The spectacular success of Germany's Energiewende- and what needs to be done next | RenewEconomy

The spectacular success of Germany’s Energiewende- and what needs to be done next

Formation of new government in Berlin will have important implications for future of the Energiewende, but much has been achieved already.


While a government is being formed in Berlin, which will have important implications for the future of the Energiewende, author and scholar Professor John Mathews of Macquarie University in Australia, looks back on what Germany has achieved so far with its unique energy policy and concludes that it has been a spectacular success, whatever its detractors may say.

But he also has some advice to offer: the German government, he writes, should be promoting the building of a European supergrid, and actively invest in storage and electric car charging infrastructure. 

The German government has been promoting renewables ever since the passage of the Renewable Energy Law in the year 2000. In 2010 the ‘grand coalition’ government led by Dr Merkel strengthened the promotion of renewables through raising the level of feed-in tariffs payable to producers.

Then the Merkel government announced, in 2011, after the Japanese Fukushima nuclear disaster, that nuclear power would be definitively phased out within a decade, by 2022. These several actions constitute the core of the ‘energy transformation’.

Germany is the most advanced industrial country to attempt such a thoroughgoing transformation of its energy sector, and its results carry global implications.

The Energiewende has been subjected to relentless attack ever since its inception, both within and outside Germany. The gist of the criticism is that the German energy transformation has achieved too little, and at too high a price. Both assertions are easily rebutted by looking at the evidence – which is what I do in this fresh post to the blog.

The story of the Energiewende can be told with reference to two original charts, one showing the electric energy generated in Germany over the past decade and a half (from 2000, the year of the Erneuerbare Energien Gesetz, or EEG) and the other showing changes in electric generating capacity over the past decade. (My thanks to Ms Carol Huang for her assistance in producing these charts.)

Figure 1. German changes in electric energy generation, 2000-2016
Figure 1. German changes in electric energy generation, 2000-2016

Chart 1 reveals that total annual generation of electricity in Germany has barely shifted over the past decade and a half; it was just under 500 terawatt-hours (500 TWh or 500 billion kWh) in the year 2000 and just over 500 TWh in 2016. But within that (more or less) constant total the changes in structure of the electric power system have been striking.

Three major changes can be identified as part of the public policy in Germany driving the Energiewende – the promotion of renewables; the phase out of nuclear; and the shift to gas within the fossil fuels.

First there is the promotion of renewables, that began in earnest with the passage of the Renewable Energy Law (EEG) in 2000 and the introduction of the German innovation of feed-in tariffs.

These provided an incentive to local producers of renewables, who under the law would be paid a certain price for renewable energy and would be guaranteed access to the grid to sell it. (There was a phased reduction or de-escalation of the feed-in tariff over time, but lawmakers were unable to keep up with the dramatic cost reductions achieved by renewables – particularly solar.)

Chart 1 reveals that renewables should generate more power than coal by the year 2020, crossing over at about 200 TWh per year

How well this has worked is abundantly clear from the chart. Renewable power generation was around 35 TWh in the year 2000 (much of this due to hydro).

It was already picking up in 2003, when it was at a level of 43 TWh (comparable at the time to the level of electricity generated from gas) and rising to 181 TWh in 2016. The headline result is that renewables as a proportion of electricity generated have risen from 5% in 2000 to 34% in 2015/16 – a green shift of nearly 30% in a decade and a half. (The 2016 total fell back a little from 34% to 33% but the 2017 total so far appears to be resurging.)

In just the last 10 years the green shift has seen the proportion of renewable power increase from 16% in 2007 to 34% in 2016 – an 18% shift to green in just a decade. This is an epic result for a system as large as the German – and is far and away (in my view) the greatest achievement of the Energiewende.

Second there is the phase-out of nuclear. Already by the year 2002 there was a government commitment to phase out nuclear – with a deadline set initially at the year 2022, i.e. within 20 years.

The reduction in electric energy generated from nuclear sources began around 2006, when it started a decline that has been relentless right up until the present.

Over the decade from 2006 to 2016, nuclear generation has declined from 159 TWh in 2006 to 80 TWh in 2016 – or a drop of 79 TWh, falling far short of the increase in power generated by renewables.

