The origins of Energiewende is very different from what we understand today. Today German Supreme Court rules against the villagers who want to stop coal field extension. 100-year-old churches may be demolished for coal. Angela Merkel may not be the Climate Chancellor that most foreigners think. Nevertheless, Energiewende, the energy transformation is moving ahead in different colors.
German EEG’s 2021 version updates will include some important changes. All electricity consumed or generated in Germany should be GHG neutral by 2050. This impacts not only generation but imports and exports as well. The real implementation may have hiccups, but a local law gives a signal to a much wider community.
The capacity expansions are also very ambitious. Onshore wind is expected to jump 3-4.5 GW and reach 5.4 GW by 2029. Offshore wind will still struggle below 1 GWs. Solar is the powerhouse of renewable extension. Starting from 4.6 GW, it will reach 5.6 GW by 2029. According to CleanEnergyWire(CEW), “500-850 MW per year will be tendered in so-called ‘innovation auctions’.
Germany has an early comer advantage, but this also results in the early expiration of renewables fees. Sub 100kW solar installations will not be benefiting from the FIT by 2020. Therefore an interim price “market value minus marketing costs” will be given. But there are at least 16GWs of onshore wind turbines to be decommissioned by 2025.
Energy-intensive industries will continue to be exempted from the renewables surge if they have been facing negativities because of global competition. This part is important because we are talking about an industrial strategy or a climate strategy. Its current shape shows us that it has to be a mixture.
One interesting discussion was acceptance problems. Renewable energy has more acceptance problems than natural gas power plants. To solve that problem, the wind farms will pay 0.2 cents/kWh for 20 years to local communities. In a country where renewable levies are close to 6.5 cents/kWh, 0.2 cents/kWh may not do the job.
The new law also pushes above the 500kW PV projects to tender. And in terms of green hydrogen, they will be exempted from renewables surcharge.
The most pressing issue in the whole bill is there is no “green growth” in the near term. The biggest growths are pushed to the post 2023s. This is one of the disappointments. The other is how Energiewende needs more and more government intervention. It looks as if, Energiewende is a product of the Soviets.
The original Energiewende FITs were inspired by the US’s PURPA act. The qualifying facilities (QF) of the PURPA act has changed the electricity systems with the help of natural gas turbines. As a matter of accident, this inspired the solar boom of Germany, despite aimed for small hydros.
Now the times are changing, but the renewable transition is getting more and more complicated. The US can be another example, but with the loss of the Senate majority, it will take time. China, on the other hand, has promised carbon neutrality, but the devil is in the detail. There is progress everywhere, but it is not uniform, and maybe we should not expect it to be uniform.
But from the new German law, we can not see inspiration or a green growth that has been promised by the EU. Yes, it is a way forward, but is it really progress?
One reason for this can be our inexperience with energy transitions. The previous transitions have happened without government regulations. But now we are trying to push an energy transition by government intervention, and we don’t know what should be the efficient government intervention look like?