GERMANY'S TRANSITION TO RENEWABLE ENERGY, AN EVALUATION - PART I

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7 september 2013

[4C note: The following article on Germany's environmental transition had to be broken into parts to fit on our site. Moreover, it was accompanied by graphs and photos that we were unable to reproduce here. Please consulte the original web publication at the Down To Earth site.]

Germany in transition (Part I)

Chandra Bhushan and Ankur Paliwal in Down To Earth, 2013-9-15 [Down to Earth appears to be a branch of the Indian Centre for Science and Environment (CSE)

From an economy addicted to coal and nuclear energy, Germany is fast transforming into one driven by renewables. Its aim is to demonstrate to the world that growth and decarbonisation can go hand in hand. Chandra Bhushan and Ankur Paliwal travel to Germany to understand how it is doing so and what it will take to achieve this vision.

“Noise from wind farms is actually music to our ears. We earn more money.” This is how Christian Carstensen, a resident of Ellhöft village on the northern tip of Germany, explains people’s tolerance of the wind turbines set up next to their houses. He himself has invested in wind farms and a solar plant. Ellhöft is in Schleswig-Holstein state that has the highest density of wind turbines in Europe. Wherever one goes in the state, wide plains dotted with wind turbines dominate the view. In most villages and towns the common sight is glittering rooftops, covered with solar panels. People in Germany are pooling in money and setting up wind farms, especially in the windswept north, or solar panels and selling electricity to utilities because the government guarantees them premium tariffs for 20 years.

More than half the renewable energy capacity in Germany is today installed and owned by individuals and farmers’ cooperatives, not big power companies. Close to 1.3 million households are producing energy using solar photovoltaic panels. In the south, where the sun is relatively stronger, the state of Bavaria alone has more installed solar photovoltaic (PV) capacity than the US. Germany is expanding its renewable energy capacity at a staggering pace. In wind installation capacity it now beats all countries other than China and the US.

Germany, the most populous country of the European Union, is carrying out the biggest and the fastest transformation in the world from coal and nuclear energy to clean energy. The official word for this transition is “energiewende”, which in English means energy transition. It is the buzzword in the country.

In the capital city Berlin, energiewende can be seen written on hoardings close to bus stops and train station. Newspapers, TV channels and radio stations are excitedly debating energiewende. People are largely aware of the word. Bernhard Elias publishes works of artists but knows that energiewende is about rethinking the supply and use of energy.

“It is about renewable energy, efficient transport and energy efficiency,” says Elias. He cycles to work and is planning to have energy-efficient lighting in his office on Berlin’s Brunnen Street. Energiewende is also a popular agenda in the general elections scheduled for September 22.

The bulk of renewable energy in Germany comes from wind and solar, and not hydropower as in other countries. What started this energy transition in Germany? The term “Energiewende” was coined in 1980 in a study by the Institute for Applied Ecology in Germany. The groundbreaking study was perhaps the first one to argue that economic growth is possible with lower energy consumption. In fact, Germany was the first country to introduce the concept of feed-in-tariff (FIT) in 1991, even before the Rio Earth summit.

FIT is the high price paid for per unit of electricity generated through renewable energy sources. But it was not before 2000 that FIT was formally introduced in legislation with the passage of Renewable Energy Act, popularly known as EEG. The law specifies that renewables have priority on the grid and that investors in renewables must receive sufficient compensation to provide a return on their investment irrespective of electricity prices on the power exchange.

Then in 2001, the combined majority of the Social Democratic Party and Green Party decided to phase out nuclear power by 2022. The country introduced another piece of legislation to propel energy transition, Renewable Heat Act, in 2009. Its aim is to increase the share of heat generated through renewable sources to 14 per cent by 2020.

The next year in 2010, Germany set ambitious targets to have an 80 per cent share of renewable energy in the total electricity mix by 2050; to reduce power consumption by 25 per cent below the 2008 level by 2050; to reduce primary energy consumption by 50 per cent below 2008 levels; and to have a carbon-neutral economy by 2050.

But by then Chancellor Angela Merkel-led Christian Democratic Union government had developed cold feet over phasing out nuclear power. It passed a law to prolong the life of nuclear plants till 2040. In a few months, though, it had to roll back its decision due to public outcry after the Fukushima disaster in March 2011.

In June that year the phase-out plan was passed with an 85 per cent majority in Parliament and immediately eight nuclear power plants were shut down. At present, only nine plants are in operation; they will be shut down in phases by 2022. Reaffirming its targets, the German Parliament unanimously voted to transform its energy sector from nuclear and coal to renewable within next four decades. Energiewende was back into the political system and this time with full force.

The successful FIT scheme has led to the tremendous growth of renewables. Its share in electricity has jumped from 7 per cent in 2000 to the current 23 per cent­among the highest in the world. Unlike other countries where hydropower constitutes the bulk of renewables, in Germany it is solar and wind power.

