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Biomass germany energy subsidies

Published on August 7th, 2014 | by Zachary Shahan

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German Solar Feed-in Tariffs Wildly Successful (New SEIA Report)

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August 7th, 2014 by Zachary Shahan
 
The Brattle Group recently completed a report on Germany’s past decade of solar energy policies and progress for the Solar Energy Industries Association (SEIA). There’s some missed messaging and unhelpful messaging in there, but overall it’s an excellent report — I’d give it an A+. There are several points from the report that I want to highlight. The first is the point SEIA highlights in a press release:

Most importantly, the report finds: “By and large, the German path has been remarkably successful, given the goal – shared by a great majority of the population – of ‘de-fossilizing’ Germany’s electricity sector.”

Germany solar feed-in tariffs solar wind energy growth

Let’s Not Go Overboard with Cost Claims

One of the biggest problems with how much of the media and many commenters discuss Germany’s solar energy costs and electricity costs is that they equate the two. In actuality, Germany’s high electricity prices are the result of many factors. The country taxes electricity use, which actually makes sense — you want to tax harmful activities in order to limit them; taxing productive activities like work makes a lot less sense. Furthermore, the costs of renewable energy such as solar feed-in tariffs are born more by residential and commercial consumers in Germany specifically because many industries are exempt.

“While the costs of electricity to most end use customers have indeed increased, it is important to note that the size of the renewables levy by itself is an incomplete (and likely exaggerated) measure of the cost of the program to consumers. It is also important to note that exemptions for trade-sensitive and energy-intensive industries contribute to higher rates for non-exempt consumers,” the report notes.

Later on, it adds: “associating the high residential retail prices of electricity in Germany purely with the solar PV and other renewable support programs would be misleading. It is true that retail prices (for residential, commercial and small industrial customers) are among the highest in the world. However, while the renewables levy, now above 6 €cents/kWh, represents a significant portion of those rates of approximately 30 €cents/kWh, other tariff elements such as taxes and fees are of comparable magnitude and have increased at similar rates. Therefore, Germany’s residential retail tariffs would be among the highest in the world even without paying for Germany’s renewable let alone solar program.”

Furthermore, costs are only one side of the equation. Renewable energy and especially solar help to reduce wholesale electricity prices (which industries actually benefit from without contributing to the extra price of solar), and they also reduce significant health costs that come from burning dirty energy. In several studies, it has been found that the extra costs of solar are lower than the extra benefits. Nonetheless, people consistently talk about the estimated costs and ignore the estimated financial benefits.

Lastly, for this section, I’ll just add that solar power’s costs are more linked to labor, and especially local labor, than the costs of dirty energy sources. Hundreds of thousands of jobs have been created in Germany to support its renewable energy industries, especially solar energy industries.

“While renewable energy policy likely remains a relatively minor contributor to Germany’s overall economic performance, Germany is experiencing an economic boom with higher than ever exports and low unemployment rates when compared to most EU countries and also when compared to the United States,” the report adds.

Germany Is Succeeding

Many energy “experts” try to argue that other systems for supporting solar have been more successful. That’s simply not true. Feed-in tariffs have driven the majority of the world’s installed solar power, and Germany’s feed-in tariff policy was a critical factor that drove down solar PV panel costs for the rest of the world. This new report concurs:

There is significant evidence that FIT based systems, which provide the revenue certainty needed to attract low-cost financing for renewable energy, allow for lower cost renewable energy procurement than most of the alternatives used in the United States, in particular certificate based systems using Renewable Energy Certificates (RECs).[58] Therefore, if, as is the case in Germany, democratic support for a transition away from conventional and towards renewable energy is strong, the use of well-designed FITs is likely superior to alternative regulatory support mechanisms, especially during the early phases of renewable technology development. At a share of renewable energy in excess of 20% and after more than a decade of support, prices for power from new renewable projects are now close enough to the cost of new conventional generation that a transition towards a more market-based approach seems justified.

In other words, Germany’s solar feed-in tariffs have been a whopping success, better than anything used in the US.

“The primary lessons from the German experience are that a system of FITs such as the one used in Germany can be highly effective in promoting the growth of solar PV,” the report notes.

Germany’s Solar Feed-in Tariffs Have Brought Down the Cost of Solar PV Panels

One important point not lost on many Germans but lost on much of the rest of the world is that Germany’s strong and stable solar feed-in tariffs helped to bring down the cost of solar PV panels a great deal. Solar panel prices have dropped off a cliff in recent years, and much of that is due to Germany’s wise investments. This is actually the first point the report makes in its executive summary:

First, there is widespread acknowledgement that Germany’s solar PV support program has been instrumental in bringing down the cost of solar PV. Since 2007, average installation costs have fallen from close to €5 per Watt to between €1-2 per Watt. In that sense, earlier investments are paying off in terms of much lower installation costs today.

solar global PV capacity top countries germany solar feed-in tariffs


Economies of scale help to bring down cost. At this stage of solar’s development, they do so much more than R&D in the lab. Germany has contributed more to the scaling up of solar PV manufacturing than any other country, on the demand side of things. In fact, at the end of 2012, Germany accounted for nearly ⅓ of global solar PV capacity!

