German government okays wide reform of green power switch

Apr 08, 2014 by Mathilde Richter
German Finance Minister Wolfgang Schaeuble (L) speaks with German Chancellor Angela Merkel before presenting his draft budget for 2014 to lawmakers during a plenary session at the lower house of parliament Bundestag on April 8, 2014

The German government approved Tuesday a sweeping reform of a law on its vaunted green "energy transformation" to reduce subsidies for renewables and stem rising electricity prices.

Chancellor Angela Merkel's cabinet agreed the draft law for the next phase of the "Energiewende", a cornerstone policy of her third term at the helm of Europe's top economy.

Under the plan, Germany plans to meet 80 percent of its energy needs with renewables by 2050 but faces also having to balance the interests of its mighty industrial sector while safeguarding jobs.

The draft law, which must still pass the Bundestag lower house of parliament, will make the rollout of renewables "more predictable" and mean that costs "no longer increase by leaps and bounds", a government statement said.

Among the reforms are caps on the production of renewable energy such as .

"The coalition is providing for a reboot of the Energiewende. It was urgently and desperately needed," Economy and Energy Minister Sigmar Gabriel told reporters.

Merkel took the surprise decision in 2011 to gradually scrap nuclear power for renewables in the wake of the Fukushima disaster but has faced pressure over how to pay for the clean energy drive.

Activists of BUND and Campact ecological associations carry a giant head of German Chancellor Angela Merkel before a demonstration against the reform of the Renewable Energy Sources Act in front of the chancellery building in Berlin on April 8, 2014

Renewables currently account for around a quarter of energy production and consumption in Germany, thanks to generous state incentives for solar, wind and biogas financed via an energy tax.

But the tax has driven up energy prices, now among Europe's highest, and critics also say the development of some has been disorganised and point to problems with the electricity transmission grid.

'Can't promise price reduction'

The new law, which is due to go into effect in August, aims to pull the brakes on electricity price rises but Gabriel warned "we cannot promise a reduction".

Germany has also increased consumption of cheaper fossil fuels such as coal to offset the phasing out of nuclear energy.

Gabriel, who is also Merkel's vice-chancellor, outlined dramatic cuts in subsidies to producers of early in the year but pressure from regional states has forced the government to roll back on some points.

While states in northern Germany complained about cuts in wind power, southern Bavaria put up resistance to removing aid for biomass which could hurt farmers.

In the end, the caps on certain remained in the reform but the subsidy reductions are milder than Gabriel initially wanted—biomass, for example, which Berlin had wanted to stop supporting in order to concentrate on wind and solar will continue to be subsidised.

Submitting the sector to market mechanisms is also a key factor of the reforms, and from 2017, the level of support will be defined by a tender system ensuring competition among producers.

Producers will gradually also have to sell their green energy competitively on the market rather than enjoying priority treatment with guaranteed prices.

Business groups have welcomed the move to a more competitively driven system even if it comes too late for some, but environmentalists accuse Gabriel of sounding the death knell on the switch.

Friends of the Earth Germany urged parliament to "repair" the draft law which, it said, risked becoming an "instrument of industry subsidisation".

And Holger Krawinkel, head of the VZBV Federation of German Consumers Organisations, accused the government of having given preference to the interests of industry.

"And the consumers must pay," he said.

A key part, however, still missing from the reform concerns price breaks for power-intensive industry which the European Commission was probing to see if it amounted to state aid.

Gabriel has negotiated a compromise with Brussels to allow the price breaks to continue but to apply to fewer companies.

Decided too late to be included in the reform, it however was welcomed by German industry, with Utz Tillmann, head of the VCI chemical federation, calling it an "important political success" that would protect jobs.

Explore further: Germany eyes swift cuts in renewable energy subsidies

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antialias_physorg
4 / 5 (4) Apr 08, 2014
Merkel took the surprise decision in 2011 to gradually scrap nuclear power for renewables

No she did not. She had OVERTURNED a phasing out of nuclear (signed into law by the previos green/socialdemocratic government coalition) only a few months prior to Fukushima. Anyone who thinks Merkel (or her party) is responsible or a driving force behind the changeover is a fool. She reoverturned her decision immediately after Fukushima because it would have been political suicide not to do so - no other reason.

The above is a clear signal that her puppeteers (the industry) are getting bold and trying to kill green energy once again.
Eikka
5 / 5 (3) Apr 08, 2014
biomass, for example, which Berlin had wanted to stop supporting in order to concentrate on wind and solar will continue to be subsidised.


This is wise, because bio-energy is dispatchable whereas wind and solar are not. It helps in solving the problems that wind and solar energy are creating.

