Renewable Power in Germany Gets Boost from Merkel’s Re-election

The good news?

Germany is the largest energy consumer in Europe, not including Russia, and the seventh largest energy consumer in the world. It is also the fourth largest economy in the world by nominal gross domestic product after the United States, China, and Japan.

The bad news?

Germany still relies on imports to meet the majority of its energy demand.

But, alone of industrialized nations, Germany seems to have absorbed the ominous lessons of the March 2011 nuclear catastrophe in Fukushima, Japan, and the government of Chancellor Angela Merkel has resolutely decided to move away from nuclear power. In the aftermath of Fukushima, on 30 May 2011Chancellor Merkel announced that Germany would close all 19 of its nuclear power plants over the coming decade, a monumental transition in the country’s energy matrix, as the NPPs previously produced about 28 percent of the nation's electricity, with the shortfall to be made up with an increased emphasis on renewable energy sources. Prior to Fukushima, in 2011 Germany was the sixth largest generator of nuclear energy in the world, with 102.6 terawatt hours and was an important exporter of nuclear technology. Following Fukushima, Merkel’s government decided to shutter the nation’s eight NPPs launched before 1980 because of public protests, and to close the remaining nuclear reactors before 2022.

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So, how is Germany’s “Energiewende” (“energy revolution”) proceeding?

Apparently, better than most expectations.

The German Federal Association of Electricity and Water (BDEW) reported that Germany’s solar photovoltaic plants produced more than 5.1 terawatt hours in July 2013, a new record for the nation and the world, 42 percent more than the previous year.

The U.S. government’s Energy Information Agency notes, “Germany is a regional or world leader on several categories of renewable energy use. In 2011, it was the largest European producer of non-hydro renewable electricity, wind energy, and biofuels (primarily biodiesel). The country was also the largest solar electricity producer in the world.”

But all is not smooth sailing for Merkel, as her experiment to shift Europe's biggest economy away from nuclear and fossil fuels  towards renewable  energy is threatened because generous subsidies have proved so popular with investors in green power that Germany is straining under the cost. Not surprisingly, the higher costs of electricity generated from renewables has resulted in a pushback from business lobbies. BDEW has urged the government to fix the country's power market after years of generous subsidies for renewable energies have resulted in increased electricity costs, while diminishing the profitability of conventional power plants. The renewable energy subsidies are particularly irksome to the conventional power generating community. BDEW managing director Hildegard Mueller said, “"Those who receive subsidies must become business people.” BDEW has also called for a premium on the price of electricity produced in conventional thermal power plants, like coal- and natural gas facilities, to encourage utilities to retain generation capacity online as backup for less-reliable renewables, as the surcharges mean that German consumers pay the second highest power prices in Europe.

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The issue has left Merkel following her 22 September election victory scrambling to forge a collation to support her “Energiewende” political platform, seeking a possible coalition with the center-left Social Democrats (SPD), who have 192 seats, who analysts believe might agree to modest cuts to costly incentives for green power in return for their political support. There remains an outside possibility that the Christian Democrats might seek to partner with the Green Party instead. The Greens ended election night with 63 seats. Merkel is now the only major European leader to be re-elected twice since the financial crisis of 2008.

Whether she can continue her green revolution remains to be seen, but this much is clear – she cannot go it alone, and will have to form some tactical political alliances in order to advance her energy agenda.

By. John C.K. Daly of Oilprice.com