Published on April 23rd, 2012 | by Thomas Gerke8
The Road to 2020 (Part III): Real Ambition
April 23rd, 2012 by Thomas Gerke
The first two parts of this series took a closer look at the political changes that occurred here in Germany at the beginning of this still young decade. Last year saw a 180° course correction by the conservative federal government in terms of energy policy. While the nuclear phaseout didn’t happen because of a sudden change of heart by all the politicans of the government coaliton, it did change the future of the German energy market significantly. This post will look at the implications of this decision on the energy market and why the goal of the federal government to reach a 35% share of renewable electricity generation is called anything but ambitious in Germany.
A 20% Gap that Will Be Filled
To understand the impact of the nuclear phase-out, it’s important to know the current relevance of nuclear power in Germany. Back in 2010, nuclear power still contributed about 22% or 133 TWh of gross electricity production in Germany. In 2011, this value already declined to 18% or 110 TWh. That means that nuclear power has a similar share in Germany as it does in the US (21% in 2012 up through March, according to EIA’s latest monthly power report). Of course, most reactors approach end of life within the next two decades in the US as well, so the question of how to replace them isn’t really limited to Germany.
According to the phase-out law, the remaining nuclear reactors will be shut down stepwise till 2022. While this obviously means that the nuclear energy age is coming to an end here in Germany, it also means that at least 20% of the entire electricity market of Germany is up for grabs over the course of 10 years. This alone is without a doubt quite a significant change and I think we all know that with change comes opportunity. But I am getting ahead of myself….
Implications for the “Nuclear States”
Now, to fully understand how this has changed the “game” for the push to renewable energy sources, we have to look beyond the national numbers and zoom in on the state level.
Nuclear power was never evenly spread across the nation here in Germany. Before 2011, there were 17 nuclear reactors spread across five states (out of Germany’s sixteen). Up until recently, all of those states were governed by the same center-right coalition that is currently in control of the federal government, with Angela Merkel as chancellor.
After the decision was made to accelerate the long-standing phase-out of nuclear power, 8 old reactors were shut down immediately. The remaining 9 reactors are positioned in only 4 states. While nuclear power made up about 20-25% of the nationwide electricity mix, it was more significant to those five states. It actually used to be and remains to be the backbone of the baseload electricity production capacity for those states, with a statewide share of approximately 50% of the electricity production.
For many years, the conservative governments of the southern states remained rather skeptical about renewable energy sources. They actively blocked the expansion of wind power by putting arbitrary restrictions in place that made the profitable use of inland wind farms impossible or held them up in a loop of permission procedures. In Hesse, the government even continued to denounce the potential of renewable energy as being enough to power the nation as late as December 2010.
Since the summer of 2011, the situation has changed completely. The very same conservative government of Hesse now thinks that the potential of renewables is more than enough. Its new goal is to achieve a 100% renewable energy supply by 2050 and accomplish a renewable energy share of 20% for final energy consumption (excluding transportation) by 2020.
But the government of Hesse is not alone in its sudden change of opinion and goals. In fact, its goals are among the least ambitous among the German states. Most states obviously dislike the idea of importing a huge portion of their renewable energy from other states, when they could produce it closer to home. Especially since 10 years of massive renewable growth in some states has shown huge benefits for regional economies in terms of jobs, economic growth, and as a consequence: tax revenues for notoriously cash-strapped municipalities (in Germany business taxes are raised by the municipalities and every windmill, rooftop-solar, or biogas power plant is a business).
So, while the federal government favors offshore wind farms that offer a slightly higher capacity factor and the potential to become an export opportunity for German industry giants, the states have their own priorities. For them, it has become a unique opportunity to bring new investments, new industries, and new jobs to their “shores.” Furthermore, it has also become a question of who will become a domestic energy exporter, thereby creating cash inflows for their regional economies.
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