The above is a clear signal that her puppeteers (the industry) are getting bold and trying to kill green energy once again.


It's completely understandable. The industry cannot operate on random intermittent power that comes in splashes and surges however which way. The only industry that benefits from wind and solar power is the industry that is building and installing them - everyone else is suffering.

But there's green and green. Biogas, biomass, hydro, nuclear, power-to-methane, geothermal etc. are all compatible with the industry and the grid, and I see no signs of any industry opposition towards them.
antialias_physorg
3.7 / 5 (3) Apr 08, 2014
The industry cannot operate on random intermittent power

The industry doesn't have to. The power intensive industry sectors (automobile, heavy industry, etc. ) all have either their own powerplants on site or get preferential treatment on the energy market (by paying ridiculously low prices for energy)

But there's green and green. Biogas, biomass, hydro, nuclear, power-to-methane, geothermal etc.

And (with the exception of nuclear) they all should have their place.

What the government SHOULD do is mae everyone pay for what the energy costs. INCLUDING all ancillary costs (climate damage, health damage, waste disposal, ... ). It is obscene that if this bill passes the old forms will, all taken into account, again receive more subsidies than renewables - which makes the 'stated goal' of changing over to renewables by 2050 nothing but a lie.
TegiriNenashi
1 / 5 (1) Apr 08, 2014
"...What the government SHOULD do is mae everyone pay for what the energy costs. INCLUDING all ancillary costs (climate damage, health damage, waste disposal, ... )"

But how do you propose to calculate these costs? People opinions vastly differ and there is no market to establish fair price.
antialias_physorg
3.7 / 5 (3) Apr 08, 2014
Any price would be a start instead of completely ignoring that some forms of energy productions incur damage or need to be insured against potential risks to the affected areas (Note that if that were ever to happen then nuclear would not get a foot on the ground. That form of energy is completely unensurable)
dvdrushton
5 / 5 (1) Apr 08, 2014
What the government SHOULD do is mae everyone pay for what the energy costs.


I agree with you - and also think that we should be grateful to countries like Germany - who have been willing to swim against the tide. Interestingly - we probably do not have to calculate those ancillary costs - as the cost of wind and solar (unsubsidized) continues to fall - and approach - or beat the cost of fossils. See - http://www.bloomb...in-.html

So market forces will now prove unstopable - and thanks to countries like Germany - we are making headway with the engineering challenges of integrating renewables onto our grids.
antialias_physorg
5 / 5 (2) Apr 09, 2014
we probably do not have to calculate those ancillary costs - as the cost of wind and solar (unsubsidized) continues to fall - and approach - or beat the cost of fossils.

True. It just seems somehow weird: Coal, oil and nuclear have gotten so much subsidies in their startup phases (and still do) but we begrudge renewables every cent. Renewables haven't even gotten 10 percent of what the others have gotten and are already delivering a better bang for the buck.

If you look back nuclear was subsidized by more than 70 cent (!) per kWh in the first years. Nobody was saying anything about THAT. But now you hera people whine "Wind is getting 7 cent per kWh and solar 20. Outrageous!". Hypocrits.
Coal has been getting subsidies for more than 100 years and oil almost as long (and you'd think that a form of energy should at some point be able to stand on its own).
Eikka
1 / 5 (1) Apr 09, 2014
The industry doesn't have to. The power intensive industry sectors (automobile, heavy industry, etc. ) all have either their own powerplants on site or get preferential treatment on the energy market (by paying ridiculously low prices for energy)


True, for now...

What the government SHOULD do is mae everyone pay for what the energy costs. INCLUDING all ancillary costs (climate damage, health damage, waste disposal, ... ).


And there you just gave the industry a reason to lobby against green energy by arbitrarily defining what energy should cost.

You see, the green energy drive is not about making green energy, but about making money out of governments. As such, the political lobby on the green side aims to strip the industry of their ability to build their own power.

So your factory cannot work on intermittent power, and you can't rely on the intermittent green power, and you have to pay extortion prices for it. The logical conclusion is to wrap things up and leave.
Eikka
1 / 5 (2) Apr 09, 2014
which makes the 'stated goal' of changing over to renewables by 2050 nothing but a lie.


The stated goal of changing over to renewables by 2050 is a fantasy and a dream in the first place, so it's just apt that when politicians demand the impossible of the society, the society responds by simply pretending to do it.

All this whining about the industry not paying their "fair share" is forgetting the simple fact that without the industry you'd have no economy. Their low price of energy is your job, directly or indirectly, so it's no good pretending that they're somehow cheating the system, because you're doing it as well.
Eikka
1 / 5 (1) Apr 09, 2014
If you look back nuclear was subsidized by more than 70 cent (!) per kWh in the first years. Nobody was saying anything about THAT. But now you hera people whine "Wind is getting 7 cent per kWh and solar 20. Outrageous!". Hypocrits.


