Industry Market Trends
Germany's Energy Transition Accelerates Cleantech Amid Concerns Over Power Cost and Reliability
September 23, 2013
According to advocates, Energiewende is going to reduce the costs and environmental effects of power production in Germany and is already giving the nation a tremendous leg-up in the global cleantech industry. Advocates also argue that Germany's transition presents a challenge to manufacturers in North America, which need to get on the ball if they want to compete in the growing global cleantech market.
Enacted into law in 2011, Germany's Energiewende
Electricity from renewable sources in Germany reached 22.9 percent in 2012, at 76 MW installed capacityA Booming Cleantech Sector Renewables industry analyst Paul Gipe
According to a study
Companies like Siemens, Repower and Enercon develop and manufacture wind turbines, and the country is a major producer of manufacturing equipment for the solar PV segment. It also manufactures solar PV cells and modules and is a leading supplier of CSP [concentrating solar power equipment. The largest inverter company, SMA, is also based in Germany. Germany was able to keep its sales figures steady and has benefited from a larger market share in wind and the increase in its biogas manufacturing.
As of 2011, Berger states, Germany's cleantech industry stood at Euros23 billion, with wind accounting for 35 percent of sales, solar for 30 percent, biogas 10 percent and other segments 25 percent. One challenge in Germany is that its industry is increasingly forced to compete with lower-priced solar products from Asia. To compensate, Germany has increased its sales in other parts of the value chain, such as manufacturing equipment and system components like inverters. The German wind industry is growing faster than the global market, through sales to the U.S. and domestically. Germany holds 13 percent of the solar PV market, 16 percent of the wind market and 48 percent of the biogas technology market.Volatile Prices and an Unstable Grid?
Some commentators have charged that the transition to renewables in Germany is causing energy costs to rise. The government's renewable-energy surcharge gets blamed for this increase.
German news magazine Der Spiegel claims that in 2013 "German consumers will be forced to pay Euros20 billion ($26 billion) for electricity from solar, wind, and biogas plants -- electricity with a market price of just over Euros3 billion."
The costs could be even higher, the magazine warns, "if you include all the unintended costs and collateral damage associated with the project. Solar panels and wind turbines at times generate huge amounts of electricity, and sometimes none at all. Depending on the weather and the time of day, the country can face absurd states of energy surplus or deficit."
The Heinrich Böll report acknowledges that retail power prices rose about 20 percent from 2007 to 2011. However, they argue that the surcharge "does not explain two thirds of the increase in the average retail power rate in Germany over the past decade." Research from Germany's Network Agency shows that renewable energy in fact decreased wholesale prices during the 2007 to 2011 period. Power utilities were increasing prices, with the savings going into profit margins instead of getting passed along to consumers. The report also charges that subsidies for renewables pale in comparison to those that have been received by nuclear and fossil-fuel energy.
The pressure on traditional utilities is what's generating much of the opposition to Energiewende, according to Gipe. He told me that feed-in tariffs in Germany are structured so that anyone can install their own power-generation capacity and sell electricity back to the grid. As a result, he said, "In Germany today, over 50 percent of the renewable energy capacity is owned by people like you and me."
Gipe scoffed at the idea that renewables threaten grid stability. "We're decades beyond that point of view now," he said. "Now we're talking about not just how to do 100-percent renewables, but 200 percent or even 300 percent," meaning that renewables should be able to go beyond electricity production to providing all heating and transportation energy as well. Gipe pointed out, "Engineers in Britain and the U.S. today manage intermittency in the electric grid already. It's no different with renewables. The concern is unwarranted and overplayed -- it's not really that difficult a challenge."
Contrary to claims that renewables are making the German grid unstable, write Morris and Pehnt, "Germany ... has had by far the most reliable power supply in Europe every year from 2006 to 2010, the last year for which reliable statistics are available." They admit that power outages are always possible, but anticipated risks have more to do with the willingness to make financial investment: "A systematic shortfall in power supply will only come about if investments in dispatchable power are not sufficient to replace aging conventional plants scheduled for decommissioning." The technical solutions to a reliable grid are already available, they assert: "a combination of national and international grid extension and optimization, a power plant mix combining a variety of renewables, flexible backup capacity, a strategic reserve of power plants, demand management, and, ultimately, storage."
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