Has Germany Paved the Way for the World’s Energy Transition?

Germany is often touted as a leader in the global energy transition. Energiewende has been part of the country’s public discourse since the 1970s, stemming from an anti-nuclear movement prevalent at the time. The term, however, gained notoriety in 2011 when the German government passed a comprehensive legislative package, adopting 120 individual measures aimed at phasing out nuclear power and promoting renewable energy.

Some have argued that the policy has been a failure. They raise some valid points. For example, one of the key goals was to fight climate change, yet Germany remains the largest coal burner in Europe.

Nurturing Renewable Energy

On June 8, the Environmental and Energy Study Institute (EESI) and the Embassy of Germany held a briefing titled “The State of Germany’s Energy Transition.” The goal of the gathering was to showcase how Germany has been successfully integrating renewable energy into its electrical grid and decoupling energy demand from economic growth. Thorsten Herdan, director-general of Energy Policy, Heating, and Efficiency with the German Federal Ministry for Economic Affairs and Energy, offered his insight on the country’s evolving power landscape.

“For us, the energy transition is the combination of renewable energy and energy efficiency that are for us two twins, which have to love each other and which have to go together in order to get the economy decarbonized,” Herdan said. However, he quickly acknowledged that every country is different, and each has the right to define its own energy mix.

According to Herdan, Germany has an overall energy demand of about 2,500 TWh—half of which goes toward heating while the remaining half is split almost equally between transportation and electricity. “We started with our energy transition by addressing electricity, because it’s the easiest way to address it and electricity can only also help to decarbonize other sectors,” he said.

Germany committed to paying whatever was necessary to make projects “bankable” and “make the projects fly.” Various technologies were supported including photovoltaic (PV) solar, wind, bioenergy, and geothermal, among others. At the beginning, the price was astronomical—€0.50/kWh for PV feed-in-tariffs. Over time, two clear winners emerged: PV and wind energy (both onshore and offshore). The other technologies were simply unable to reduce costs enough to stay competitive.

About two years ago, Germany changed its feed-in-tariff to an auctioning model and prices decreased even more dramatically. The latest prices for PV were about €0.04/kWh “in the very sunny region of the world in Germany,” Herdan said, presumably tongue-in-cheek. Onshore wind in Germany also runs about €0.04/kWh while offshore wind had its first auction with a price of zero.

“They said, ‘I don’t need any subsidy at all. I’m taking just the market price—what the market mechanism says—and for that I can build the offshore wind farm. All I need is the permission to build an offshore wind farm and grid connection,’ ” said Herdan.

The point Herdan was trying to make is that renewable energy is now competitive. The German energy transition has helped make it so. Other countries that choose to incorporate solar and wind into their energy mix today will reap the benefits of the German experience. “The high amount of money we paid at the beginning is not necessary for you to pay if you enter into the game right now,” Herdan said.

Getting into the Game

Herdan also had some advice for countries interested in following Germany’s lead. “For each and every government, it’s extremely important that you set yourself targets, agree on measures, do a monitoring of those measures, whether you reach the targets. And if you don’t reach the targets, you have to think about new measures or change the measures,” he said.

Germany established climate, renewable energy, and energy efficiency targets. Germany has already determined that it won’t meet its climate target for 2020. As a result, the government appointed a commission to develop a proposal by year-end for phasing out coal from its energy mix. “We absolutely know that with our coal-fired power plants for us it would be impossible to meet the climate targets,” Herdan said.

But eliminating coal-fired generation isn’t easy. There are security-of-supply issues and a lot of people are employed by the coal industry. So, structural changes are necessary, he said.

Not surprisingly, when more solar and wind energy are added to a system, the power supply fluctuates with weather conditions. Therefore, flexibility becomes critically important. “Baseload is poison for our energy transition in Germany,” Herdan said.

Flexibility can come in the form of peaking plants, energy storage schemes, demand-side management, or neighbors. One way Germany is improving flexibility is by building a power line to Norway. Norway has a lot of hydropower, which is a useful counterpart for Germany’s wind energy. Both countries will benefit by making use of each other’s strength. The market will decide which resource is utilized at any given time.

Thus, markets become one of the most important pieces of the puzzle. To achieve transparent markets, real-time data are vital. Herdan said Germany didn’t have that for a long time, but now it does. Knowing the real-time production from every source every second allows the market to adjust prices accordingly. Then, flexible generators can fill gaps in supply with the most cost-effective resource.

Has Germany figured it all out? Probably not. But it has helped move the industry forward, and for that, we should all be thankful. ■

Aaron Larson is POWER’s executive editor.