The proposed adjustment of Germany's renewable energy law: A critical assessment (original) (raw)

Three Decades of Renewable Electricity Policies in Germany

Energy & Environment, 2004

Of the large industrial countries, Germany is clearly leading with regard to new renewable energy sources, occupying the first rank in terms of installed wind energy capacity, and the second rank in photovoltaics. This capacity is not due to an exceptional natural resource base but to its policy in this area, despite the fact that this policy was conducted in a rather lukewarm fashion until 1997. In any case, it led to a remarkable expansion of this sector. The red-green coalition, in office since 1998, developed the vision of achieving 50 percent and more of electricity generated from RES by 2050, a goal that seems well accepted by the public but not by the established energy interests or the leaders of the conservative-liberal opposition, even though its cost appears as comparatively modest. The article gives a historical account of German RES-E policy since 1974 and focuses in particular on the evolution of feed-in legislation from 1990 to 2004. The first 15 years of RES-E policy after 1974 were devoted to R&D. Market creation measures only came after 1988; of these, the Feed-In Law was the most important. During the 1990s, it barely managed to survive. Significant improvement occurred after the 1998 election; the new majority greatly strengthened RES-E support, particularly for photovoltaics and biomass. However, this legislation is not fully accepted on both the domestic and the EU levels.

Renewable energy policy in Germany: pioneering and exemplary regulations

The development of renewable energy in Germany has been a great success: 9 % share of green electricity in 2002, world leader in terms of installed wind capacity amounting to 13,512 MW in October 2003 (nearly 40 % of the global capacity), second largest installed photovoltaic capacity in the world (nearly 350 MW at the end of September 2003), European leader in the sale of biodiesel (550,000 tonnes per year at the end of 2002) and in solar heating systems, with 4.75 million m2 of installed systems at the end of 2002. To understand the success it is necessary to know that it results from -- besides suitable background conditions -- a comprehensive promotion approach which was launched at the beginning of the 1990s and has been given a further boost, since the coming into office of the Social Democratic-Green government in autumn 1998, through a series of promotion measures. Since 1991, with the coming into force of the first German feed-in law, the Act on Supplying Electricity from Renewables (Stromeinspeisegesetz, StrEG), fixed remuneration has been paid to electricity based on renewable energy sources (RES), leading to the market breakthrough in wind energy. Its successor, the Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz, EEG) in April 2000, improved the regulations of the StrEG in many respects and made market entry possible for other renewables such as solar photovoltaics and biomass energy. The positive RES development in Germany can be explained by, besides this key promotion measure which served as a subsidy for the operational costs, several promotion programmes, which supported RES through investment subsidies (in the form of grants or soft loans), tax exemptions (within the scope of the Environmental Tax Reform) or in a more indirect way, through the decision to phase out nuclear energy, by means of information dissemination (i.e., the RES export initiative of the federal government) and corporate financing schemes in the case of wind energy.

Economic impacts from the promotion of renewable energy technologies: The German experience

Energy Policy, 2010

The allure of an environmentally benign, abundant, and cost-eff ective energy source has led an increasing number of industrialized countries to back public fi nancing of renewable energies. Germany's experience with renewable energy promotion is often cited as a model to be replicated elsewhere, being based on a combination of farreaching energy and environmental laws that stretch back nearly two decades. This paper critically reviews the current centerpiece of this eff ort, the Renewable Energy Sources Act (EEG), focusing on its costs and the associated implications for job creation and climate protection. We argue that German renewable energy policy, and in particular the adopted feed-in tariff scheme, has failed to harness the market incentives needed to ensure a viable and cost-eff ective introduction of renewable energies into the country's energy portfolio. To the contrary, the government's support mechanisms have in many respects subverted these incentives, resulting in massive expenditures that show little long-term promise for stimulating the economy, protecting the environment, or increasing energy security. JEL Classifi cation: Q28, Q42, Q48

The Impact of PV on the German Power Market

Zeitschrift für Energiewirtschaft, 2011

During the last months, the discussion on feed-in tariffs (FiT) for photovoltaic (PV) installations in Germany has gained new momentum. On the one hand, the issue of oversubsidisation due to the fact that module prices have been decreasing faster than feed-in tariffs was discussed. On the other hand, increasing costs to the consumers of power were put on the agenda after the unprecedented increase in new PV capacity in Germany in 2009. After the general election in September 2009 this discussion lead to different proposals for adjusting the FiT scheme. In summer 2010 a bill was passed amending the current FiT.

Comparing the feed-in tariff incentives for renewable electricity in Ontario and Germany

