Germans Debate Renewable Energy Supports

  • Published on May 19th, 2008

germany debates subsidies for solar industry

Conservatives call into question highly successful feed-in tariff

There is a reason that Germany has half of the world’s installed solar generating capacity, and it is not the Northern European country’s boundless sunshine. Renewable energy capacity has achieved such tremendous growth because of the German government’s aggressive energy policy.

The policy vehicle responsible for the rapid acceleration of the country’s renewable energy capacity, known as a feed-in tariff (FIT), guarantees a fixed-rate of return for homeowners and farmers who install solar, wind, small hydro, biomass, and methane capturing systems and sell their surplus electricity back to the grid. Germany has Europe’s highest feed-in tariffs, allowing consumers to earn around 40 euro cents ($0.62) per kWh compared to paying retail rates of 18 euro cents per kWh after taxes and support fees.

Electricity generated through Germany’s feed-in law produces about 50 terawatt-hours (billion kilowatt-hours) of electricity per year, or nearly 15% of German electricity consumption (1). This adds an average of only 1.01 euros ($1.69) a month to a typical home electricity bill.

Bu, despite the law’s success, conservatives in the German Bundestag want to ratchet back the incentives that support renewable energy development.

It seems that the members of the Free Democratic Party (FDP) and the conservative wing of the Christian Democratic Party (CDU) argue that solar generation is growing so fast that it threatens to over burden consumers with high electricity bills, according to an article in the New York Times.

Joachim Pfeiffer, a Member of Parliament who is drafting the plan to cut incentives, says solar power could end up adding 8 euros ($12.32) to a monthly electricity bill, “which would alienate even the most green-minded.”

Opposition to Feed-in Tariff is Not New

But calls for paring back the renewable energy feed-in tariff are nothing new, according to wind energy expert Paul Gipe. Gipe, an outspoken advocate of the FIT and has written extensively on on the subject wrote in an email, “The FDP and the conservative (utility) wing of the CDU have wanted to ratchet back the tariffs all along [and] It’s unlikely they will succeed.”

Other supporters of the German feed-in tariff point to the unparalleled growth in renewable energy capacity reason enough to maintain the system as it currently stands. “The general target is to mobilise all renewable options, producing a renewable energy mix and reducing the dependency on conventional energy over time,” says Hermann Scheer, one of the principal drivers behind Germany’s renewable resurgence.

So far, 15% of Germany’s energy comes from renewables, an increase of 11% in just eight years. “We could increase the speed of this growth if it weren’t for the barriers we’re facing at local and regional levels,” says Scheer.

Importantly, Gipe did add that the CDU could grant some concessions by throttling back on the proposed offshore tariffs “which are widely seen as a gift to the utility companies.”

I would argue that it would be foolish for Germany to nip the most successful renewable energy policy this planet has ever seen in the bud. Especially with the certain increase in demand for electricity, and the rising pressures on the coal-industry in Germany, Germans may be better off absorbing a slight increase in their electricity bills that is calculable, as opposed to drastic increases used to offset certain shortages.

Other posts about feed-in tariffs and German energy policy:

Photo: Jeff Poskanzer via Flickr under a Creative Commons License

About the Author

is the founder of ecopolitology and the executive editor at LiveOAK Media, a media network about the politics of energy and the environment, green business, cleantech, and green living. When not reading, writing, thinking or talking about environmental politics with anyone who will listen, Tim spends his time skiing in Colorado's high country, hiking with his dog, and getting dirty in his vegetable garden.

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12 comments

  • Tim:

    Thank you for the clarification on the feed in tariff. I was just about ready to build a few wind farms in Germany.

    In another bit of annoying mathematics, I figure that the total solar energy contribution to the grid is about the same as one 500 MW coal plant operating with an 80% capacity factor.

    Wind obviously produces a more impressive contribution, but it is difficult to schedule. In one publication by the Pembina Institute that I found via the Paul Gipe link, I found that the total capacity of wind turbines in Germany in 2007 was 22,250 MW. Of course, some of those were probably brought into operation sometime during 2007, but for simplicity let's say that they were all operating during the year.

    39500000 MW hours (you wrote 39.5 GWh, but I am sure that you meant 39.5 TWh) from 22500 MW capacity yields a fleet wide average CF of 20%.

    That is quite a bit lower than the 28%-32% that many wind promoters claim.

    Interestingly, I learned today that the feed in tariff rules provide a higher sales price for more challenging wind locations (if there is a lower wind regime, the turbine owner gets to sell for a higher price). Perhaps that explains why there is such a low average CF; some less desirable locations from a technical point of view can still be profitable.

    Wonder what will happen as even less desirable locations are brought on line?

  • Rod-

    Thanks for pointing out what appears to be a discrepancy in my numbers. In my cobbling together of the numbers from different sources, I failed to note that that the $0.62 per KWh number for the average feed-in payout I quoted is for SOLAR SOURCES ONLY.

    In 2007, Germany produced nearly approximately 3.5 GWh of electricity via solar PV and approximately 39.5 GWh of electricity via wind. There are many more individual installations of solar PV, and the payout is much higher than wind, but the total capacity of solar PV is less than one tenth of generated wind capacity in Germany.(1)

    Tell me more about the 25 new coal-fired power plants being planned in Germany for the next 10 years and then I'll tell you about all of the coal-fired power plants that have been "planned" in the US that have been canceled in the last year alone. If you think the regulatory environment is inhospitable to coal in the US, it doesn't even hold a candle to the level of public opposition in Germany.

  • Tim:

    If the average supplier of renewable energy under the feed in tariff gets paid approximately 62 cents per kilowatt hour, and the total renewable energy production is 50 billion kilowatt hours, it seems to me that the total bill to Germany would add up to something like 50 Billion x .62 = 31 Billion per year. There is a claim that that cost adds up to about $1.69 per month per household or $20.28 per year per household. Are there really 1.55 Billion households in Germany?

    Please forgive my simplistic math analysis, but I wonder what kind of assumptions are being made in the numbers that you quote. There must be something missing in the story.

    If Germany's renewable energy program is so successful, why are there about 25 new coal fired power plants being planned for the next three to ten years?

Comments are closed.