Germany Renewable Energy Subsidies Must Stop

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Originally published on Lenz Blog.

That’s what a new report by “experts” on innovation calls for, as Reuters just reported.

40 MW CdTe solar PV project in Germany.
Image Credit: JUWI Group (CC BY-SA 3.0).

I actually agree with that. That probably comes as a surprise to readers, but it will become clear in a couple of moments.

The most important part of the Reuters article is this paragraph:

The report is unlikely to have much impact on policy.

That observation is correct. The only party that might have supported such a fringe minority loser position was the FDP. And they got booted out of the German Parliament in the last election. I am a former FDP voter, and I changed my mind and voted for the Green Party this time because of their horrible positions on renewable energy.

Former Green Party Member of Parliament Hans-Josef Fell has already demolished this report here (in German language). There is not much to add. I found a link to the report at Fell’s website, and here it is.

The “experts” only take two short pages to develop their critical point of view.

They start off with whining about the high costs of a feed-in tariff system. They don’t consider the cost of keeping energy based on fossil fuels, with prices for oil going up by a factor of 50 in the last 40 years.

That’s only to be expected. These are “experts” on research policy. They lack clue one on energy issues.

They then fall for the common error to state that it doesn’t matter how much CO2 the German electricity generation sector emits, since there is a ceiling on CO2 emissions in the EU anyway.

That’s correct as far as it goes, but obviously one can reduce that ceiling much faster if CO2 reductions proceed quickly than if one does nothing to improve the situation. With that particular argument one could doubt the value of any efforts in emission reduction. I don’t think there is any merit to it.

I learned from their position paper that there are people studying innovation in the renewable sector, and that those people have been unable to find any.

That says something about the quality of these studies. It does not change the fact that innovation in the renewable energy sector was the most resounding success of the German feed-in tariff systems.

It is a fact that prices of solar and wind energy have gone down massively in a very short time of only about a decade. That’s innovation. And you don’t need a “study” from “innovation experts” to understand the game-changing and revolutionary effects of that innovation.

There are several goals of the Law on Priority of Renewable Energy, but the most important one is actually to help develop technology in the sector.

That’s because in contrast to the other goals (environment, saving costs compared to staying with fossil fuels, leave more fossil fuels for future generations), more innovation in renewable energy will help developing the sector everywhere on the planet. The first three goals are mainly about the situation in Germany only.

These “innovation experts” seem to think that you would get more innovation without a massive-scale market enabled by the feed-in tariff. They are wrong. As Hans-Josef Fell correctly remarked, you don’t get any innovation without a market to actually sell the products you are developing.

So why do I agree with their conclusions?

That’s because we need to make sure that the German feed-in tariff law is not a subsidy law, or – in the terms of European Union law – a form of “state aid”.

If the system has any aspects that allow the EU Commission to view it as “state aid”, like the French feed-in tariff system, the EU Commission will try to abuse this for an illegal power grab and start dictating German energy policy over their competition competence.

So I agree with the part of stopping “subsidies”. The coming feed-in tariff law reforms in Germany should have as the most important goal to make the EU Commission shut up in this debate, for two reasons. One is that the EU Commission’s ideas about the feed-in tariff deserve a sound rejection. They are useless and harmful, like their stupid idea about requiring to run everything on an auction model. That fringe minority loser position was another idea supported by nobody in Germany, except possibly the FDP. The other is that basic values of democracy require to take the limits of competence delegation to the EU very seriously.

The feed-in tariff should be devised in a way as to make it impossible for the Commission to view it as “state aid”. There are several ways this may be done.

One is to frame the issue as one of safety. Germany has decided that nuclear energy is not safe. And even the EU Commission has – up to now – not dared to interfere with that decision.

So just decide in the same way that generating electricity with coal and gas is not safe. That’s correct, of course. Keeping fossil fuels in the mix risks enormous damage from global warming. Much more than damage from radiation in case of a large-scale nuclear accident.

Then declare everything in the feed-in system as necessary to phase out the extremely dangerous fossil fuel energy generation. Just set the goals of renewable energy market share, as the German government has done, and declare that the feed-in tariff policies necessary to achieve those goals are safety measures.

As I have argued before, fire prevention measures in building safety codes come with a cost. Are these costs state aid? Is requiring the use of fire resistant doors etc. a “subsidy” for the makers of such doors?

Of course not.

And exactly in the same way, requiring a certain market share of renewable energy as a safety measure against global warming is far from “state aid” or a “subsidy”.

It may be possible to make this even clearer than it is already under the present German system. If so, the German legislator should do anything possible for the noble goal of telling the EU Commission to stop their illegal and undemocratic power grab.

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Dr. Karl-Friedrich Lenz

is a professor of German and European Law at Aoyama Gakuin University in Tokyo, blogging since 2003 at Lenz Blog. A free PDF file of his global warming science fiction novel "Great News" is available here.

