Lentis/Solar Energy Policy in Germany

As of 2014, Germany is the world’s leader in solar energy production. Germany’s solar journey started in the 1980s when the country was still heavily dependent on fossil fuels and nuclear energy (fig. 1).

Figure 1. Electricity production in Germany

Due to disruptions in the fossil fuel supply and nuclear disasters, German communities started to independently adopt solar energy. While the solar movement began in the 1980s, the government took action in 2000 with the Renewable Energy Act. This movement affected the productivity of conventional and nuclear energy companies, while allowing new solar companies to enter the energy industry. This chapter discusses the history that led to the Renewable Energy Act and its implications, along with the key participants in this movement.

History of Energy in Germany

Figure 2. Germany's energy demand per capita compared to world and Eurasian averages (data from Google Analytics)

In 2012, Germany was the eighth largest consumer of energy in the world, and the largest in Europe. Germany has consistently remained atop the world and Eurasian averages in energy consumption over the last 20 years (fig. 2). Germany still ranks fourth in coal and eighth in petroleum worldwide, despite decreased demand of those two resources by 35.7% and 15.6% respectively since 1991. Germany depends on coal, nuclear, and petroleum for its energy needs.

The anti-nuclear movement in Germany began in the 1970s in the village of Wyhl, where the locals prevented the construction of a nuclear plant. This protest incited German communities to demand more sustainable sources of energy. Spurred by the Chernobyl disaster in April of 1986, which caused radioactive rain in Germany, the majority of the public opposed nuclear energy. The opposition only grew, with recent polls showing 75-80% of Germans wanting to abandon this energy source.

The oil crises of 1973 and 1979 made Germany implement daylight savings time and a driving ban on Sundays. The crisis also forced Germans to think about alternative energy supply. In 1976, Germany passed the Energy Conservation Act, requiring building insulation. In 1982, Germany forced oil firms to sell unleaded gasoline, getting rid of leaded gas altogether in 2000.

Energiewende

German for energy transition, Energiewende is a movement that began in the 1980s as an attempt to move away from nuclear energy and towards renewables. According to the [[w:en:Heinrich Böll Foundation|Heinrich Böll Foundation], the term Energiewende was first mentioned in the German Institute for Applied Ecology's 1980 study, which promoted energy efficiency for economic growth. Local, community-driven efforts after the Chernobyl disaster led to the rise of solar power.

Key Participants

Figure 3 shows the key participants of the solar energy movement.

Figure 3. Key participants of Germany's solar energy movement.

Local Cooperatives

The solar industry continuously grew with German communities' adoption of solar technology. Some German cities, such as Feldheim and Freiburg, became 100% reliant on renewable energy sources, primarily solar and wind.

The unsung hero of Germany's solar movement is a retired general named Wolf von Fabeck, a nature lover from Aachen, Germany. In response to the Chernobyl catastrophe, von Fabeck pursued solar energy. Along with seven friends, including the pastor of his church, von Fabeck founded the Solar Energy Supporters Association of Aachen.

Solar Energy Supporters Association of Aachen

Conventional energy sources had a competitive advantage over solar energy at the time. However, the group realized that any investor in a solar energy could feed the extra energy produced back to the grid. According to Wolf von Fabeck: “The main idea was that private owners of solar systems should be treated exactly as if they were utilities.” This method, now known as a feed-in-tariff, can make the initial cost of a solar system bearable. Thanks to efforts by grassroots groups, it was adopted in small towns across Germany.

Schönau Power Supply (EWS)

After Chernobyl, in Schönau, Germany, Ursula and Michael Sladek formed the Parents for a Nuclear-Free Germany coalition. Along with other Schönau residents, the Sladeks bought a local electricity grid and founded the Schönau Power Supply (EWS). Michael Sladek describes the success of EWS in 1999: “With a small advertising campaign, we have already sold a million kilowatt hours of power across Germany… For the most part it goes to the advancement and improvement of the environmentally friendly power production.”

Government

The federal government responded favorably to community efforts by passing the Renewable Energy Act in 2000, which incorporated von Fabeck’s feed-in-tariff. However, in 2010, Chancellor Merkel extended the life of nuclear power plants, as she believed that nuclear energy was still vital to Germany’s energy needs. Immediately after Fukushima, the German Federal Parliament passed an amendment to the Atomic Energy Act, which mandated the shut down of eight nuclear reactors by August 2011 and the remaining nine by 2022. This is a big step, as Germany is currently the fifth-largest generator of nuclear energy globally.