The proportion of power generated from nuclear over the same period declined from 12.5% in 2006 down to 5.5% in 2016 – or a 7% decline in a decade.

So the expansion in renewables over the past 10 years has more than compensated for the decline in nuclear power. Renewables have grown from 68 TWh in 2006 to 181 TWh in 2016 – or growth of 113 TWh, compared with the decrement of 79 TWh for nuclear. The widespread fear that German renewables would not be able to substitute for nuclear has proven to be unfounded.

Third there has been a moderate reduction in the burning of coal – which was on the way down in the early years of the Energiewende, but then staged a recovery, with coal enjoying a local peak in consumption by power generators in 2013 and it is only now resuming its downward trend.

At the same time gas saw a decline as coal consumption bulged, but gas is now increasing again, particularly since 2015, which is only to be expected. It is the continued dependence on coal which has been the least successful aspect of the Energiewende, and the one which is most in need of sustained policy attention in Germany.

Why the German NGOs are not shouting these results from the rooftops is a mystery – they are truly extraordinary results, demonstrating a determination and ambition that is unique in the developed world

If present trends are allowed to continue, the shift in proportion of renewables (18% over the past 10 years), will result in a further such shift over the next 10 years, i.e. to reach a 36% shift over 20 years. Germany would be well on the way towards eliminating coal as a source of power.

Chart 1 reveals that renewables should generate more power than coal by the year 2020, crossing over at about 200 TWh per year.

Quite remarkable

When we turn to capacity shifts, as shown in Chart 2, the situation is even more dramatic. Taking our span as the decade from 2008 to 2017, we see that power capacity drawing on renewable sources has increased from just under 40 GW in 2008 to just over 100 GW in 2017 – or more than 60 GW in the decade.

Over the same period the capacity that is nuclear powered has declined from 20 GW in 2008 to just 11 GW in 2017 – meaning that there is little nuclear capacity left in the German system to eliminate.

The green shift in capacity is quite remarkable – with renewables rising as a proportion of electric capacity from 30% in 2008 to 52% in 2016 (and even higher if we count the interim 2017 results). That’s a 22% green shift in capacity in just a decade – compared with an 18% shift in terms of electric power generated.

Why the German NGOs are not shouting these results from the rooftops is a mystery – they are truly extraordinary results, demonstrating a determination and ambition that is unique in the developed world.

german power fig 2.

The driver of all this is of course costs, which have declined precipitately over the past decade while the Energiewende has been in full swing. Costs of solar PV have fallen by 60% since 2009 – at least in California, according to the NREL (National Renewable Energy Laboratory).

The US NREL has tracked the costs of generating solar PV since 2009. In that year (Q1) the cost of residential rooftop solar PV was 7.1 cents per kW, compared with 2.93 cents in Q1 2016 – a drop of 60% over 7 years. (US Solar Photovoltaic system cost benchmark Q1 2016, at:

Does it matter that the green shift in terms of capacity does not correspond to the green shift in terms of power generated? No it doesn’t. It makes sense that the shift in terms of capacity would exceed the shift in terms of electricity generated because nuclear and coal fired power stations tend to have a higher utilization rate than renewables.

The real achievement of the Energiewende is that it has transformed the German energy system in just a decade and a half, ensuring that it is a rising industry, taking over from coal and residual fossil fuels as well as nuclear.

The shift is reflected in terms of employment; in terms of investment; in terms of reduced burden on balance of payments for fossil fuel imports; and in terms of engagement with the energy industries of the future (rather than sticking with the energy systems of the past, as the US is doing under Donald Trump).

In this sense Germany is emerging as the world’s only serious competitor for China, which is leading the way into the new 21st century energy industry.

Carbon emissions have indeed not fallen by all that much, but that is due to continuing use of fossil fuels in transport and industry

The real losers of the Energiewende have been the big coal-burning and nuclear-power companies, led by the grid giants RWE and E.ON, which enjoyed virtually guaranteed profits for decades. But the last decade of success of the Energiewende has upset these cosy arrangements. The share prices of both RWE and E.ON have plunged, and both companies have been forced to restructure.

