severely undermining the government's clean energy push. Germany has been the largest lignite producer in the world since the beginning of industrial lignite mining. [5] Production of lignite, the dirtiest form of coal, hit its highest level in 20 years in 2012. [6] Hard coal and lignite currently account for 46% of the country's overall energy production. [6] Renewables have undercut natural gas on price, and thus the big energy companies have shifted from gas power plants to coal for generation, which is much more profitable. [2] Additionally, the government intends to phase out its nine remaining nuclear power plants by 2022, which is posing a huge obstacle for coal-slashing ambitions. Renewable energy will not be able to fully replace the resulting loss in nuclear capacity, and the country will have to further amp up coal-based power generation to cover the gap in supply. [6] The nuclear exit process has already triggered a spike in Germany's greenhouse gas emissions over the past two years, as utilities have turned to cheap coal to cover the power capacity loss from closing plants. [4] Germany currently follows the "merit order curve," which determines the order in which energy sources are used to satisfy demand. The cheapest sources is used first, then followed by sources of increasing cost. [5] Renewables are currently the cheapest energy source, then followed by nuclear, then lignite, and then coal. Once nuclear energy is phased out, lignite will move further down the merit order curve. [5]
There is no question that countries need to implement an aggressive overhaul of current energy policy systems in order to make a lasting charge against climate change. In this way, Germany's Energiewende serves as a salient example of both the positive and cautionary lessons pertaining to the economics, politics, and grid optimizations of energy transition. However, the conflicting goals of the Energiewende, namely phasing out nuclear energy while eliminating fossil fuel consumption, must be resolved before Germany can make any concrete progress towards its visions for a renewable energy future.
© Minna Xiao. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
[1] P. Sopher, "Lessons Learned from Germany's Energiewende," Renewable Energy Law and Policy Review 6, 99 (2015).
[2] "Energiewende: The Energy Transformation in Germany," Greenpeace, 7 Apr 14.
[3] A. Neubacher, "Reality Check: Germany's Defective Green Energy Game Plan," Der Spiegel, 25 Oct 13.
[4] M. Karnitschnig, "Germany's Expensive Gamble on Renewable Energy," Wall Street Journal, 26 Aug 14.
[5] A. Curry, "Germany Plans to Raze Towns for Brown Coal and Cheap Energy," National Geographic, 13 Feb 14.
[6] R. Andersen, "German Coal Industry Underpins Renewable Push," BBC News, 10 Apr 14.