German renewable energy strategy explained
Ecellent and up-to-date summary of the German renewable energy strategy by Amory B. Lovins, American consultant, experimental physicist and 1993 MacArthur Fellow.
What's so special about Germany?
It is true, Lovins write, that Germany is not the most outstanding example among countries with limited hydro power. Denmark passed 40% renewable electricity in 2011. Portugal raised its share of renewable electricity from 17% to 45% in just five years, 2005 to 2010, reaching 70% in the rainy and windy first quarter of 2013. But unlike these economies Germany is an industrial giant, disproof of claims that highly industrialized countries, let alone cold and cloudy ones, can do little with renewables.
"Germany has doubled the renewable share of its total electricity consumption in the past six years to 23% in 2012. It forecasts nearly a redoubling by 2025, well ahead of the 50% target for 2030, and closing in on official goals of 65% in 2040 and 80% in 2050."
Effortlessly phasing out nuclear power
Lovins continue to explain how Germany is able to phase out its nuclear power without "making the lights go out, the economy crash, carbon emissions and electricity prices soar and forcing Germany to import power" as some skeptics feared.,
"[In fact] none of that happened. In 2011 the German economy grew three percent and remained Europe’s strongest, buoyed by a world-class renewables industry with 382,000 jobs. Chancellor Merkel won her bet that it would be smarter to spend energy money on German engineers, manufacturers, and installers than to send it to the Russian natural gas behemoth Gazprom. Germany’s lights stayed on. The nuclear shutdown was entirely displaced by year-end, three-fifths due to renewable growth. Do the math: simply repeating 2011’s renewable installations for three additional years, through 2014, would thus displace Germany’s entire pre-Fukushima nuclear output. Wholesale electricity prices fell 10-15%. Germany remained a net exporter of electricity, and during a February 2012 cold snap, even exported nearly 3 GW to France, which remains a net importer of German electricity."
Base load power being out-competed
Everyone with an interest in energy markets have seen how traditional base load power like coal and nuclear are fighting a losing battle against renewable, fuel-free power. Nowhere is this trend as clear as in Germany. Lovins too make this observation:
"German renewables’ dual trajectories of declining costs and rising installation rates are sending big ripples through the electricity system. Rating agencies are downgrading major European utilities because renewables — now over one-third of Europe’s generating capacity — have almost zero running cost. They can thus underbid fossil and nuclear plants, making them run fewer hours and earn lower prices, and thus slashing their profits. For example, German wholesale power prices have fallen about 30% just in the past two years to near eight-year lows, putting big utilities that under-invested in renewables under severe profit pressure."
Germany’s FiT and Electricity Rates
Critics have wrongly blamed renewables and the surcharge for Germany’s high household electricity prices.
"Many coal and nuclear subsidies came for decades from tax revenues. But Germany stopped subsidizing photovoltaics nine years ago and has adopted a more rigorous, egalitarian, effective, and transparent system of buying the power mix it wants and paying for it through an electric-bill line-item. Those renewable charges present a key choice: you can earn them back — and more — by choosing to invest in renewables personally, the way 65% of Germany’s renewable capacity is now owned. You pay the surcharge like most German citizens, but you also reap the feed-in tariff for your renewable generation. Even customers who choose not to invest in renewables, the surcharge is a tiny drop in the bucket. From 2000 to 2012, only two-fifths of the increase in the household electricity price was due to the renewable surcharge. The 2012 renewable surcharge cost the average German three-person household about ten euros a month. That’s about 3% of the household’s total energy costs, or 0.3% of its total expenditures, or less than 0.2% counting its offsetting cost reductions. You need a magnifying glass to see it."
Energy efficiency and economic growth
Lovins rounds up his article by summarizing German energy productivity.
"Germany is becoming the world’s most energy-efficient country. Since 1990 the country’s weather-adjusted primary energy use fell 11% while its real GDP rose 37%. This powerful trend is just getting started: Germany intends by 2050 to cut its absolute greenhouse gas emissions by 80-95% below the 1990 level, double its overall energy productivity from the 2020 level, and supply 60% of its total final energy renewably."
"Germany’s renewable share exceeded 1.5 times the nuclear share by mid-2012. Germany is installing 8 GW of solar power each year (more in the past three years than the U.S. added in the last 30). The feed-in tariff, now below $0.19/kWh for small PV systems, falls monthly. As liberalized power markets in Europe and the phase-out of German coal subsidies gain traction, renewable costs and subsidies are falling, and Germany’s relatively stable policy has built a world-leading clean-energy industrial base."
"Germany’s methodical and determined energy turnaround offers proof that a heavily industrialized, world-class, politically pluralistic market economy can run well on a self-financing combination of efficiency and renewables."
"The losers in the German market are those who assumed the energy turnaround couldn't work. The winners are those who applied their capital and skills to make it happen."