In 2016 E.ON took the initiative and split itself into two, with E.ON retaining the renewables and grid parts of the business and a new vehicle, Uniper, taking over the fossil fuels and nuclear operations.

Then in 2017 it was the turn of RWE, where a new vehicle, Innogy SE, was created for the renewables activities. Already, by March 2017, the market capitalization of Innogy stood at 18.9 billion Euros (US$20 billion), which was more than double the value of its parent RWE.

Critical chorus

The Energiewende has attracted a critical chorus – from the Financial Times (the ‘absurdity of German energy policy’), The Economist (“It’s not easy being green”), Forbes (‘What is so revolutionary about Germany’s Energiewende?’), Forbes again (‘Germany’s green energy policy disaster”), Fortune (‘Germany’s high-priced energy revolution’) et al.[1]

Some of the criticisms are simply laments at the fading fortunes of the primary power generators, RWE and E.ON.

This was the case with the Forbes article ‘Germany’s green energy policy disaster’ (January 2017) which simply listed the ways in which the shares and net worth of shareholders in RWE and E.ON were being disadvantaged by the Energiewende – without ever asking whether the companies had been too slow to see the coming changes, and been less than enthusiastic in embracing renewables.[2]

The gist of the main criticisms is that the Energiewende has achieved modest results at a very high price. The criticisms are that it has not reduced carbon emissions by all that much; it has been too expensive; and coal burning remains on a massive scale.

Well – carbon emissions have indeed not fallen by all that much, but that is due to continuing use of fossil fuels in transport and industry. These too need to be cleaned up – but you cannot blame the Energiewende with its focus on electric power generation for that outcome.

Yes, it has been expensive because Germany has been paying generous FiTs for renewable energy supplied to the grid. There was no alternative in the year 2000 when these payments started in earnest.

But since then costs of solar PV and wind power have plummeted and so the German government has been able to reduce the FiTs paid accordingly – and in 2016 actually went all the way and introduced public auctions as a way of setting the future FiTs to be paid.

A focus on greening cities, rather than just single sectors taken one at a time, is called for

So the German Energiewende has been expensive because Germany was a first mover and introduced FiTs when solar and wind power was still costing much more than fossil fuels. But now the renewables cost less, and their costs are continuing to fall – so other countries don’t need FiTs, and can actually introduce their own energy transformations without any public subsidies at all.

In fact Germany itself could abandon payment of fresh FiTs for new installations of renewables and allow them to ride the downward cost curve associated with the global learning curve – now that they have been established. And that would enable Germany to confront head-on the issue of legacy subsidies still being paid for fossil fuel supplies – to move to a market-based system across the board.

The fact that coal burning is still at a high level in Germany is the one source of criticism of the Energiewende that really counts. And that is where a carbon tax that would force the pace of a switch to electric vehicles in transport and away from coal in energy-intensive industry (like steel and cement) – if a carbon tax could be made politically acceptable in Germany.

Entrepreneurial forces

The real result of the Energiewende so far (and it is a work in progress) has been its transformation of the German energy sector, and the unleashing of fresh entrepreneurial forces that usher in the new and drive out the old.[3] This is the very essence of Schumpeterian competition, where the new destroys the old, sweeping it away in a gale of ‘creative destruction’.

Just focusing on whether there have been sufficient reductions in carbon emissions (unlikely unless the energy transformation were allowed to encompass transport and industry as well as power generation) clearly falls short as a lens through which to view the Energiewende. Its very breadth and ambition is what marks it out as the only real competitor worldwide for what China is accomplishing in the renewable energy space.

A European Supergrid would provide the infrastructure needed for market exchange of renewable power, which would curb the recent price increases being inflicted on individual countries by fossil fuel dinosaurs

But the costs are still high, and need to be brought down if the energy transformation is to retain its political support in Germany.

The Minister of Energy and Industry, Sigmar Gabriel, who is the current driver of the Energiewende, has stated openly that Germans have reached ‘the limit of what we can ask of our economy’ – meaning that costs have to be reined in.

