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Clean Power Half of 53,000 MW German Renewable Energy Market is Locally Owned

Published on December 2nd, 2011 | by John Farrell

14

America and Germany Getting Their Clean Energy Just Desserts

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December 2nd, 2011 by
 
Germany is the unquestioned world leader in renewable energy.  By mid-2011, the European nation generated over 20 percent of its electricity from wind and solar power alone, and had created over 400,000 jobs in the industry.

The sweet German success is no accident, however, and the following pie chart illustrates the results of a carefully crafted recipe for renewable energy.

As the chart illustrates, more than half of Germany’s enormous renewable energy generation is in the hands of “ordinary people,” according to the German Renewable Energy Agency.  This outcome is more than golden in color, but has been a gold-clad economic opportunity for the German people, who have used the opportunity to become renewable energy producers and improve their economic security in a time of world economic crisis.

The policy recipe behind this golden success is called a feed-in tariff and its basis premise is that anyone can become a renewable energy producer.  Under a feed-in tariff, electric grid operators are required to buy all renewable electricity under a long-term contract, and to offer a price for the renewable electricity that provides a modest return on investment.  The feed-in tariff is responsible for two-thirds of the world’s wind power capacity, and nearly 90 percent of the world’s solar power.

The feed-in tariff is Germany’s complete energy policy recipe because it’s an incentive for generating renewable energy, but also has a democratizing effect – broadening the source and ownership of energy production. Crucially, the feed-in tariff builds a political constituency for more renewable energy production in a way that America’s half-baked energy policy does not.

The following chart illustrates a recent study of support for more nearby wind power in two German towns, each with a local wind farm.  The difference is ownership, with one adjacent wind farm absentee owned and the other locally owned; and the difference is a massive shift in public support for more wind power.  (I’ve generalized this to renewable energy).

The political importance of democratizing participation in the energy system can be boiled down to a simple example: a residential solar installation may add 3-5 kilowatts of new renewable energy to the grid, but more importantly it adds two new solar voters to the rolls.  It may be marginally less cost-effective to allow a broad base of residential solar installations under their clean energy policy, for example, but the Germans have realized that the political payoff far outweighs the fractions of a cent added to electricity bills.

In practical terms, it explains why Germans are ahead of their targets for renewable energy production and can consider replacing their entire nuclear power industry with clean power while the United States lags behind, mired in a debate about extending the federal cash grant program and with an energy market balkanized by 50 distinct state policies.

The success of Germany’s renewable energy policy, in contrast to America’s, is a case of just desserts.  Germany’s policy expands the energy pie and also divides it more evenly among its citizens, resulting in a groundswell of public support for more renewable energy.

American energy policy is half-baked, and its energy future is less appetizing.

The dominate energy policy in the U.S. is federal tax credits, policies that prevents vast swaths of America from being energy producers simply because they lack sufficient tax liability and forcing public institutions like cities and schools into awkward public-private partnerships to access them.  The use of the tax code leaves the renewable energy industry heavily reliant on large financial institutions to help them sop up the credits, siphoning off scarce dollars to pad Wall Street accounts and effectively capping the growth of the industry.  Marshal Salant, managing director of Citigroup Global Markets Inc., said in a recent interview: “There’s more demand for tax equity to finance renewable energy projects than we will ever have in the way of supply.”  And Wall Street banks don’t love clean energy, only money.  Unlike citizen energy producers, the banks won’t provide crucial political support when renewable energy policy is before the Congress.

Critics that contrast a feed-in tariff with other energy policy options like tax incentives, REC markets, or renewable portfolio standards miss the point.  The latter are ingredients in a clean energy future, but the former is a complete recipe for the political, economic, and financial future of the renewable energy industry.  Without a similar comprehensive approach in the United States, our energy future may not be so sweet.

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About the Author

directs the Democratic Energy program at ILSR and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. His seminal paper, Democratizing the Electricity System, describes how to blast the roadblocks to distributed renewable energy generation, and how such small-scale renewable energy projects are the key to the biggest strides in renewable energy development.   Farrell also authored the landmark report Energy Self-Reliant States, which serves as the definitive energy atlas for the United States, detailing the state-by-state renewable electricity generation potential. Farrell regularly provides discussion and analysis of distributed renewable energy policy on his blog, Energy Self-Reliant States (energyselfreliantstates.org), and articles are regularly syndicated on Grist and Renewable Energy World.   John Farrell can also be found on Twitter @johnffarrell, or at jfarrell@ilsr.org.



  • Anonymous

    Mike, aren’t you pushing the history river a bit?

    As far as I can tell there are no OTEC plants now generating power. A prototype or two has been built, but no functioning plants yet exist. Did I miss something?

    • Mike Straub

      Hey Bob,

      You’re right, it’s on the way though. I said the Bahamas committed to building the plants, and they will have the first 2 commercial OTEC plants in the world. But in making that move, other countries in tropical regions are lining up. So it’s a really exciting time for OTEC power.

