Ag Leadership Exchange (ALE) August 2015 in

Overview

Germany's renewable energy sector is among the most innovative and ambitious worldwide. Net- generation from renewable energy sources in the German electricity sector has increased from 6.3% in 2000 to about 30% in 2014. More than 23,000 wind turbines and 1.4 million solar PV systems are distributed all over the country's area of 357,000 square kilometers. As of 2010, the renewable energy sector was responsible for nearly 370,000 jobs.

Renewables now provide close to 30% of Germany’s power on an average basis. And on some peak days in 2014, solar and wind supplied close to 80% of peak power demand at specific times of the day. In the future, Germany is targeting a 35% average share by 2020 and a 50% average share by 2030. Because of the feed-in tariff law (EEG), renewables have dispatch priority, meaning they are always used first, sometimes leaving very little power demand left to be supplied by coal, nuclear, and natural gas plants. Up until now, Germany has been able to effectively manage the rapidly increasing load of renewable energy on its grid. However, key investments in “smart grid” infrastructure will need to be made in the future to reach the stated goals and ensure reliability.

The German “”

Germany’s story of renewable energy growth is frequently referred to as the German “Energiewende” or energy transition/turn-around.

The German Energiewende has been a story in the making for several decades. It is rooted in the anti- nuclear movement of the 1970s and has brought together many different political interests in unique fashion. The shock of the oil crisis in the 1970’s, combined with anti-nuclear activism and the meltdown in Chernobyl in 1986, changed the way many viewed fossil energy and the status quo at the time with regard to its energy system.

This anti-nuclear movement was also one reason why the Greens were founded as a political party. Around 1980, the Greens began consistently getting more than five percent of the public vote during national elections, which is the limit required for a political party to enter Parliament in Germany. Since that time, the Green Party has consistently had a presence in German politics and has influenced energy policy in particular.

Other factors leading German society to support the Energiewende include a natural scarcity of resources and supplies in the country, a large dependence on energy imports including Russian natural gas, energy security, a desire to capitalize on its strength as a world leader in the export of innovation and technology, a desire to democratize energy and help local communities, and a widespread consensus about the urgency of climate change.

Over the years, this sustained activism for clean energy led to the creation of policies that support renewable energy such as feed-in tariffs and Germany’s current EEG or renewable . Ag Leadership Exchange (ALE) August 2015

EEG: Germany’s Renewable Energy Policy

The Renewable Energy Sources Act (Erneuerbare Energien Gesetz – EEG) promotes the generation of electricity using renewable energy sources and is the primary vehicle responsible for the rapid growth of renewable energy in Germany in recent years. Germany's Renewable Energy Act guarantees full-cost compensation to cover the actual cost of a specific investment in terms of size and technology. The rates offered are guaranteed for 20 years starting in the year of installation to protect investments, but the rates drop for newly installed systems each year to put price pressure on manufacturers.

Some of the EEG’s key elements are:

•Above market, long-term and regularly adjusted remuneration feed-in tariffs guaranteed to renewable energy producers depending on renewable source and capacity, and a payment obligation for grid operators for the renewable power sent to their grids,

•Priority feed-in and grid connection rights for renewable energy producers,

•Reallocation of system costs managed by the transmission system operators using a sophisticated so- called EEG surcharge (EEG-Umlage), paid by all energy consumers.

•Special exemptions from the surcharge fee for certain consumer groups and for the largest energy consumers (i.e. steel, heavy manufacturers, etc.)

The system has also been supplemented with energy targets, regional growth corridors, and a wider market premium support system and special rules for auto-manufacturers. The EEG 2014 aims to constantly and cost effectively increases the share of renewable energy sources in the German electricity supply.

•40% to 45% of the share in the gross electricity consumption by 2025

•55% to 60% by 2035 and 80% by 2050

(Sources: Heinrich Boell Stiftung – www.energytransition.de; Fraunhofer Institute; www.germanenergyblog.de)

For more information and a comprehensive timeline on the German Energiewende, visit http://energytransition.de/