And the most obvious way to rein in costs is to change the pricing structures of the electric power grid, allowing new players to enter and offer services that supply renewable power at low marginal cost – without maintaining large fossil-fuelled plants that remain unused for most of the time. These are political challenges that need to be met in the political arena.

Decisive role

What then needs to be done? Claudia Kemfert, a prominent German energy economist, wrote a Commentary for Nature in September where she called for action around three priorities to be tackled by the incoming government after the September 24 elections.[5]

First is to phase out coal, whose elimination from the German energy system is long overdue. Professor Kemfert is surely correct on this point.

I have indicated above that Germany could safely eliminate fresh feed-in tariffs now in support of renewables, given that their costs have fallen so dramatically – and at the same time eliminate lingering subsidies paid on fossil fuels. Kemfert quotes a figure of $57 billion paid in subsidies to fossil fuels – far outranking the remaining subsidies paid to renewables via the feed-in tariffs.

The German Greens would make a smart choice if they demanded an end to the fossil fuel subsidies in return for dropping fresh subsidies paid to renewable via feed-in tariffs. (Of course there are payments to be made to renewable energy providers under the 20-contracts entered into, which cannot be broken.)

Germany could play a much more decisive role in promoting the coming shift to electric transport, by emulating (and improving on) the Chinese efforts to create a vibrant 21st century electric vehicle ecosystem

Second, the Energiewende could be better integrated with wider concerns over the need for a shift to electric vehicles and energy efficiency, in both buildings and industry. A focus on greening cities, rather than just single sectors taken one at a time, is called for – and here one can only agree, emphatically.

Third, there should be more government investment in R&D (Kemfert quotes data revealing how low Germany’s contribution on this point is) as back-up to Germany’s successful focus on promoting solar and wind power. Kemfert cites the need for much more R&D on energy storage as the emerging sector. Again, no quarrel with that.

I would add to these priorities three more issues calling for attention. The first is the necessity for Germany to lead in building a trans-European Supergrid that is equipped with smart meters and other IT devices to enable it to accommodate fluctuating renewable energy supplies.

Germany was one of the proponents of the future-oriented Desertec project, linking producers of solar power in the deserts of North Africa with an upgraded European grid – but that project has failed for lack of support from German industry.

Here is where government funds could sensibly be spent to revive the idea.

And a European Supergrid would provide the infrastructure needed for market exchange of renewable power – buying and selling – which would curb the recent price increases being inflicted on individual countries by fossil fuel dinosaurs.

Second Germany could meet Chinese competition in the emerging clean energy sector by direct intervention in the German economy, emulating the Chinese practice that has propelled China to world leadership so quickly. A good place to start would be in energy storage, where technological directions and technological competition is still fluid (via standards, patents and public infrastructure development – such as charging stations for electric vehicles).

Third, Germany could play a much more decisive role in promoting the coming shift to electric transport, by emulating (and improving on) the Chinese efforts to create a vibrant 21st century electric vehicle ecosystem.

The first step is to ban the sale of new gasoline and diesel-powered vehicles – which France and the UK have already done with respect to a deadline year of 2040.

But China has taken a decisive step here, announcing its clear intention to move to outlaw sales of new internal- and external-combustion engine vehicles by a date yet to be announced – shaking the global automotive industry.

The incoming German government election could look to making a similar announcement – to kickstart the serious development of a new clean vehicle industry in Germany.

Acknowledgment: The efforts of Ms Carol Huang in preparing the charts and assisting with the research for the article are gratefully acknowledged. This article was first published on John Matthews’ blog Global Green Shift.


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  1. Keith 3 years ago

    Hi John,
    Thank you for an evidence-based critique of Energiewende, which is refreshing after much nonsense from publications who are too lazy to see what is really happening.

    A small niggle about the omission of India in relation to the energy transition, especially in relation to ambitious plans to electrify transport. India is right up there with China and Germany in the energy transitions (notwithstanding that the Australian press keeps chanting nonsense about India and coal).