  • AndrewW

    Incentives create false hopes. If wind and solar want to replace coal-generated electricity, they would need 300 million acres and at least $20 trillion. We don’t have either.

    If the world wants clean, affordable energy let them offer $1 billion for a real solution. That’s a small price to pay for something the whole world needs. Solar and Wind development schemes have received $1.2 trillion in the last 10 years. Demand has increased by 3X what these new renewables can ever produce. We are NOT going forward or making any progress.

    In terms of economic development, starting companies is not what will save us – solving problems will. Find a start up that is solving something, not just being a little better than their competitors. Find something meaningful. That will change the economy and the world.

    • Anonymous

      Andrew – you are spamming this site. I’ll copy my same comment as I did to the other two times you just posted this same comment…

      Andrew, you’ve been here before and I, for one, have learned not to trust your claims.

      Show us the math that says that we would need 300 million acres and at least $20 trillion to replace coal with renewable energy.

      Be sure to use only the footprint of wind turbines, not the 98%+ of land within a wind farm that is still usable for farming, grazing and wildlife.
      While you’re at it, make sure you include only the land aside from rooftops and parking lots that we’ll need for solar.

      Remember to subtract the cost of necessary plant replacement as existing coal plants wear out. Subtract the savings that we’ll realize by no longer having to pay enormous amounts for coal-related health and environmental damage.

      I’d like you to prove that you’re not just writing crap and hoping the less critical will swallow it.

      • AndrewW

        There is plenty of info regarding the amount of land required for wind and solar. The problem is they are greater than the areas that have good wind and sun. You know that.

        The math of the money, which you ignored is simple. Replacing coal-generated electricity with wind and solar would require more than $10 trillion. Even then, it wouldn’t be reliable.

        Wind and solar schemes are fools gold. In that last ten years $1 trillion went to wind and solar projects, yet demand exceed their combined capacity by 3X. It will never make a difference.

        I know you’re a cheerleader and you make a living promoting false hopes. But, sooner or later the people will know the truth – as cute and sweet as wind and solar ideas are, they do not make a difference. It’s a waste of time, money and energy.

        The solar-wind gig is almost up. Find another cause to promote.

        • Anonymous

          OK, we got it Andrew.

          You spout bull. You don’t have the slightest idea about facts.

          Let me help you out. Right now wind and solar supply only a bit over 3% of our electricity. Not the 33% that you seem to think. Now that does not mean that they won’t continue to grow at even faster rates than they are now growing and that we will reach 33% and then exceed 33%, it just shows that you ain’t plugged in.

          There is plenty good info on the amount of land needed for wind and solar. Either you don’t know how to look up those numbers or you’re afraid to look them up because you would be proved so very long.

          (BTW, I made my living a long time ago. I now live off my investments. I was able to do that because I seek out facts and know how to do math.)

  • http://batshite.com/ Scott Bartlett

    It’s hearing things like this that makes me think the Occupy movement is more of an environmental movement than is widely acknowledged.

    Clearly, Germany has benefited from democratizing renewable energy, making it easier for ordinary people (read: the 99%) to be energy producers.

    In the U.S., the renewable playing field–like virtually all American playing fields–is slanted so that almost all the opportunity and wealth slides toward corporations.

    The more I think about it, the more Occupy’s success appears to have a directly proportional relationship with America’s (and the world’s) ability to grapple with our myriad environmental crises.

    • Anonymous

      Totally agree.

    • AndrewW

      What “Occupy Movement?”

      Complaining doesn’t solve anything. “Mad-as-Hell” isn’t helpful. Find a solution.

    • BlueRock

      > …the Occupy movement is more of an environmental movement than is widely acknowledged.

      It’s all intertwined. Environment, energy production, food production, social justice. The more I learn about each, the more the connections become apparent.

      The gatekeepers are not friends to the 99.9%.

      • andreww

        The “99.9%?” 70% of adult Americans own stock in corporations. This whole “occupy” charade is childish. Complaining is easy. Why not spend your time trying to fix something?

      • Anonymous

        I see Occupy as the possible rebirth of widespread involvement by “ordinary people”. A lot like what happened in the Sixties.

        During a period that began in the late 1950s and stretched through the early 1970s people outside political circles got involved in making changes they thought needed. We ended legal segregation, we forwarded equality for women, we began the process of getting equality for gays, we forced the end of the Vietnam War, we wiped out the straight jacket social rules of the ’50s.

        I wasn’t around for earlier social movements such as the labor movement of the early 20th Century, but I suspect this might be the start of a new period of citizen involvement.

        Now we’ve got a new set of problems, left over problems which were never totally solved and the desire to move society along seems to have reached a critical point.

        I don’t think anyone will be able to say that Occupy is a political or a financial or an environmental or an equal rights movement. I suspect it will be all of the above and more if it continues.

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