Germany slows down energy transition and pushes back citizen energy

Energy Transition

Last Wednesday, the German cabinet finalized the details of what will become known as the EEG 2016. An astonishingly wide range of commenters agree on one thing: it’s bad.

The proposals will be voted on in the Bundestag before the summer break, at which time the bill will become law effective 1 January 2017. Technically, there is still time for changes to be made, but negotiations have already taken place with the major parties affected, and some compromises were already reached. No major changes are expected.

In the negotiations about the German EEG 2016, the biggest battle was about wind energy. (Photo by Dirk Ingo Franke, modified, CC BY-SA 1.0)

A brief overview by energy source:

Solar, which is already expected to fall short of the annual target of 1.5 MW for the second year in a row, will probably slow down further. Now, arrays larger than 750 kW (down from 1,000 kW) will no longer be eligible for feed-in tariffs and instead have to be auctioned (meaning that investors can be told they cannot build).

Below that level, solar will increasingly offset power purchases from the grid, but the government wants to rein in this potentially strong market as well; if more than 20 megawatt-hours of solar power is consumed directly, the electricity tax of 2.05 cents per kilowatt-hour is payable for the entire amount of electricity (not just the amount in excess of 20 MWh) in addition to roughly 2 cents for the renewable energy surcharge. Solar power from new arrays may only cost nine cents, but the German government has just added four cents to systems of this size. Mainly, very large commercial roofs are affected.

Biomass, which also fell short of the already dismally small 100 MW target annually last year with only around 71 MW built (source in German), was to be cut further, but the state of Bavaria insisted on a compromise. Now, the annual limit is to be increased to 150 MW for the next three years, followed by 200 MW per year. Still, the question remains whether those targets will be reached at all, as with solar.

Wind: Arguably, the biggest battle took place here. The original proposal would have had 2.5 GW of new capacity as the maximum irrespective of repowering (new turbines replacing old ones). The wind sector wanted to have the target stated in net terms, meaning that the capacity of older turbines replaced would be subtracted from the new ones added. The compromise reached, however, has a gross limit of 2.8 GW. Because Germany installed 3.2 GW in 2002, there is therefore likely to be a net reduction of 0.4 GW when those systems reach the end of their 20-year eligibility for feed-in tariffs and come up for repowering. Note that this reduction only applies for onshore wind (the cheapest source of new electricity in Germany); there are separate targets for offshore wind (6.5 GW by 2020 and 15 GW by 2030).

There is widespread dismay over this outcome. The overwhelming consensus is that the German government is slowing down the energy transition and pushing back citizen energy. German blogger Kilian Rufer put together a nice overview of recent press reports (in German), and he was also surprised to find how many news outlets criticized the new legislation. I had a brief look at the German press myself online and agree with Rufer: German media generally emphasize that citizen energy is being pushed back in the name of low costs, but the plans actually increase the cost.

I suppose that’s the only bright side to this story: at least broad sections of the country know that ownership matters in the energy sector – in other countries, experts tend to focus on whatever numerical indicator they fetishize. Still, these amendments aim to cover the next four or five years. That’s a long time for this awareness to survive the handover of the energy sector back to the utilities that never believed in renewables.

As an American, I especially appreciate Rufer’s praise of his political opponents’ respectful conduct. “In relevant press reports, I did not find any discrediting statements,” he writes, adding that one major political leader “treated the press with respect when presenting his climate-unfriendly position.” Germany’s energy transition would not have been so successful if the different camps had not engaged in civil discourse with each other. As long as this civil discourse continues, the transition can be put back on the right course.

Otherwise, I’m with former Environmental Minister, UNEP head, and Christian Democrat Klaus Töpfer (source in German): “Foreign onlookers originally thought we were crazy, but then they took a closer look at the Energiewende and started praising us – and now we’re slowing it down? After COP21, people expected more, not less.”

Craig Morris (@PPchef) is the lead author of German Energy Transition. He directsPetite Planète and writes every workday for Renewables International.

Source: Energy Transition. Reproduced with permission.