Energiewende Will Succeed

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Part Three of the Seven Most Attractive Countries for Renewable Investments Series

Originally Published in the ECOreport

American critics of Energiewende regularly announce its approaching  demise.  A hypocritical article in The Wall Street Journal announced that Germany will spend €1 trillion  on it renewable energy experiment by 2040, without mentioning that a large portion of that money will go for electric grid upgrades that would be needed anyway. Nor did the author disclose the fact an even larger sum (€90 billion a year) would have gone to fossil fuels. Similarly, Forbes mocked Germany’s slight rise in CO2 levels, without mentioning they are already 23% lower than the 1990 benchmark set by the Kyoto Accord. (The author’s country, the US, is still 5% above that target.) Their carping does not explain how Germany became Europe’s powerhouse and the fourth largest economy in the world. Nor does it do justice to the nation the  Renewable Energy Country Attractiveness Index (RECAI) ranks #3 for renewable investments. Energiewende will succeed because it is embraced by the German people.

The Nation Endorses This Policy

Most of the population endorses this policy. Despite all the criticisms from within Germany,  as well as without, a  2013 poll  showed the opposition had only grown to 14%. That was a quarter of the number that endorsed Energiewende. Asked if Germany will reach its’ emissions goal of being 40% below 1990 levels by 2020, a businessman from Mecklenburg-West Pomerania could have been speaking for his nation when he replied with a simple, “Yes.”

But what if you fail?

“Then Chancellor Angela Merkel is out,” he said. “This is something she has staked her political career on.”

Merkel’s Genius

Though Merkel has been the Chancellor since 2005, she still enjoys a popularity most politicians dream of. A poll taken last October found that 79% of the nation thinks she is doing a good job. She was subsequently re-elected President of the Christian Democratic Party with 96.72% of the vote.

One of her German critics recently described Merkel’s genius as recognizing “where the train is going and jumping on it.” The soft-spoken former East German physicist did not invent Energiewende, she grasped hold of a movement whose roots go back to the anti-nuclear movement of the 1970’s. The exponential growth of Germany’s solar industry began in 1990, reaching 1 GW of capacity during the first year of Merkel’s administration.  The wind sector was already providing 4.4% of the nation’s electricity. Germany’s Renewable Energy Sources Act went through several revisions between its original appearance, as a two-page document in 1991, and Merkel’s famous Energiewende legislation of 2010. Germany already led the world in the deployment of wind and solar, when the 2011 meltdown at Fukushima gave wings to the nation’s will to adopt renewable technology. Merkel has adopted this movement as her own.

Still Setting Records

Though larger nations have passed Germany in terms of total capacity, it is still setting records. The wind sector set a record 29.7 GW peak power production on Friday, December 12, 2014. Another record, for the output of wind and solar, was set the same month. Though the final figures are not in for 2014, at the end of November, solar production was still 7.4% ahead of last year. Germany’s nuclear and lignite plants had to curtail production, by 10% and 30% respectively, to make way for renewable energy.

Data from the Frauenhofer Institute show that by the end of October 2014, Germany possessed

• +38 GW of solar capacity
• Almost 36 GW of wind capacity.
• +8.1 of biomass capacity
• 5.6 GW of hydroelectric capacity

Germany’s goal is to have renewables supply 40% of its power by 2020. They appear to have reached 27% this year. Last Summer, the government laid out an agenda for continued expansion:

• Onshore wind: 2,500 Megawatt (MW) increase per year.
• Solar photovoltaics: 2,500 MW increase per year.
• Offshore wind: 6,500 MW by 2020 (implying an increase of about 800 MW per year).
•  Biomass: 100 MW increase per year. This sounds modest, considering that Biomass makes up about one-third of renewable power currently, but it has a high cost and limited future potential.

Preparing for the Future

Two of Europe’s largest utilities are preparing for the future by divesting themselves of fossil fuel assets. The CEO of Vattenfall told Energy Post the future lies with offshore wind. His company is selling off German lignite operations.  Similarly, E.ON is spinning its conventional assets off into a new company.

“E.ON will focus entirely on renewables, distribution networks, and customer solutions and thus on the building blocks of the new energy world. This is the logical consequence of our commitment to be our customers’ partner of choice and to be best in class in terms of customer satisfaction in all our markets,” said Dr. Johannes Teyssen, CEO of E.ON.

One of the keys to build the grid of the future is energy storage. That’s why we hear so much about the German company Younicos, or projects like the 30 MW facility planned for the state of Saxony-Anhalt.

Progress towards putting a million EVs on the roads by 2020, is less impressive. So far, there are only around 24,000! Though there are plans for an electric corridor linking Southern Germany to the Netherlands and going across the North to Denmark, the existing  infrastructure is limited. There are 100 fast-charging DC stations, and 4,800 Level 2 charging stations.

“There’s a lot to do. We see that further subsidies are necessary. We must speak with the German states about that,” said Merkel.

America’s First Choice

According to Germany  Trade and Invest (GTAI), Germany  is America’s first choice for research and development (R&D) investments. It received approximately $8 billion of the $45 billion Americans sunk into foreign R&D’s in 2012.  Their press release says, “There were also 6,100 US companies employing more than 730,000 people operating in Germany in April 2014, according to the Bureau van Dijk Markus database.”

US FDI projects in Germany 2008-2013 in %:

• ICT & software 29%; 
• Business and financial services 15%;         
• Mechanical engineering and accessories 10%; 
• Health care, biotechnology, pharmaceuticals 7%;
• Chemical industry, plastics, paper 7%;
• Other sectors 32%. (Source: fDi Markets, 2014).

Investments in Germany

Germany invested $22.4 billion in renewable technologies during 2012, but only $10.1 billion in 2013. As a result, she fell from #3 to #6 in terms of  investments.

Germany’s incoming FDI was $852 billion in 2013; 58% comes from the EU, 24% from the US and 9% from Asia. (It is China’s #1 European trading partner)

Germany is currently ranked #3, behind China and the US,  on the Renewable Energy Country Attractiveness Index.

Images Above:

• Photo Credit: Angela Merkel painted portrait by thierry Ehrmann via Flickr (CC BY-SA 2.0 license)