    • Joe 3 years ago

      Judith Sloane at The Australian is a constant ‘Naysayer’ of Deutschland’s Energiewende. She does herself no credit in trying to constantly demonise RE. The transition to RE in the electricity industry in a rich industrialised country had to start somewhere, it was Germany. Germany took the initial short term cost hits but it is the longview down the road that counts. Every country around the world is jumping onboard albeit some slower than others eg Australia. The technology,innovation and economies of scale gains of RE are now being developed and shared around the world. There is no turning back and the Fossil Fuellers can only hope to delay for as long as they can …the inevitable….their end.

  2. dorsett 3 years ago

    How many orders of magnitude off?

    “..the cost of residential rooftop solar PV was 7.1 cents per kW, compared with 2.93 cents in Q1 2016…”

    Try DOLLARS (not cents) per WATT (not kW).

    OK, so the real cost of rooftop solar in the US is only 100,000 times more expensive than stated- what’s a handful of zeros between friends!?! 🙂

  3. Alex Hromas 3 years ago

    One of the chief criticism of Energiewende has been that Germany’s carbon emissions would have fallen faster had nuclear power generation not been curtailed as steeply as it was. After all German nuclear stations do not face the same earthquake based risks as Japanese. Was this reduction due to government policy or simply aging infrastructure?

    • Joe 3 years ago

      In short government policy is the answer to your question.Germany’s closing down of Nuclear power generation has been up and down so to speak. Chancellor Gerhard Schroeder in his first term 1998-2002 planned the closure of Nuclear power generation by 2022. In 2010 Chancellor Angela Merkel ‘delayed’ the close down by 12 years until 2036. Then Fukushima incident which changed everything and Angela Merkel announced a stunning policy reversal with Nuclear power close down by 2022 as was originally planned under Gerhard Schroeder. The politics of Nuclear energy in Germany has never disappeared and it was of course the reason for the rise of The Greens Party in Germany. The risks of Nuclear power and of course the ongoing demonstrations against the movement of nuclear waste within Germany always keeps the issue simmering away.

      • Alex Hromas 3 years ago

        Thanks for that Joe some of the reactors must be quite elderly as they were being commissioned about 40 years ago when I was working as a very junior engineer in Switzerland for BBC now ABB.
        I have always been puzzled by the lack of success of the nuclear industry which is pretty much on its knees right now. Originally touted as being able to produce power that’s too cheap to meter it was always overcoming one more minor hurdle whether it was safety, control or waste and never quite reached its potential a classic case of a technology that looks fine but just fails to make the grade

  4. Mark Diesendorf 3 years ago

    Many thanks for your valuable analysis, John, and for the excellent graphs, Carol. If you revise your blog, please consider the following comments:

    1. Feed-in tariffs (FiTs) are, or should be, a fair price paid for electricity fed into the grid. Depending on the level set, they are not necessarily a subsidy. In countries or sectors where there is no contract-for-difference or tender price for renewable electricity fed into the grid, fair FiTs should be paid. There is a strong case that FiTs equal to the wholesale price of electricity are unfair (too low), especially in countries without a carbon price.

    2. It should be stated explicitly that your article is about large-scale electricity generation. Germany has retained FiTs for small-scale renewable electricity.

    3. Smart meters and smart switches are more relevant to local electricity distribution and use, than to the large-scale transmission system.

    4. I think “7.1 cents per kW” should be replaced by “7.1 cents per kWh”. Every contributor to RenewEconomy must learn the difference between kWh (a unit of energy) and kW (a unit of power, that is rate of change of energy).

    5. The technical term for “utilization rate” is “capacity factor” = average power generated divided by rated power capacity.

    6. Desertec has been put on the back burner to a large degree because of the political unrest in North Africa.

    Best wishes, Mark

    • dorsett 3 years ago

      On #4, the error wasn’t about a per kwh levelised cost, but rather the monetary units of cost (US dollars, not cents), and that it was the cost per watt, not kilowatt. As detailed in the referenced document ( ) the average price of small scale roofop PV had been $7.10/watt in 2009, then fallen to $2.93/watt by 2016. Somehow that was reduced to 7.1 cents per kw, a 2.93 cents per kw in this article.

      To be sure it becomes confusing to figure out what was meant when the numbers are fully five orders of magnitude away from what was intended. If solar was truly that cheap (cheaper than the installed cost of house paint), would there be any discussion about powering the world with something else?

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