Dr. Karl-Friedrich Lenz has 67 posts and counting. See all posts by Dr. Karl-Friedrich Lenz

13 thoughts on “Germany Renewable Energy Subsidies Must Stop

  • They want to do what their fossil buddies are dictating them, but at the same time don’t want to lose votes because they look like enemies of the environment.

    And so they predictably play the ‘innovation’ pr tactic (as the right wingers do in my country): try to look intelligent by talking of ‘innovation’ and at the same time insert the message that current day technology is not good enough.

    People that believe them better take off their rosy coloured glasses. Locking a few white coats in a lab will not magically produce the perfect solar panel or a cheap battery. At some point, you’ll simply have to roll up your sleeves and go to work. That moment has already arrived. A long time ago.

  • Good perspective. I believe the German public supports renewable energy and thus having high level mandates of % renewable in the mix as a compliance lever will suffice. They have passed the apex of the curve and are now in a state where renewables are a base form of generation. Other countries likely still need these incentives but based on what you shared, I’m supportive of your position. Thanks for sharing.

  • Germany has been a supporter of Renewable Energy since they are mainly energy importers, and it is always good campaign advertisement to talk about innovation and technology keeping in mind that they do produce one of the most widely used inverters (at least for solar that I know). Check out my site about energy

    • How about we look at your claim that Germany “are mainly energy importers”?

      • Is this power only? Can’t tell since there are no units. Germany mainly imports oil and gas.

        • It clearly says “million kiWh”.

          And it clearly says “Electricity”.

          • To be fair: to notice this you would have to read all the way to the end. That is probably too much to ask “Banned”.

      • You got about HALF the story there.

        The important bit is that German electricity exports electricity at times of peak wind production, and often must pay other countries to take it off their hands.

        When Germany imports, it is always without exception paying for it over the last few years. Increasing the severity of this problem by building more wind turbines is not a solution unless more pumped storage or hydro power can be built, but that is politically impossible.

        • Well, there’s a bit of a problem with what you report. It probably is the case that Germany exports power when the wind is howling, that’s to be expected. Winds move across Europe and wind farms will reach maximum output at different times. As Europe connects itself (E-Highway 2050) it will act like one big grid, sharing power and storage for best efficiency.

          Germany doesn’t have a lot of places for pump-up hydro. They are looking at installing some in abandoned mines. And Denmark is building an “artificial island” offshore for hydro storage. If that works out then it will be an option for Germany as well. Baring that, other countries will provide the bulk of the storage needed.

          Now buying and selling. I don’t have any 2013 price numbers yet, but in 2012 Germany exported 66.6 TWh of electricity, earning 3.7 billion euros or 5.6 cents/kWh. Germany imported 43.8 TWh of electricity, paying 2.3 billion euros or 5.25 cents/kWh.

          Germany exported 52% more electricity than it imported.

          And on the 43.8 TWh they sold and bought back Germany earned a 7% profit. So looks like selling power worked out well for Germany.

          Germany has been selling more power than they purchase since 2005. 2013 was a banner year in which exports greatly exceeded imports.

          Interestingly, France is a big purchaser of German electricity. France doesn’t have a lot of flexibility in their heavily nuclear grid and has to buy and sell quite a bit in order to match demand. Germany makes some sweet money off France.

        • BTW, that article you link is one gigantic POS.

          The Poland surge problem has nothing to do with Germany and its generation. The problem comes from countries in one part of Europe purchasing from other European countries. The transmission runs from western Europe through Germany and Poland to southern Europe.

          It’s a transportation problem.

          And this piece of terrible reporting…

          “Another oddity is that Germany pays some of the lowest wholesale prices for electricity in Europe, yet suffers from some of the highest retail prices. Consumers are burdened with all manner of network fees, taxes and ever-growing charges to subsidise renewable energy.”

          German retail customers pay 5.3 cents per kWh to cover renewable subsidies. They also pay another 8.5 cents in federal taxes (including VAT) that have nothing to do with renewable energy.

          Whoever wrote that article didn’t do their homework. They suggest that Europe needs more transmission. But they didn’t even discover that it’s already on the way.

  • I think recent events have highlighted how silly it is to be dependant on fossil fuels from other countries. Every MJ produced by renewables is one Mj that doesn’t need to be bought from Russia. (who may or may not like the look of you and turn off the gas)

  • I am from america and we too have a political problem concerning energy but here offer an idea to any who will speak to me as I have developed a self contained recirculating hydroelectric sub-station for home use. I believe that winning the power battle means that we all must be masters of our own energy production as individuals. What if every home in Germany could produce enough power and supplement the grid system so a profit
    Can be realized, or even live
    independent of the grid system all together. By speaking with many who live here I intend to purchase peoples electric bills in exchange of letting me install my mechanical machine in thier home, this way they get free energy and I realize a profit. A very nice deal.

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