Germany Has Supported Coal & Nuclear Far More Than Renewables

One of the most annoying things that anti-renewable commentators do is act as if dirty energy sources have never received (and don’t continue to receive) considerable government support. This Brattle Group/SEIA report does a good job of highlighting that cumulative support (between 1970 and 2012) for coal and nuclear power has been far greater than cumulative support for renewable energy. Hard coal is on the left, then brown coal, then nuclear energy, then renewable energy:

germany energy subsidies

As you can see, support for hard coal alone is over 4½ times greater than support for all types of renewable energy. Support for hard coal and brown coal is approximately 6 times greater than for all types of renewables combined. And support for nuclear energy is over 3 times greater than for all types of renewables combined.

Honestly, looking at these charts, I’d say that renewable energy deserves a ton more governmental support than it receives.

Energy Independence

The Brattle Group/SEIA report closes with an excellent line. It brings into the discussion the fact that energy independence provides great energy and economic security. Germany would have been in a much more difficult situation with the recent crisis in Ukraine if it were not for the country’s strong renewable energy market. But this sort of energy independence is important all around the world, especially if we take into account oil and the potential to electrify our ground transport.

Here’s the closing line from the report: “As the recent Ukraine crisis has shown, the transition has also helped reduce the exposure of Germany to potentially volatile input prices to the traditional power system, a benefit that has largely remained unquantified, but could prove significant in the future.”

Indeed.

The report has much more in it that I think is worth a read, and many charts and graphs. Have a look if you’d like to dig in a bit further, and feel free to drop more highlights in the comments below.

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About the Author

spends most of his time here on CleanTechnica as the director/chief editor. Otherwise, he's probably enthusiastically fulfilling his duties as the director/editor of Solar Love, EV Obsession, Planetsave, or Bikocity. Zach is recognized globally as a solar energy, electric car, and wind energy expert. If you would like him to speak at a related conference or event, connect with him via social media. You can connect with Zach on any popular social networking site you like. Links to all of his main social media profiles are on ZacharyShahan.com.



  • tomandersen

    One can see the ‘success’ of the German renewable program as compared to the US system of almost doing nothing by comparing these two graphs.

    http://i2.wp.com/cleantechnica.com/files/2014/03/Agorawrong.png

    http://www.earth-policy.org/images/uploads/graphs_tables/indicator7_2013_top5.PNG

    With success like this, who needs failure?

    Solar & wind have not been proven to reduce emissions.

    • Bob_Wallace

      Tom, how about we take a longer look at Germany’s success in cutting CO2 rather than cherry pick a short number of years in order to misrepresent their success?

      We can easily see your dishonesty, Tom, by looking at the longer term record in the two graphs below. First, Germany started cutting CO2 many years ago. Something you omit. Then, Germany stalls out a bit over the last few years mostly due to their closing of nuclear reactors which means that the renewable generation they have added has gone to replacing that capacity rather than further cutting fossil fuel use.

      As for the US, I suppose you think the US hasn’t been installing wind and solar?

  • No way

    So when will the de-fossilizing start then in Germany? I’ve been hearing so much about it but have seen so little results.

    • sault

      You obviously aren’t looking. Without 20% renewable energy, Germany would have to burn a lot more fossil fuels than it does currently. As they wean themselves off of Russian gas, their coal consumption might go up temporarily, but in the grand scheme of things 20+ years into their energy transition, Germany’s grid is a lot cleaner than it was at the start of the program.

      • No way

        I’m just not impressed. Here are the stats for EU for electricity in 2013, with fossil fuels as the sorter.

        http://epp.eurostat.ec.europa.eu/statistics_explained/images/9/95/Breakdown_of_electricity_production_by_source%2C_2013_%28in%25%29.png

        And electricity with renewable energy as the sorter for EU in 2013

        http://epp.eurostat.ec.europa.eu/statistics_explained/images/c/c9/Share_of_renewables_in_electricity_production%2C_2013_%28in_%25%29.png

        And renewables out of total energy for 2012, sorted by 2012 but also including the mandatory goal for 2020.

        http://oi61.tinypic.com/voy1w5.jpg

        With all you hear about Germany wouldn’t you expect them to be higher up the lists, or is it just me?
        I’m much more impressed by for example Romania, with what they have done with their limited economical resources. Or the Baltic states.
        Or what Greece or Bulgaria among other countries have done, with an increase in renewables during the last 8 years which is greater than Germanys.

