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Germany About To Make Big Changes To Its Renewables Policy

Solar Plant Germany

On Earth Day, some 171 nations formally signed the Paris climate agreement; it was a mostly symbolic, though meaningful next step. The document now awaits individual ratification and, more specifically, ratification by 55 countries representing 55 percent of global greenhouse gas emissions. When and from where those approvals will come is difficult to say with certainty. How are the targets are then actually met is even less clear. For its part – and well aware of the fact that it has much to do – Germany is in the process of reshaping its transformative Energiewende policy.

To be sure, Germany is no slouch. Over the last two years the country has added roughly 11 and 4 gigawatts (GW) of wind and solar capacity respectively. Last year, nearly 33 percent of Germany’s electricity demand was satisfied by renewable sources – wind even out-produced coal for the first time ever in December. Renewable energy penetration in the power supply is already greater than 100 percent in two German states. Moreover, renewables account for 15.3 percent of gross final energy consumption nationwide, up nearly 2 percent from 2014. Globally, Germany has a top-three wind fleet and the world’s largest solar PV capacity. Related: Is This The Biggest Red Herring In Oil Markets?

But – with high expectations and increasingly heavy realties – there’s still much left to do. As it stands, Germany will not meet its current climate obligations. By 2020, it is estimated that Germany will only have cut greenhouse gas emissions by 32 percent compared to 1990 levels, or well short of its 40 percent target. In fact, GHG emissions have seen year-on-year growth in six out of the last ten years. Persistent, and in some cases growing coal use, combined with backward progress in the transportation sector suggest the current, aggressive electricity transformation is having trouble maturing into a full blown energy shift.

Growing pains are of course expected and, to date, modifications (see: feed-in tariff adjustments, grid fees, etc.) have been fairly quick to materialize, if only reactively. Looking forward – and in an effort to get ahead of the curve – Germany is preparing some big changes for 2017. The most sweeping reforms will come to the nation’s Renewable Energy Act (EEG). Related: U.S. Crude Imports Surge After Long Period Of Decline

Slated to enter into effect on January 1, 2017, pending government approval, EEG 2016 will abolish feed-in tariffs as the primary policy instrument to incentivize renewable energy development. Instead, the Ministry for Economic Affairs and Energy will establish an auction system, designed to provide market-based renewables support while making it easier to control development within a broader network of associated infrastructure.

Three pilot tenders for large-scale PV installations were held last year, producing rather mixed results – hopes for a more diverse pool of bidders and lower prices were largely unmet. Moreover, measures limiting system size and alterations to the surcharge on self-generated and self-consumed power will limit profitability for an already slumping German PV industry. Still, EEG 2016 favors solar development, which is prioritized over more cost-effective onshore wind projects. Related: Biofuel Breakthrough: Production Jumps 64%

Regarding onshore wind, auctions will begin in mid-2017 and continue with relative frequency through 2018 as a price level is established. Incentives will be provided to installations across Germany, but the most efficient sites will receive the greatest support. The exact capacity volumes to be auctioned are less clear, however. More specifically, capacity additions for wind are determined by subtracting existing and non-wind planned renewable additions from the target figure for renewable electricity. As such, onshore wind takes on new swing-producer role under EEG 2016. Floors and caps have yet to be decided, but will likely settle in the 2.0 to 2.9 GW range, far below last year’s record level.

For Germany, increased uncertainty and planning insecurity for many of the country’s wind developers is a necessary risk as it tries to combat ballooning state costs and infrastructure deficiencies. Its climate responsibilities are great, but – with much of the world watching, and taking notes – getting it right is the first piece of the puzzle.

By Colin Chilcoat of Oilprice.com

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  • RussianJew on May 06 2016 said:
    The whole green brouhaha dies out as soon as subsidies end. Renewable energy pipe dream are a stillborn child of a crazy left. Period.
  • Doug on May 06 2016 said:
    The article is a bit misleading in citing renewables accounting for 15.3 percent of gross final energy consumption nationwide for Germany in 2015. If you go to the link the article references, it was actually 12.6%. More importantly, nearly half of that 12.6% was credited to biomass. Folks, that's burning wood, an 18th century solution to creating heat. Only 3.5% of Germany's total energy in 2015 was generated by the combination of wind and solar! Think of that, with all of Germany's effort and market subsidizes and they still only produce 3.5% of their energy from solar and wind. 6.1% comes from biomass, principally the burning of wood, nearly twice what all the wind turbines and solar cells in Germany generate. Without fossil fuels, the lights go off in Germany.
  • Colin on May 07 2016 said:

    12.6 percent refers to primary energy consumption; 15.3 percent is final energy consumption. Regardless, your point on biomass stands.
  • Rick B on May 09 2016 said:
    Renewables work if somebody else helps you pay to collect the wattage.
    No mention of the true cost of a 200 ft wind turbine or the total cost of an acre of photovoltaic collectors.
  • CapitalistRoader on May 09 2016 said:
    "But – with high expectations and increasingly heavy realties – there’s still much left to do."

    German industrial electricity prices are two to three times higher than the US's. If by "much left to do" you mean "completely eliminate manufacturing" then, you're right, there's still much left to do. Most of the German car manufacturers have factories in the US and Mexico. My guess is that they'll just transfer all manufacturing out of Germany due to outrageous electricity costs.
  • Mrc on May 10 2016 said:
    @Doug @Colin
    The 12.6% for primary energy consumption includes heat, electricity, transport, etc. and is the energy consumption multiplied by the primary energy factor f. Non-renewable electricity, for example, is given a primary energy factor of 2.8. So an average of 2.8 times the primary energy (fuel) is required per energy unit of electricity on the grid. For renewables, such as wind, hydro and solar, f = 1, so primary energy is set equal to the secondary energy (electricity). This is done in order to estimate how much fossil primary energy is saved due to the use of renewables. Giving the thermodynamic correct primary energy factor of approx 5 for solar PV would make the share in primary energy for renewables a lot larger than that of fossil fuels, but it would be misleading in terms of how much fossil primary energy is prevented.
    For biomass, f = 1.2 - 1.5, depending on the fuel (with a non-renewable share of 0.2 - 0.5, respectively). The non-renewable share for non-renewable electricity is 2.8, so yes, biomass is renewable (83% renewable in the case of wood). It is not just "18th century burning wood". It is far more complex than that. Renewable biomass (the 83%) is the CONTROLLED burning of various fuels, including wood, usually in the form of combined head and power (CHP). In some cases, it includes pyrolysis (for oil, gas and coke). It also includes gasifcation (e. g. of human waste or crops). We are way past the 18th century when it comes to biomass.

    @Rick B
    The same goes for fossil fuels. If you include local pollution subsidies, they are actually much, much higher for fossils than they are for renewables (http://www.imf.org/external/pubs/cat/longres.aspx?sk=42940.0). Even without local pollution and global warming subsidies, the global subsidies for fossil fuels per Wh added are greater than those for renewables.
    And here's the major difference between renewable subsidies and fossil subsidies:
    Renewable subsidies are steadily DECREASING, while renewables are becoming more and more competitive at faster rates than the rates of subsidy decrease. Fossil fuel subsidies are steadily INCREASING, while fossil fuels are becoming less and less competitive on the free market.

    That being said, I would like to clarify that I am NOT defending Germany. The coal industry has the current leading coalition wrapped around their little fingers. They just "promised" to contribute to limiting global warming to 1.5 °C and at the same time they are allowing Vattenfall to buy out of their responsibility. The new EEG reform is designed solely to protect the coal industry from further onshore wind expansions and could ultimately lead to a reduction in onshore wind capacities - where the highest potential for wind power lies. They claim to be big in renewables - at the same time their lignite operations are making them the EU's worst polluters.
  • mnemos on May 12 2016 said:
    The article is very hopeful. The description of "Persistent and in some cases growing coal use..." is poorly phrased, though. Coal is a source of base power, while wind and solar are not. Coal use is growing for the simple reason that one of the other main sources of base power - nuclear - is being phased out. The reason why this is important is that it will move the energy shift you are hoping for from "diversification away from fossil fuels", which is good, toward "elimination of fossil fuels", which is probably not. Our only viable sources of base power at this point are fossil fuels (coal, oil, natural gas), hydroelectric (which is being limited due to non-GHG related environmental concerns, and nuclear. Unless you are interested in supporting nuclear energy, supporting elimination of fossil fuels is a non-starter. Any solution that implies emergency rooms should only be open at night if it is windy is neither viable nor desirable.

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