Understanding the German Energy Transition: from leader to laggard

Germany is often praised as being the frontrunner in the transition to renewable energy. It is shutting down its nuclear power plants by 2022, and their capacity will be replaced by renewables. Today, the country already produces 38% of its electricity from renewable sources, mostly wind and solar. Its long-term goal is to reach 80–95% by 2050. But is Germany on the right path to reach these goals?


Rebecca Bertram

The first phase of the German energy transition dealt mostly with creating a market for renewables and reducing their technology costs. The country pushed ahead with its so-called feed-in tariffs available to anyone who wanted to participate in Germany’s renewable energy revolution. It allowed ordinary citizens, farmers, communities, municipalities and cooperatives to all play a role in shaping Germany’s energy transition. The policy also involved a rule that gave priority access to the grid for all electricity generated from renewable sources. Overall, this policy mix helped Germany reach its renewable energy goals far earlier than anyone had anticipated when the policy was first formulated in 1990, and it created a democratic energy system in which everyone could play a part. Germany was seen as an international pioneer of the energy transition.

The second phase started a couple of years ago and is slightly more complicated than the first one. It deals with managing the increasing share of renewables in the system while controlling the costs. In this second phase, large solar and wind installations with more than 750 kW capacity no longer qualify for feed-in tariffs but instead must bid in a government-managed auction. This new policy favours large developers who can more easily submit the most competitive bids. Increasingly, citizens, farmers and cooperatives are just bystanders in the energy system again.

Where did the ambition go?

Germany has come far but is now somewhat stuck in limbo. It lacks a clear vision, strategy and narrative of why the country needs an energy transition. Its policy-makers have largely disregarded the vast societal benefits that come with the switch to renewables. As a result, they do not push for any ambitious continuation of policies even though the powerful business community and the country’s large utilities are calling for the German government to keep up the speed of the energy transition.

The main challenge in Germany’s energy transition is to align the old system with the new one based on renewables. Germany needs investment in infrastructure and digitalisation to align supply and demand in a more complex energy system than in the past. A true energy transition requires a stronger coupling between sectors, i.e. spreading electrification into heating, cooling and transportation. At the moment, the German energy transition targets only electricity, which accounts for just 20% of the energy sector as a whole. However, since heating, cooling and transport make up the remaining 80% and run predominantly on conventional fuels, these sectors must be addressed if Germany intends to sensibly move forward with its transition. This can only be achieved by investing in smart meters, infrastructure for electric vehicles, battery storage capacity — and getting serious about decreasing its energy consumption significantly.

"Germany has come far but is now somewhat stuck in limbo."

Another big challenge comes from the approximately 40% of electricity that is still generated from coal, a very carbon-intensive energy source. The 100-or-so coal-fired power plants in Germany emit about one-third of the country’s total carbon emissions. Therefore, phasing out coal is important if the country is to meet its national climate targets. As things stand today, however, it will miss its goal of a 40% reduction in emissions by 2020 by 8 percentage points. This is bad news for the energy transition since reducing carbon emissions should be its ultimate mission.

A matter of social justice

The coal issue also demonstrates the most complex issue of the energy transition, one that remains widely neglected: structural change and social policy. There are many regions in Germany that are dependent on coal to keep their local economies healthy. If coal is to be successfully phased-out of Germany’s electricity mix, there needs to be a discussion about socially just alternative economic pathways for the affected regions for the time after coal.

In short, the energy transition is a huge challenge. Yet it is one that can be met in terms of technology and policy. The technology to decrease overall energy consumption and incentivise smarter consumption is already available today. The business sector is on board and calling upon policy-makers to formulate the necessary policy instruments to push the transition to the next level. Yet the German government remains hesitant and focused only on short-term policy measures neglecting the power of a societal vision and a socio-politically sound narrative that would put renewed interest in working to achieve an energy transition that is economically, politically and socially just.

Rebecca Bertram is the senior policy advisor for a European energy transition at the Heinrich Böll Foundation in Berlin. Her work focuses on integrating various European energy discussions into the German decision-making process. Twitter: @EnergiewendeGER

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