        • sault

          Germany has a much larger economy than those countries and cannot transition as quickly. Bob’s graphs above clearly show that fossil fuel consumption in Germany is down in a big way.

          • No way

            So you’re saying that the 4th largest economy Germany can’t keep up with the 5th largest economy in the world and that is why?

            So what is Germanys problem then? Lack of economy? Lack of industries capable of scaling up non-fossil fuels and mass production? No technical/administrative/engineering skills?

            Nah…It’s all about lack of will and the abundance of cheap, dirty domestic coal.

          • sault

            First of all, the electricity generated by rooftop solar in Germany isn’t tracked by the graphs you linked to since Germany actually gets 25 – 30% of its electricity from renewable sources. Secondly, France plowed billions of government money to start up and prop up their nuclear power and reprocessing industries. Now, the French are looking to lower their dependence on nuclear power because it isn’t flexible enough and they are getting tired of swallowing Areva’s operating losses. Thirdly, you mentioned Bulgaria, Greece and other, much smaller countries (per their GDP) than France. How come you are changing tack all of a sudden and completely ignoring that those small states have small economies and are able to switch off fossil fuels much quicker than a major economic power like Germany? And how come you just ignore all the data that Bob showed you that clearly proves German coal consumption over the last 20 years is way down. Too inconvenient to your pre-existing conclusions about German renewable energy???

      • tomandersen

        Biomass (clearcutting US forests and burning them) produces much more pollution than coal, with particulates, toxic gases and CO2 all much higher.

        That does not include the impact of reducing mature forests in the US and other places to stumps.

        All in the name of ‘green’.

        • Bob_Wallace

          Ah, Tom, learn something about the carbon cycle.

          The CO2 from burning biomass is far less of a climatic problem than the CO2 from fossil fuels.

          Clear cutting US forests for biomass? FUD, Tom, simply FUD. There are no plans to clear cut US forests for biomass, most of the fuel would come from lumber wastes and specially grown crops. It may be that some of the previous pulp plantations might be repurposed for feedstock, but that’s hardly what you insinuate.

    • Bob_Wallace

      Looks to me as if it’s been going on for a while.

      • No way

        Are you seein any improvement during the last 20 years in that graph?
        Basically it’s a slight reduction in oil, which probably is because cars are more fuel efficient (even though the German car park is in the upper end of efficiency in the EU, fuel efficient cars isn’t really their thing unless they are forced to it).
        And even slighter reduction in coal, which basically would be that new coal plats which are more efficient have replaced old ones once they retired.

        Am I looking at it wrong? Is it like a 3D-picture where suddenly something else will appear?

        • Bob_Wallace

          2003, both coal and NG were about 3.5 Quadtrillion Btu.

          2011, both coal and NG were about 3 Quadtrillion Btu.

          That’s a ~14% drop.

          Then consider the loss of nuclear generation. If you want to argue that Germany should not be closing their nuclear plants that’s an argument you can make. It would have meant that fossil fuel use would have dropped quicker/further. But the decision to close nuclear was made.

          Had nuclear stayed on line the 14% drop would have been larger. And that’s over an 8 year period. Now with their most inefficient coal plants closing and wind and solar prices continuing to fall I’d expect to see the downward slope accelerate.

          Then consider that much of the coal generated electricity is flowing to other countries. If places like The Netherlands would get their thumbs out of their dikes and start installing their own renewable generation we’d see German fossil fuel consumption dropping even faster. A lot of what we see is other EU country’s coal being burned in Germany.

          • No way

            I really do hope we see that supposed downward slope (which was a upward slope in 2012-2013) from now on and at an accelerated pace.

            Don’t get me wrong here, it’s great that Germany are trying and that the people are positive and aware of green technology. What baffels me is the lack of actual results and the amount of attention Germany gets even though it’s one of the worse EU countries.

            Imagine how peoples head would explode if you looked at some of the countries which have done a lot better in recent growth/recuctions and/or in the total percentage.

            I mean, even Germanys 2020 target goal for renewables of total energy is lower than the EU average.
            If you are being hunted by Poland which has a government that has the outspoken philosophy that coal is king and will be for the forseeable future and we will fight to keep it that way then you are doing something wrong.

          • Bob_Wallace

            I’d be hesitant to declare a change in direction based on a single year or two’s data. If you look at the historical record there are times during which fossil fuel when “the wrong way” but the overall slope is downward.

            Germany gets a lot of attention because they did so much to drive down the price of solar. And because they are now experiencing periods when a large percentage of their electricity is coming from solar and their grids working fine.

          • Bob_Wallace

            Here’s another interesting look, comparing the winter and spring months of 2006/2007 with 2013/2014.

