EU Drives German Energy Policy

Yesterday, the German government held a press conference on the energy transition, which apparently put a lot of reporters to sleep. During the event, Environmental Minister Peter Altmaier found time to engage in a debate with us on Twitter. Craig Morris thinks he won that debate, by the way. And the real news came out of Brussels, not Berlin: German energy policy may violate competition rules.

The chemical industry in Germany is one of the main industrial consumers of power and often excluded from the surcharge and even grid fees. (Photo by Gerd W. Zinke, CC BY-SA 3.0)

The chemical industry in Germany is one of the main industrial consumers of power and often excluded from the surcharge and even grid fees. (Photo by Gerd W. Zinke, CC BY-SA 3.0)


Altmaier tweet
The press conference aimed at reassuring everyone that the German government is making a concerted effort to coordinate its actions in redesigning energy policy for the energy transition. Unfortunately, nothing new was announced in Berlin (but there was some news from Brussels – see below). The nightly news on German TV even showed how the reporters attending did not even bother to write anything down while Industry Minister Rösler was speaking.

At the beginning of the press conference, our Arne Jungjohann (@EnergiewendeGER) tweeted a message to Peter Altmaier and got a response six minutes later (see above). I’m going to have to side with Altmaier on this one. The main problem Germany faces is definitely not that solar is growing too slowly. True, the estimated 3.9 gigawatts of PV expected to be newly installed in Germany this year is far less than the 7.5 GW we have had annually over the past three years, and a lot of installers (above all) will be hurt. But while 3.9 GW of PV is less than what most experts believe we need – the estimates range from Photon’s 5.7 gigawatts to our colleague Volker Quaschning’s 10 gigawatts (see our rendition of his “dental chart” here), the German limit on feed-in tariffs (offered for 20 years) is 52 gigawatts. Divide 52 by 20, and you get an annual installation average of 2.6 GW – far below the 3.9 we might have this year. So the collapsing PV market in 2013 is a problem, but not the biggest one.

Altmaier is right to emphasize onshore wind, the energy source we need the most to keep the cost of the overall transition down. Furthermore, studies regularly show that we need to grow wind and solar at roughly the same rate – which means we should focus on doubling our annual installations of wind power.

What we need most of all is a coal phaseout, not only to reduce carbon emissions, but also to ensure that flexible gas turbines will be on hand to provide dispatchable power when the wind is not blowing and the sun is not shining.

Renewables are not the main reason for rising surcharge

As the renewables surcharge shows, a lot of the costs associated with renewables are actually related to exemptions.

But the real news came from Brussels yesterday with the announcement that the exemptions to grid fees offered to large companies may distort competition. Firms that consume at least 10 gigawatt-hours over at least 7,000 hours per year pay nothing for grid usage. The policy is technically unrelated to renewables, but the conflict shows that the German government’s attempts to keep our prices down for industry seem to be coming to an end.

The media depicted the press conference as devoid of content and a waste of time, and the nightly news even showed Minister Altmaier tweeting during the conference. But I must speak up for Minister Altmaier here – he was engaging in a crucial policy debate with Very Important People!

Craig Morris (@PPchef) is the lead author of German Energy Transition. He directs Petite Planète and writes every workday for Renewables International

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Craig Morris

Craig Morris (@PPchef) is the lead author of Global Energy Transition. He is co-author of Energy Democracy, the first history of Germany’s Energiewende, and is currently Senior Fellow at the IASS.

5 Comments

  1. Sascha Röber says

    Hello.

    a) Isn’t it 1 GWh / yr rather than 10 (which is the old threshold)?
    b) In his “Strompreisbremse” concept, Altmaier was silent about offshore, the technology which makes renewable energies unnecessarily expensive (owed to his colleague Rösler who soleley supports the interest of E.on, RWE, Vattenfall, and EnBW).
    c) What is the real news in the chart? Its facts have been known for months…

    Kind regards
    SR

    • Craig Morris
      Craig Morris says

      Sascha, I checked again, and it looks like 10 GWh is correct. You may be thinking of the exemptions to the renewables surcharge (EEG-Umlage).

      The chart is not new; I merely used to point out what the cost impact of industry exemptions looks like within the renewables surcharge. (But perhaps I should remove it because of the potential confusion between the exemption to the surcharge and the exemption to grid fees…)

      Otherwise, I agree with you about offshore wind.

  2. Karl-Friedrich Lenz says

    Why does it make sense to divide 52 by 20? The twenty years duration for feed-in tariffs have nothing to do with the cap of 52 GW. Also, we already have over 32 GW, so there are only 20 left until the cap. I certainly hope it doesn’t take 20 years to get there…

    • Craig Morris
      Craig Morris says

      There is no need to divide 52 by 20, and as you point out we could just as easily subtract the 32 we already have from the target of 52 for 2020. That would give us eight years to build 20 GW, equivalent to 2.5 GW per year – far less than what we are talking about above. So consider my figures above conservative.

      Also, Germany has never considered its targets to be ceilings, as is done in the US, so growth generally continues after targets are met. Mainly, I’m trying to put everything into perspective – 3.9 GW of PV is not the end of the world at this point in terms of the overall picture (as much as it will hurt installers).

  3. ArneJJ says

    I completely agree that ~3GW additional solar capacity per year is a solid and steady growing PV market. Still, in the context of the “Strompreisbremse” (slowing energy price increases) it is ironic that Peter Altmaier and the German government cut down solar growth when it’s getting so cheap. There are many other ways to cutting energy bills for consumers. Reducing the installation of new solar panels that produce electricity for half the costs of some years ago should not be one of them.

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