Germany has one third of all the solar PV installed in the world. For the past 10 years it has been a net exporter of electricity. This holds true even after eight nuclear power plants were shut down in 2011.

The FIT regime has also led to an enormous decline in the cost of key renewable energy technologies, solar PV and wind turbines. The cost of power generated by wind and solar energy has decreased by 50 per cent and 80 per cent respectively since 1990.

And it continues to decrease. According to an estimate by Agora Energie wende, a Berlin-based policy think tank working on Germany’s energy transition, by 2015 it would be possible to generate electricity by newly built wind and PV plants at a cost of 7-10 euro cents per kilowatt-hour (kWh).

Then, it would be on a par with power from new gas and coal plants. “In good locations like Bavaria in south Germany FIT for solar PV has fallen to about 10 cents per kWh.

Electricity from wind in north Germany is possible at about 7 cents per kWh,” says Patrick Graichen, senior associate with Agora Energiewende. EEG, however, ensures that onshore wind farms will continue to get 7-10 cents for every unit of electricity sold and solar PV plants 12-18 cents for 20 years.

Wind and solar have emerged as clear winners among the renewable energy technologies. Wind alone accounts for 8.5 per cent of the total energy produced in the country and solar, 4.5 per cent. “Other renewable sources are either more expensive or have limited potential for expansion,” says Graichen. For example, biomass energy cannot have a big share because agriculture and forest are limited in Germany and the use of biomass for energy competes with other potential uses such as food and paper production. Besides, biomass is an expensive source of energy. Unlike solar and wind, its cost has only increased over the years.

Wind and PV power will be generating 70 per cent of the renewable energy in Germany by 2022, according to the Federal Network Agency, the regulatory authority on the electricity, gas, telecommunication, post and railway networks. But that would be possible only if Germany meets the emerging challenges. Rising cost of electricity has begun to pinch citizens, who are footing the bill for this transition by paying renewable surcharge. Besides, Germany is yet to have enough transmission lines and storage to absorb its increased capacity.

The great energiewende experiment has entered a crucial phase.

Ellhoft: electrifying cooperatives

Schleswig-Holstein is the northernmost of the 16 states of Germany. Nestled between the North Sea to the west and the Baltic Sea to the east and bordering Denmark in the North, it is one of the windiest states of Germany. Travelling from Hamburg on train, as one approaches Husum, one of its main cities, as far as one can see the horizon is spiked with wind turbines. Fittingly, the world’s most important wind energy trade fair is held every two years in Husum.

Schleswig-Holstein has close to 3,300 megawatt (MW) of wind power (about 11 per cent of the total wind power installed in Germany) and wind energy provides nearly half the state’s electricity consumption. With more than 200 kW of capacity per square kilometre, it has the highest density of wind turbines in Europe. Wind turbines currently occupy 0.8 per cent of the land in the state. Recently, the state Cabinet doubled the land area that can be used for wind turbines. The state has set a target to develop 4,800 MW of onshore wind capacity by 2015 and 6,500 MW by 2020.

To understand the wind power development in the state, we travelled to Ellhöft. This is a small village just 500 m from the Denmark border. Our destination: a community wind farm and a solar PV plant owned by the residents of the village. Christian Carstensen, 64-year-old vice-chief of the Windpark Ellhöft GmbH & Co.KG, accompanied us to the wind farm. Christian has invested in three projects, two wind farms and a solar PV power plant.

In 2000, 50 people from his village invested between €1,500 and €75,000 to install six wind turbines of 1.3 MW each. The residents contributed 20 per cent of the total capital cost of €9 million; remaining was taken as a loan from a bank. With annual power generation of 16-20 million kWh and a feed-in-tariff (FIT) of 9.1 cents per kWh assured for 20 years, their return on investment is 15-20 per cent annually. In 2012, Windpark Ellhöft paid off its loan and now the money the wind farm earns belongs to the villagers.

As we climbed atop a wind turbine on a ladder, Carstensen explained how the idea is catching up. The high rate of return on investments has meant that the residents are now ploughing back money to set up new renewable energy projects. In 2010, 20 villagers came together to set up a 2 MW solar PV plant costing €5 million. This plant produces 2 million kWh of electricity each year. With assured FIT of 24 cents per kWh, the people get 12 per cent rate of return on their investments. This is lower than what they get from the wind farm, but still far higher than what they can earn from the bank deposits or share market.

Inspired by the success of the Ellhöft, Danish investors from across the border have partnered with the residents to set up another wind farm of 27 MW in Ellhöft. In this project, they have installed three wind turbines of 6.125 MW capacity each­the biggest wind turbines available in the market.

Money is the driving force. Investments in wind, solar and biomass projects get people higher rates of return. Regulatory certainty makes it easier for ordinary folk to invest in renewables.

“In Germany, anyone can erect one or more wind turbines as long as they can fulfil the legal requirements,” explains Martin Haasler, Pastor at Christian Jensen Kolleg in Breklum who accompanied us to the wind farm. Once an area is declared suitable for wind power generation, permissions to install wind turbines come easy, though not without meeting environmental norms.