Pro-Renewables Groups

Pro-renewables groups include the Green Party and the German Solar Industry Association. The Green Party links renewables to anti-nuclear movements: "The Fukushima nuclear disaster is a critical moment in the history of energy policy. Warning about the dangers of nuclear power was a driving force in the founding of the green movements worldwide." The Greens consider the 2011 amendment to the Atomic Energy Act a victory. The Green Party’s co-chairman, Cem Özdemir stated: “It’s certainly the biggest success in the party history that even in the opposition we managed to force the other parties, in particular the governing parties, to follow us.”

The German Solar Industry Association represents the interests of 800 companies. According to the group’s communication director, David Wedepohl: “In the future, Germany’s electricity demand will be covered mostly with solar and wind power. That’s because people want the Energiewende, and they are increasingly taking things into their own hands."

Pro-Conventional Energy Groups

Groups such as the Association of Industrial Energy and Power Industry Association ( VIK) and the Federation of German Industries (BDI) are concerned about the rising price of electricity from nuclear shutdowns. VIK is a German association of industrial energy consumers and self-generators. According to the head of VIK, Annette Loske: “Everything’s on the line here for us. This electricity price increase specific to Germany can’t be allowed to reach industry.” BDI, which represents 100,000 businesses within Germany, claims that electricity prices will increase as power plants auction CO₂ emission rights. Therefore, BDI asks for conventional energy companies to be compensated.

The Big Four

Four power companies have historically dominated the energy industry: RWE, E.ON, EnBW, and Vattenfall. All four companies have nuclear plants that have been forced to shut down because of the 2011 amendment to the Atomic Energy Act. RWE, Vattenfall, and E.ON have formal filed complaints against the government for uncompensated shutdown. EnBW’s chairman is also dissatisfied with the government’s policy, citing “extraordinary expenses” from the “immediate shutdown of two nuclear plants.”

Solar Companies

Companies such as Juwi and SolarWorld are focused entirely on renewable energy production. Juwi designs and builds solar and wind plants around the world, encouraging 100% renewable energy supply. SolarWorld, one of the largest solar companies in the world, believes that photovoltaics are the “cornerstone of sustainable and fair economic development.” While these two companies have been successful, another major company, Bosch, decided to shut down its solar energy division because of market price pressures and the loss of one billion euros in 2012.

The Renewable Energy Act

In 1991, Germany passed the Electricity Feed-In Act, which required utilities to purchase electricity generated from renewable resources at a higher price than that of conventional resources. The act did not differentiate between the various renewable energy resources despite differences in production costs. As an improvement, the German Renewable Energy Act was passed in 2000 to achieve long-term cost reductions of renewable energy technologies, encouraging more companies to compete in the energy market. The act aims to produce 45% of Germany’s electricity demand by 2025, 60% by 2035, and 80% by 2050 from renewable resources.

The act includes three main principles. The first is offering investment protection and incentives by guaranteeing long-term contracts with cost-based prices. Renewable energy companies receive 20-year-long, technology-specific guaranteed payment for their electricity generation. Unlike the Electricity Feed-In Act, prices under this act are determined by the generation cost, allowing companies to enter the market in all renewable energy segments.

Prior to this act, conventional energy companies did not bear the social and ecological consequences of their operations. The second principle in the act puts an additional cost on these companies determined by their total energy production. Because renewable energy companies do not have to pay these fees, they are now more price-competitive with conventional energy companies. Finally, the act reduces the feed-in tariffs over time, putting additional cost pressure on energy generators every year and forcing them to produce more efficient and cost-effective technologies.

Despite its remarkable progress, Germany is facing some challenges such as integrating decentralized energy production technologies into existing electricity grids that were designed for centralized production. As the electricity generated by renewable resources increases, the need for updated grids becomes urgent. Additionally, the act was criticized by BDI and other associations, claiming that the act damaged the energy market competitiveness and drove up the energy prices. In 2014, the act was amended to slow the rise in the act’s surcharge to make it more manageable and ensure the smooth transition to and integration of these technologies.

Impacts

The Renewable Energy Act has increased the amount of electricity generated from solar since it was introduced in 2000 (fig. 4). In the first half of 2014, 28.5% of Germany’s electricity was produced from renewable resources, compared to 23.4% in 2012. In 2012 alone, 145 million metric tons of CO2 emissions were avoided, while creating over 400,000 jobs in the energy sector. Germany is currently the world’s third largest renewable energy economy after the U.S. and China, and over three million Germans live in 100% sustainable areas. The German model has been implemented in more than 100 cities worldwide and has proven to be successful in many schemes.

Conclusions

The German solar movement is an example of the democratization of technology. Since the 1980s, power has shifted from the four major energy companies to individuals and communities. More people now have access to solar systems due to the feed-in-tariff policy. This case also provides a counter-example to the technological momentum theory. As the German solar movement gained momentum socially, it shaped government policy. In turn, government policy made conventional energy companies, in spite of their great momentum, implement renewable technologies.