The accelerating downward pressure on onshore wind energy expansion in Germany is paralyzing the industry. Community-owned renewable producers have been hit hardest, and elbowed out of the few markets that remain. L. Michael Buchsbaum takes an in-depth look.
Organized by the World Wind Energy Association (WWEA), LEE NRW and others, one of the major themes of the 4th International Community Wind Symposium and Community Power Forum held recently in Bonn is the accelerating collapse of the overall onshore wind energy sector in Germany and the particular challenges faced by smaller, often municipal producers.
With only 194 megawatts of new onshore wind energy capacity installed throughout the five months of 2019, expansion has plummeted to the lowest level since the beginning of the “Energiewende” or energy transition. “We are now in crisis,” said Stefan Gsänger, WWEA’s Secretary General. In Germany’s largest and most industrial state, North Rhine Westphalia, wind energy expansion is in free-fall, slumping an alarming 95 percent. At this rate, industry trade group WindEurope warns that Germany “will be lucky to reach two-gigawatts” of new installed capacity by year’s end. Gsänger predicts it’ll be even lower, maybe not even breaking 1GW.
In 2017, supposedly to increase cost efficiencies, the overall amount of wind energy expansion was initially capped to 2,800 and 2,900 MW a year by setting an annual auction tender volume—though many suspect the real reason was to keep growth in check—Mission accomplished! But ever since, several botched auction designs have led to “a series of cascading problems,” said Indrayuth Mukherjee, a global wind power analyst with IHS Markit. Through two auction rounds in 2019 “only 746 megawatts were awarded, although 1350 megawatts were tendered,” meaning there were no bids for nearly half of what remains available within the government-approved growth channel.
Even worse, acute understaffing in the permitting offices has doubled the average time to receive a permit to some 300 days, according to the German wind energy association Bundesverband WindEnergie (BWE). As of the first quarter of 2019, only 413 megawatts of capacity got through the whole process.
Auctions aren’t a FiT for community groups
Following energy market liberalization in the early 2000s, pioneering citizen groups banded together to develop wind energy sites throughout the nation. Aided by a Feed-in-tariff (FIT) that allowed almost immediate returns on investment, smaller companies and grassroots citizen cooperatives pushed from the ground up to expand the nascent renewables sector. Citizen-energy producers became key players in the German Energiewende, with over 1000 cooperatives being formed nationwide. Even to this day, 42% of all German renewable energy plants are run by private individuals or farmers. While small producers can still receive FITs, virtually all commercial or non-profit generators are excluded.
Despite their successes helping to propel the early Energiewende, over the last few years very few new community groups have been formed. As turbine technology matures and more complex, high-productivity wind farms are built by large corporations, community wind developers are finding themselves increasingly penned in.
A new study from WWEA and LEE NRW, “Community wind in the second year of auctions: a lot of shadow, little light”, shows that the shift in the remuneration system from feed-in tariffs to auctions in 2017 has exposed the community wind sector to a slew of challenges, as the specific conditions and interests of the community power projects have been given insufficient consideration.
This shift is a fatal flaw, says Jan Dobertin, Managing Director of LEE NRW, “because community power plays a central role in the acceptance of the energy transition.” Indeed, as larger corporate producers come to dominate, protests against new onshore wind energy are increasing.
Under the previous policy, FITs ensured cashflow once a project was hooked up to the national grid. Now under the auction system, community developers have to put up substantial permitting and auction processing fees, “money they don’t get back if they don’t win their bids.” Moreover, even if they do win, the long lead times between auction decisions, permitting and project realization are creating additional burdens. Beyond taking months, “the process can cost several hundred thousand Euros, which gets lost if approval isn’t won,” said Gsänger.
North Rheine Westphalia in particular
Beyond being battered by “risky auctions” developers are also facing “increasingly restrictive approval procedures,” said Dobertin. The crackdown is about to get even worse in NRW, home of energy giant RWE, the embattled Hambacher Forest and the biggest lignite mines in all of Europe.
The state is about to introduce a new minimal distance requirement preventing any new turbines from being erected within 1500 meters of any houses and excluding wind energy development within all forests. Oddly these restrictions don’t exist for the coal pits there, whose expansion is forcing the destruction of whole towns while the lignite itself is burned inside the biggest climate killers on the continent. Other German states are passing similar rules.
These restrictions are certain to crush NRW’s withered wind industry, all but eliminating the state’s previous 15% wind by 2020 goal. “While you could go ahead and challenge this in the courts, for community developers and smaller players, you can’t afford to face an army of lawyers while fighting a long case. So you just give up,” said Gsänger.
Community energy’s path forwards
In order to breath new life into the whole system, and in particular for community groups, “the bureaucratic hurdles should be lowered not only in the wind farm approval process, but also for the direct marketing of electricity from community power plants as well as for sector coupling approaches,” said Gsänger. This, coupled with a return to a FIT support plan, seems to him completely justified considering the recent European Court of Justice ruling that renewable energy promotion through the former German feed-in legislation does not constitute state aid.
Undaunted, whilst struggling to expand in volume, community power producers are pushing to expand their services, especially into direct marketing, heat, and electro-mobility: community-owned and -shared electric vehicles powered by community-generated renewables. “While we know this is something we probably won’t make a lot of money with, it’s a way to attract new clients and increase overall participation,” said Gsänger.
“What’s so frustrating is that our members tell us that today’s competition isn’t over capital, it’s over opportunities. The system ensures that only the larger investors can participate in the renewable energy expansion. It’s permitting, not costs that are the issue,” Gsänger continued. “Indeed, IRENA just published a study showing that renewables are the least expensive energy option almost everywhere in the world—especially in Germany.”
Without a swift reversal in policy, its unlikely Germany will be able to meet its Paris Accord agreements or 2030 renewable energy targets. Moreover, by increasingly cutting out the power of the citizen-energy producers who fought for and demonstrated the viability of the Energiewende while bolstering its popularity, the current “Grand Coalition” government is instead demonstrating its inability to protect its citizens from the widening climate crisis. Despite Berlin’s current paralysis of energy progress, physics remains stubbornly apolitical.