This month, the German government met with state representatives but failed to reach an agreement. The second meeting is scheduled for May 31. At the moment, both sides have simply agreed to disagree. Berlin wants to dramatically slow down the energy transition, and some states will have none of it. Craig Morris explains.
The general sentiment in the German wind sector is that the market is currently booming because of concern about policy changes to be implemented next year. After roughly a decade of just below two gigawatts of new wind turbines annually, the market roughly doubled to around four gigawatts of new installations in 2015 and 2016. As I explained last summer, the government aims to respond to this boom it artificially brought about with a bust. Within just a few years, the market for new wind farms could almost dry up completely. What’s going on?
This month, German Chancellor Angela Merkel and Economics Ministers Sigmar Gabriel met with the governors of the country’s 16 states. Berlin remains committed to its corridor of 40 to 45 percent renewable electricity by 2025. The problem is that even the upper limit will require the market to slow down by nearly two thirds, and a separate target for offshore wind leaves little space for anything else. Furthermore, rooftop PV will be hard to stop without draconian policies that are politically untenable. And biomass growth has already been killed. So onshore wind power – the cheapest source of renewable electricity in Germany by far – is the only thing left to cut back on.
The government claims that it wants to reduce the cost impact of the transition. Unfortunately, the focus on offshore wind will do the opposite; up to 19 cents is paid for a kilowatt-hour of power from offshore wind, compared to a maximum of nine cents for onshore. Furthermore, the worst price increases are behind us; more renewable electricity will hardly raise the price significantly. The State of Baden-Württemberg, which has a Green governor, recently had the Öko-Institut calculate the savings from the proposed legislation, which came in at one euro per household per month over the next decade – not much in light of the average power bill of 84 euros monthly, a level that has been stable for the past three years.
In addition, Energy Minister Gabriel says in defense of the proposed slowdown that the exact percentage of renewable electricity is less important than expanding the grid in time (report in German). This view holds true especially if the focus remains on offshore wind, which concentrates installations in a small number of areas where no electricity at all is consumed. If the focus were more on sector coupling, as the head of German Energy Agency Dena and practically all community activists would prefer (report in German), grid bottlenecks would be mitigated not by constructing even more power lines, but by charging electric vehicles at times of excess power supply and by storing excess grid electricity as heat.
The number of jobs in the PV sector has already dropped from around 100,000 to 50,000. An estimated 150,000 people still work in the wind sector, however. If Minister Gabriel is not worried about the exact percentage of renewables, he should be more flexible on the growth of onshore wind. The market is admittedly already globalized, and most of German firms in the wind sector are largely export-based already. Nonetheless, forcing these businesses to weather several years of stagnation on their home market is outright irresponsible.
Finally, the states are concerned about community projects. Berlin has rejected the proposal to have such groups take part in auctions as non-competitive bidders (meaning they could go ahead with their projects at whatever price the auctions produce), but the states have not given up.
One thing is already certain: the transition from feed-in tariffs to auctions will create a lot of jobs – for lawyers, bankers, consultants, and other white-collar experts. Critics of feed-in tariffs have long mischaracterized them as complicated, charging, for instance, that there were 4,000 different payment levels. In reality, however, only one applied for any particular project, and it was easy to look up in the law. The 2012 version only had 57 pages for all renewables.
The new draft for the switch to auctions has 269 pages (PDF in German), and that does not even include the separate 114-page document for offshore wind (PDF in German). Clearly, Berlin has worked hard to slow down the Energiewende. On May 31, we will know whether state representatives have managed to forestall the worst.