Legal & Regulatory

Germany Puts the Brakes on Rapid Renewables Expansion

In July 2016, the German parliament approved three major pieces of legislation specifically laying out the future of the celebrated Energiewende: the 2017 revision of the Renewable Energy Sources Act, the Electricity Market Act, and the Act on the Digitization of the Energy Transition.

“These three pieces of legislation will ensure that the transition of our energy supply can proceed in a foreseeable and cost-efficient way,” said Federal Economics and Energy Minister Sigmar Gabriel. “Renewable energy, the electricity market, energy efficiency, the grids and digitization used to be treated as separate elements, but have now been turned into a consistent overall framework for the energy transition,” he said.

The changes now adopted perhaps constitute the most sweeping reform of the electricity market since it was deregulated in the 1990s. Going forward, auctions instead of feed-in tariffs (FITs) will force renewables to expand only within predetermined growth corridors, controlled by both market forces and stricter permitting. While there’s little doubt that the new system will be imperfect, what it’s replacing has had problems as well. By both attempting to plan growth through 2030 and introduce market forces, the new roadmap allows for increasing renewable energy while ensuring stability. The latter is a change much desired by Germany’s established, mostly fossil fuel–dependent electrical providers, which have been financially beaten up by the last decade of rapid renewable transformation.

The new body of law also reflects how green energy has gone from being a “niche technology” to “the mainstay of our electricity market,” said Gabriel. Since its official beginning in 2010, the Energiewende has helped promote a dramatic increase in renewable energy, from 17% at the time to an average of 33% today. At times, renewables surge to supply more than 80% of energy needs during optimal weather conditions.

Going forward, the government will introduce a new annual installation cap of 2,800 MW of onshore wind from 2017 through 2019, increasing to 2,900 MW beginning in 2020—all to be auctioned off (Figure 1). Offshore wind is currently scheduled to reach up to 15,000 MW by 2030. The framework proposes 500 MW of offshore wind in 2021 and 2022, followed by 700 MW per year of new development in 2023 to 2025, and 840 MW per year from 2026 onwards. Also beginning in 2021, offshore wind parks will be built only in the Baltic Sea because of grid capacity availability.


1. Blocked. New wind turbines tower over the old church in Klepzig, Germany, near Halle in what was once East Germany. Ironically, renewable energy production is stronger in the east, but with the Energiewende slowing, new onshore developments like these will likely be curtailed. Courtesy: UFZ / André Künzelmann

The new laws also create a 600-MW annual auctions target for large solar systems of over 750 kW. There is an assumption that smaller solar systems will grow organically, and these small systems will still be able to receive a viable FIT. Biomass power also will have a small slice of new generation, but only 150 MW per year in 2017 to 2019, and 200 MW per year in 2020 to 2022. There will be no auction for hydropower.

But paramount to fostering this growth is fixing the current transmission bottleneck problems. “The grid is not in a position today to take up all the renewable energy” coming on stream, said Tony Adam, manager of Public Affairs and Government Relations with wind turbine producer Nordex, in an interview with POWER. Increasing grid bottlenecks now stretch from the windy north to the industrial south and are corralling electrons in a green pen. While the nation haggles over how to create new transmission systems, “last year, grid operators had to pay €1 billion for wind power capacity that went unused. The goal, after all, is to generate clean electricity, but also to make sure that it reaches consumers,” said Gabriel. When grid congestion happens, “electricity consumers have to pay twice: The operator of the wind farm will be paid damages for having to reduce their installations’ output, and a power station in the south of Germany will be paid to generate more electricity locally,” the minister said.

The problem today is that so many renewables are coming online that “we are completely overshooting our 2020 targets,” said Craig Morris, editor of Renewables International and coauthor of Energy Democracy, the first history of the Energiewende in any language. Although the country initially aimed at 20% by 2020, “it’s likely that Germany will reach 35% renewables as a share of demand by the end of 2016! So along with the corridors, for the first time we’ll have an annual cap. Now we’ll take nine years to reach 45[%],” he continued.

Though the new legislation is slowing down the pace of development following several record-breaking years, the volume of the auction called for in the new laws is actually larger than the average growth volume Germany had in the years from 2010 to 2014. “So it provides for an increase in wind and renewables,” said Adam.

As the new laws were being written, however, energy development has continued at a near-frenzied pace. Because projects permitted in 2016 are still eligible for FITs if they are completed by 2018, “we’ve seen a lot of projects squeezing though the gates as the existing schemes still hold force,” said WindEurope CEO Giles Dickson in an interview with POWER. Germany installed over 6 GW of new on-and offshore wind combined last year, according to a report by WindEurope in early 2016, 2,282.4 MW of which was offshore. But “already in the first six months of 2016, another 2 GW of new capacity—250 MW offshore and the rest onshore—has been installed,” said Dickson. For perspective, by the end of last year, Germany already accounted for 44% of all wind installations in Europe.

Currently, upwards of 4,000 MW to 4,400 MW of new net power could be installed or placed “into the pipeline” by the end of the calendar year. “It’s possible,” said Morris, “that wind power will make up nearly 16% of Germany’s total power supply by year’s end—up fully two percentage points from 2015.”

While energy providers and stakeholders generally welcome the creation of a more ordered path forward, renewables advocates and many small-scale energy producers worry about the curtailment of FITs in exchange for auctions. Historically, more than 800 energy cooperatives as well as private investors, farmers, banks, and enterprises have formed the backbone of the Energiewende and today still own about 95% of total installed renewable energy capacity. Energy cooperatives alone have invested about €1.3 billion in renewable projects, thus generating revenues for communities, regions, and citizens. The other 5% is owned by the “big four” energy providers who were largely involved in framing the new laws.

“It remains to be seen how small producers will be able to compete against those with much deeper pockets and more access to capital,” said Anna Leidreiter, senior program manager with the World Future Council, in an interview with POWER.

Lee Buchsbaum (, a former editor and contributor to Coal Age, Mining, and EnergyBiz, has covered coal and other industrial subjects for nearly 20 years and is a seasoned industrial photographer.

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