Energiewende” by Peter Sopher, energy policy analyst at Environmental Defense Fund (EDF), is the first of three articles featured in Volume 29, No. 3 of the Renewable Resources Journal. Germany has emerged as a leader in the development and incorporation of renewable energy into a national energy grid. The Energiewende, defined as the transformation of Germany’s energy supply system to renewables, is by far the most aggressive clean energy effort among the G20. The renewable mix in Germany’s electricity generation has increased from 6% in 2000 to close to 28% during 2014. This is double the U.S. 2014 renewables percentage of about 13%.
Germany has been transitioning while maintaining high public support, increasing employment in the renewable energy sector, establishing itself in the global green technology sector, improving the cost-competitiveness of renewables, and maintaining high grid reliability.
Politically, the energy transition generally maintains a high level of public support. Approval rating numbers are between 56% and 92%. In fact, a 2014 survey by polling company Allensbach shows that 67% of Germans think their country is not doing enough to move to renewables.
Economically, the transition is pointing towards long-term macroeconomic gains. Germany’s renewable energy sector employment doubled to 363,100 between 2004 and 2014, with 70% of 2013 renewables employment attributable to the Renewable Energy Sources Act (EEG). Research suggests that investments in the Energiewende have allowed Germany to establish a 14% market share, second only to China, of the global green technology sector. In 2013, green technologies accounted for 13% of Germany’s GDP. The cost competitiveness of renewables is also improving – premier wind farms produce electricity at a price comparable to that of gas and coal plants, and solar PV is now competitive with residential electricity tariffs in Germany.
According to the System Average Interruption Duration Index (SAIDI), which measures the average interruption time per electricity customer, Germany has maintained impressive grid reliability throughout the Energiewende. In 2012, Germany’s SAIDI score was the third best in Europe and less than a tenth of 244, the most recent statistic from the United States. This score improved in 2013, even with an electricity generation mix of 25.3% renewables.
Despite its success, the Energiewende faces political, economic, and grid infrastructure challenges.
Politically, challenges include building and maintaining popular support for renewables integration, reconciling overlapping responsibilities both within and between various levels of government, and navigating the instabilities associated with partisan politics. Two interest groups, the Conventional Energy Coalition and the Sustainable Energy Coalition, support fundamentally different energy systems that oppose each other. At the federal level, six ministries have jurisdictions relevant to the Energiewende, complicating governance. Germany’s federalism adds further complexity – while states have recently agreed to improve cooperation and relinquish more planning decisions to the federal government, unclear jurisdictions and lack of accountability are still prevalent. Finally, partisan politics may interfere with the long-term implementation of the transition. Although the Energiewende has long-term goals, the heads of governing ministries fluctuate in the short-term. This leaves the long-term efficiency and effectiveness of the transition vulnerable to political dynamics. Given these numerous political challenges, consistent and transparent communication with the public is crucial to sustaining support for the transition.
Economically, the long-term benefits of the transition come with short-term costs, particularly for energy-intensive industries and low-income households. The “EEG Levy” contributes largely to the Energiewende’s costs. This levy, the difference between the set feed-in price for renewable energy sources and the trading price of electricity, amounted to €23.6 billion in 2014. Although energy-intensive industries receive significant EEG discounts, industries and consumers still bear the burden of increased energy costs.
While Germany’s SAIDI scores remain high, renewable energy still has impacts on the electricity grid that must be addressed to maintain high reliability in the future. The Energiewende has contributed to a spike in grid congestion, both domestically and for Germany’s neighbors. Expansion of electricity infrastructure is advancing slower than planned. Additionally, intermittent renewables will continue to require robust backup capabilities. Germany may need to rely on imported energy in certain situations and incorporate flexibility mechanisms to improve reliability. Even the strongest proponents of the transition agree that Germany needs to reform its energy system to accommodate renewable energies.
Germany’s the Energiewende provides, and will continue to provide, lessons to other countries on the complexities of managing an ambitious energy transition.
Volume 29, Number 3 of the Renewable Resources Journal is available for free download. For more information on the Energiewende, visit http://energytransition.de/. RNRF also held a round table discussion with Dr. Georg Maue, First Secretary for Energy and Climate at the German Embassy, in April 2015. Download his presentation on the Energiewende here.]]>