Explains Carstensen, “Before constructing the wind farm we did a detailed birds and bats impact study.” His company was also asked to pay for protection of an area equal to the area of the wind farm. “For the six wind turbines we installed in 2000, we had to buy 7.6 hectares of protected area for conservation,” he adds. They were asked to do a similar study after 10 years of operation, which they have finished recently.

Still Carstensen is a little worried. Last year the transmission company asked his wind farm to stop generation during peak wind season. “We cut our generation by 25 per cent because the grid did not have the capacity to transport power from our wind farm. But we got paid for the generation loss,” says Castensen. According to the German Energy Agency, Germany will have to construct 4,300 km of extra-high voltage grid until 2020 to absorb wind power generated in the north and transport it to the south. However, many grid extension projects are stalled because of local opposition and long planning and authorisation procedures.

Carstensen is also worried about the reduction in FIT for new projects that is likely to happen post September

Feldheim: energy autonomy

July and August are holiday months in Germany, but not for Kathleen Thompson. Her office in tiny Feldheim village in eastern Germany receives visitors from across the world all the year round. Feldheim does not have heritage buildings, restaurants or museums. What it has is a wind farm, a biogas plant and a woodchip-fired heating plant. These ensure that the village, with a population of 128 people living in 35 houses, generates all its energy locally from clean sources. It is the only village in the country with its own grid.

“Feldheim showcases Germany’s Energiewende, which the world is talking about,” says Thompson, sitting inside the information centre whose walls are covered with posters advertising Feldheim’s energy ventures. Tucked away in the Brandenburg countryside 60 km from Berlin, Feldheim attracted 3,000 visitors in 2012. “The number is growing every year,” says Thompson, who is in her thirties and works for a regional non-profit, New Energie Forum.

She explains how Feldheim became what it is today. Back in 2004-05 farmers in this village were a worried lot. Prices of their produce, milk, potato and sugar beet, were falling and the rate of electricity was increasing. While farmers were losing hope, a company called Energiequelle GmbH saw a big potential in the village. The Brandenburg-based company, which specialises in renewable power, was looking for a potential site for establishing a wind farm. Feldheim with an average wind speed of 6.5 m/sec fit the bill. Michael Raschermann, a 25-year-old owner of the company, sat with farmers’ cooperative and chalked out a plan to make Feldheim energy independent. A company was set up with equal partnership. It is called Feldheim Energie GmbH & Co. KG.

Soon a 500 KW biogas plant was set up by the joint venture in 2008. Farmers switched to maize, sweet corn and rye. They started sending 15-20 per cent of their produce to the plant, the rest is used as animal feed or sold in the market. The agriculture feed is mixed with manure from animal farms to produce biogas. In a year the plant produces 4.2 million kWh of electricity and 4.3 million kWh equivalent of heat. Almost 80 per cent of the generated heat is used in the village, mostly in a pig farm. Its by-product slurry is used as fertiliser in farms.

Meanwhile, Energiequelle also set up a wind farm with 43 turbines having a total capacity of 74 MW. One of the turbines of 500 KW capacity is owned by the village. Energiequelle pays farmers rent for putting its turbines on their farms.

The power generated from the biogas plant and the wind turbines is fed into the local grid to meet the electricity requirements of the village. The surplus is sold to the grid. Feldheim Energie gets a feed-in-tariff of 19 euro cents per Kwh for electricity generated from the biogas plant and nine cents for the electricity from the wind farm. It sells the electricity to the residents of Feldheim at about 17 cents per kWh.

But building mini-grid for the village was not easy. Michael Knappe, the outgoing mayor of Treuenbrietzen municipality, which covers Feldheim, had to face up to big energy industries. “Energy system in Germany is centralised and strictly regulated. It is also monopolised by a few energy distribution companies. And they don’t like it if somebody steps on their toes,” Knappe, a staunch supporter of renewable energy, told the media. When the residents approached the major public electricity utility E.ON, it refused to sell or lease its grid to Feldheim.

“They didn’t want others to take control,” says a member of Energiequelle. The village, therefore, decided to build its own energy grid with the help of Energiequelle. It was completed in 2010. Each resident contributed around €3,000 and some state subsidies were pooled together to meet the total cost of €2.2 million. The village also received a little help (€850,000) from a European Union programme to build a heating network in the village.

Having their own grid exempts residents of the village from various electricity surcharges. As a result they pay onethird lower tariff than what other households in Germany pay. This tariff is guaranteed for 10 years.

In extreme winter when there is no wind, Feldheim’s wood chip plant switches on and provides heating. The biogas plant, though sluggish in cold, provides electricity. Every family in the village has found a job in these clean energy ventures. They are also earning more than before.

With the number of visitors in Feldheim increasing, Thompson’s makeshift office will be replaced by a big centre which will showcase Feldheim to visitors and also conduct training for people who want to work in the renewable energy sector. It will also have a restaurant, the first in Feldheim.


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