            A 15% drop in fossil fuel use. And a 36% drop in nuclear’s contribution. Had nuclear stayed level fossil fuel use would have dropped 30%.

          • No way

            That would have been some impressive numbers. If they would have kept the nuclear then we would be able to talk about a start of the de-fossilizing, at least for electricity.

          • Bob_Wallace

            15% drop in 7 years. About 2% per year. The IPCC says we need to cut 40% to 70% from 2005 levels by 2050. A 40% cut would require a 0.8% reduction per year. A 70% cut would require a 1.6% reduction per year. Germany’s on track.

            Looks like they’ve cut oil use by close to 10% since 2005. Need to push harder there, but EVs are just starting to appear on roads.

          • No way

            Well, that is for all countries. Developed countries have a much larger responsability and capability to solve their pollutions faster than that.
            And that drop is just for electricity. Remember that their goals are 18% renewable energy for 2020, 30% by 2030 and 60% by 2050.
            None of them higher than the EU-average. It seems pretty unambitious to settle for below average performance, don’t you think?

            I have no worries about the oil. That is mostly transportation and the EU regulations for cars is ambitious. Germany have no option but to comply even though they fought hard for the regulations to not be put into action.
            It will be mostly efficiency and biofuels but EV’s will play their role too, especially for the 2030 goals when the numbers on the road should be significant.

          • Bob_Wallace

            “Developed countries have a much larger responsability and capability to solve their pollutions faster than that.”

            I think we have to assume that some countries won’t achieve the 40% to 70% target. It’s impossible to state which might not today, but if we were talking about a short term target one would assume Putin’s Russia might not. And we all need to aim for 70%, and higher. Just in case.

            I don’t worry about oil. We’re on route to doubling US personal vehicle efficiency rate, which will mean major drops over the next 20 years. And, after that, I assume we’ll be well underway in the transition away from oil and onto EVs or FCEVs.

          • No way

            Exactly. I highly doubt that Russia will get close to the numbers that many other developed countries are aiming for in the future .
            But Russia will hopefully have a massive drop in fossil fuels too when exports might go down. They use a lot of energy to get energy out of the ground to sell to other countries. Germany being their main buyer of both oil and gas with almost a quarter of all Russias oil and gas exports.
            The big hope there is for their nuclear program to really increase its size on a large scale.

          • No way

            That makes them an example of that solar works. But hardly an example for renewable energy and even not so for renewable electricity.
            Solar is still a very very tiny part of the world of renewable energy and de-fossilizing.

            So that means that we will soon be doing the same to UK for them investing in and driving down the price on sea based wind power? Even though the UK is an even worse example of renewable energy and de-fossilizing (this might be my new favorite word :P)

      • Fast&Furless

        If you look closer, you’ll find that cost increase over time therefore demand fell over the same time line. Look at Fit payment cost increase over time, demand fell for energy consumption a clear link between two.

        • Bob_Wallace

          I don’t follow you.

          Can you post some data that backs your claim?

    • Hans

      Renewables first had to replace the electricity from the nuclear powerplants that were taken out of service after Fukushima. They have done that now and are starting to eat into the market share of fossil fuel power plants.

      See the graph at the bottom of:
      http://www.renewablesinternational.net/did-co2-emissions-from-german-power-sector-drop-in-2013/150/537/75866/

      • No way

        So in other words there hasn’t been any de-fossilizing yet. But it might start soon, at least in the electricity sector?
        When should be expect them to reach 2009 levels? And when should we expect them to lower the emissions from that level and keep improving every year compared to last?

  • JamesWimberley

    The record of success of German FITs is clear – but not to the EU Commission, which in alliance with German neoliberals has forced a large switch to market based mechanisms, meaning auctions and “direct marketing”. Cynics will notice that unlike straightforward FITs, these create large fees for financial middlemen expert in the complicated paperwork, and shift the balance away from small firms and cooperatives to large corporations. Follow Craig Morris’ Renewables International site for this story (link). By 2017, only solar installations under 100kw – a very small factory roof – will still be eligible for FITs. Hans-Josef Fell, father of the first EEG act, has written of the reform that “the grand coalition has put an end to th e Energiewende as a citizen movement” (link).

  • http://www.michaeljberndtson.com/ Michael Berndtson

    The first chart is unclear. Showing 30 percent of the mix as “other” isn’t helpful. Offshore wind is just a sliver, maybe 1 percent, but get’s its own identity? What’s included in the “other?” In the mean time, I’m going to assume Germany is using my perpetual motion machine and lump it in with cold fusion and Gibbs free energy as “other.”

    • http://zacharyshahan.com/ Zachary Shahan

      It’s likely biomass and hydro combined, i assume. but yeah, would have been nicer broken out.

    • Jan Veselý

      It is mostly biogas production and CHP and some biomass CHP.

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