Germany’s Move To A Renewables Auction Model Is A Policy Failure

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Originally published on Lenz Blog.
By Karl-Friedrich Lenz

The numbers for 2016 are in, and they don’t look good.

As Hans-Josef Fell points out in this comment, renewable sources provided 186 TWh in 2016. That’s not bad, but only 3 TWh over the result of 2015. That’s stagnation. And it shows that the move to an auction model from 2014 on is a policy failure.

Other countries should learn from this failure and avoid making the same mistake.

Germans should learn from this failure and vote Green in the next election.

As a result, CO2 emissions from the power sector even increased in 2016, by 0.9 percent.

Until now, it has been possible to keep the promise of the 2011 legislation that cancelled 1804 TWh of nuclear power generation permits. That promise was to replace that low CO2 supply with new renewable capacity.

Hans-Josef Fell can’t be described as a large fan of nuclear power. I disagree with him about which risk is greater (nuclear or CO2).

But we completely agree that you need to step on the gas, not on the brakes regarding renewable, and one of the reasons for that is the need to replace low CO2 nuclear capacity in the next couple of years.

Of course, if you increase the renewable share further, fossil fuel will be used less, leading to potential losses for the mining of fossil fuel and the operators of fossil fuel power plants, with jobs lost in these sectors. Addressing their needs may be necessary to stop these artificial slowdowns.

The way to do this is to introduce a feed-in tariff for fossil fuel. I discussed this idea in detail in 2015. In short, that would guarantee that coal and gas power plants can operate at a decent profit, while also making sure that their share declines every year.

The basic policy deal would be: Accept that your market shares are going down to a small percentage over the next couple of decades. In return, we make sure that the price is high enough to guarantee a profit.

Reprinted with permission.

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