Energy Policy, 2012

The development of feed-in tariff (FIT) programs to support green electricity in Ontario (the Green Energy and Green Economy Act of 2009) and Germany (the Erneuerbare Energien-Gesetz of 2000) is compared. The two policies are highly comparable, offering similar rates for most renewable electricity technologies. Major differences between the policies include the level of differentiation found in the German policy, as well as the use of a price degression strategy for FIT rates in Germany compared to an escalation strategy in Ontario. The German renewable electricity portfolio is relatively balanced, compared to Ontario where wind power dominates the portfolio. At the federal level, Canada does not yet have a policy similar to the European Directive on Renewable Energy, and this lack may impact decisions taken by manufacturers of renewable technologies who consider establishing operations in the province. Ontario's Green Energy and Green Economy Act could be benefit from lessons in the German system, especially with regard to degression of feed-in tariff rates over time, which could significantly reduce payments to producers over the course of a contract, and in turn encourage greater competitiveness among renewable power providers in the future. & 2011 Elsevier Ltd. All rights reserved. strongest impetus behind this investment is economic growth and job creation, and language in both the GEGEA and the EEG speaks to the desire to create a sustainable energy economy that can lead in the global energy sector (Ontario, 2009; BMU, 2009). New project investment is expected to create local economic development in the renewable energy sector, and to generate subsequent incremental tax revenues and job opportunities for farmers, rural landowners, community groups, First Nations, and local businesses (Ontario, 2009). According to Little and van Berkel (2006), renewable energy generates four times as many jobs per megawatt of installed capacity as natural gas. A recent study conducted by Sovacool (2009) outlined the economic benefits in Germany of the EEG's promotion of renewable energy, and estimated that by 2008, 157,000 jobs had been created in the German energy and related manufacturing industries (Sovacool, 2009). These jobs include the direct employment at the facility, as well as a wide range of indirect jobs across construction, technology manufacture, and government positions. At that time, this would have been the equivalent of 3.9 jobs per MW installed, based on a total installed capacity of 40.1 GW of renewable power. The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) has reported higher figures, estimating that the number of direct and indirect jobs varies between 5 and 6.5 per MW (BMU, 2011). It has been estimated that an average investment of 2 billion euros per annum Contents lists available at SciVerse ScienceDirect

Renewable Electricity Policy in Germany, 1974 to 2005

Bulletin of Science, Technology & Society, 2006

Of the large industrial countries, Germany is clearly leading with regard to new renewable energy sources, occupying first rank in terms of installed capacity for wind energy and second for photovoltaics. This is not because of an exceptional natural resource base but because of public policy in this area, despite the fact that this policy was conducted in a lukewarm fashion until 1998. In any case, it led to a remarkable expansion of this sector. The Red-Green coalition, in office from 1998 to 2005, developed the vision of achieving 50% and more of electricity generated from renewable energy sources by 2050, a goal that seems well accepted by the public but not by the established energy interests. There seems to be a good chance that the Conservative-Social Democratic coalition, which took office in November 2005, will continue this course.

The Effect of the German Renewable Energy Act (EEG) on ?the Electricity Price?

Many technologies that produce electricity from renewable energy sources are currently not competitive. This is due to the fact that their generation cost is higher than that of conventional thermal power plants. Nevertheless, since using renewable energies has a number of positive effects, these installations have been supported by German public policy for many years. This support is currently demonstrated very successfully by the German Renewable Energy Act (EEG), which provides for fixed feed-in tariffs (FITs). The costs of this support scheme are distributed to the electricity consumers. Due to the so-called EEG levy, electricity costs of i ndustry are increased and as a result their competitiveness is decreased. Consequently, electricity intensive enterprises have protested against the levy on a regular basis and finally achieved a reduction of the levy. However, the potential effect of the EEG on the wholesale price for ele ctricity has not yet been considered. Against this background, we analyze the effect of the EEG on ele ctricity prices in a perfect market. We will show that the support of electricity production from renewable energy decreases the wholesale price of electricity. Consequently, electricity costs of companies that are subject to the reduced EEG levy may decrease too.

German electricity prices: Only modest increase due to renewable energy expected

2011

Consumer prices for electricity in Germany have risen considerably in recent years. These price increases are partially attributable to a strong rise in the apportionment for the promotion of renewable electricity in accordance with the German Renewable Energy Sources Act (EEG). The EEG apportionment and associated VAT currently account for approximately one-sixth of household spending on electricity. Yet the increasing generation of power from renewables leads to decreased wholesale electricity prices. As a result, the net burden on the consumer-given effective competition-is lower than the apportionment. According to modelling calculations performed by the German Institute for Economic Research (DIW), inflation-adjusted wholesale prices for electricity will only increase by 11% between 2010 and 2020 to 4.9 euro cents per kilowatt-hour (kWh), despite increasing fuel and CO 2 certificate prices. In the absence of expanded deployment of renewable energy, a higher price increase of 20% can be expected. Although electricity generation from renewable sources is forecasted to more than double by 2020, the EEG apportionment borne by consumers will in real terms only be 3.64 euro cents per kWh, and thus only slightly higher than it is today. The main reason for this low growth is the fact that the tariffs for new installations are digressive, falling year by year. In addition, tariffs are diminished in real terms by price inflation. Our modelling calculations assume that legislators will take action against the recent overinvestment in the solar electricity sector. Thanks to a significant fall in the cost of photovoltaic (PV) systems, the reduction of PV tariffs can be placed on an accelerated timetable. Over the long term, the overall level of support provided under the EEG should be reduced. For the further deployment of renewable energy it is necessary to expand Germany's power grid in addition to the availability of energy storage facilities. Steps must also be taken to increase competition in electricity markets. Consumer and producer (i.e. wholesale) prices for electricity in Germany have experienced divergent developments in recent years. The electricity prices paid by households fell between 1991 and 1998 in real terms. Since then, they have risen continuously (Figure 1). 1 In the first half of 2010 households paid on average 23.75 cents per kWh (nominal price, including VAT). Industrial consumers pay No. 6/2011