What's disingenuous about your constant insistence that nuclear power was at some point subsidized more is the fact that nuclear power ended up producing massive amounts of energy. Seriously. Count the amount of subsidies per total amount of energy produced with traditional vs. wind & solar, and you'll see the problem.

But as I've pointed out many times before, you simply refuse to make this comparison because the outcome will not be in line with your propaganda.

Renewables haven't even gotten 10 percent of what the others have gotten and are already delivering a better bang for the buck.


Would you like to prove that statement? Especially wrt. to wind & solar power?
Eikka
1 / 5 (1) Apr 09, 2014
Here's the situation in the US: http://mercatus.o...-580.png

Coal gets 10% of the subsidies, makes 45% of the energy.
Gas gets 6% of the subsidies, makes 25% of the energy.
Nuclear gets 21% of the subsidies, makes 20% of the energy.
Wind gets 42% of the subsidies, makes 2% of the energy.
Solar gets 8% of the subsidies, makes so little it doesn't even measure

Every other form of energy produces in proportion to the money the society is putting in them, except solar and wind.

And it's not a matter of there being not enough wind and solar power yet. If you wanted wind power to produce in proportion to its share of subsidies, you'd have to cut the subsidies by 95% while at the same time increasing wind power production 21 times. That's a scenario that simply isn't going to happen.

So what's 7 cents to a kWh, when wind power should be subsidized at 0.3 cents/kWh to match the subsidies paid to nuclear power.
dvdrushton
5 / 5 (2) Apr 09, 2014
Probably Eikka did not even bother to read the information that shows that over the last 4 years, the cost of wind energy has declined 43%, and is now approaching parity with all other energy sources. Obviously - as Eikka's link indicates, the U.S. government is in the business of subsidizing all forms of power generation. So it clearly is a smart investment to put some money up front - into a new industry - watch it not only hit parity, but continue to fall in price - and soon be in a position to supply cheap (the cheapest), home made, clean, unsubsidized energy. Eikka feels that it is better to be in Ukraine's shoes this morning - buying gas from the Russians, as they hold the power to destroy your economy.
Eikka
not rated yet Apr 11, 2014
Probably Eikka did not even bother to read the information that shows that over the last 4 years, the cost of wind energy has declined 43%, and is now approaching parity with all other energy sources.


It has, but it still can't survive without subsidies because its intermittent.

Wind power has the property of producing most of its output in high power surges, which crash the spot price of electricity below production costs, so they have to sell at a loss much of the time just to get someone to use the power. That's where the state subsidies come in to make up the difference.

Obviously - as Eikka's link indicates, the U.S. government is in the business of subsidizing all forms of power generation.


Everybody is.

Eikka feels that it is better to be in Ukraine's shoes this morning


Ukraine has its own shale gas fields and could become energy independent in ten years if developed by western technology. Guess where the gas fields are? Eastern Ukraine.
Eikka
not rated yet Apr 11, 2014
Probably Eikka did not even bother to read the information that shows that over the last 4 years, the cost of wind energy has declined 43%


It has, but it still can't survive without subsidies.

Wind power has the property of producing most of its output in high power surges. That causes the spot price of electricity to crash below production costs, and they have to sell below production cost most of the time to get anyone to use the power. That's where the state subsidies come in to make up the difference.
the U.S. government is in the business of subsidizing all forms of power generation


Everybody is.

Eikka feels that it is better to be in Ukraine's shoes this morning


Ukraine has its own shale gas fields and could become energy independent in 10 years if developed by western technolgy. Guess where the fields are? In eastern Ukraine.
Eikka
not rated yet Apr 11, 2014
And solar power has the exact same issue when every single solar panel in the country is producing peak power at midday: electricity market price plummets down with supply exceeding demand and the government has to step in to subsidize or else none of them would be making ends meet.

It's possible to control wind power variability by throttling the output, but that leads to massive increases in cost. A typical windmill with a capacity factor of 0.25 could be made to operate at 0.50 - 0.60 by letting something like half the available wind energy past the blades, but that would also mean doubling the price of electricity from the turbine since the cost remains the same while energy production goes down.

The situation for solar power is much worse because it starts at a capacity factor of 0.10 in a place like Germany. To improve, you'd have to overbuild massively and then dump nearly all of the power because the grid can't absorb it.
Eikka
not rated yet Apr 11, 2014
And if you remove the right-of-way of the renewable energy on the grid, they couldn't sell any power since they'd have to start paying the other producers to drop their output to fit the renewable power in.

At the moment, the governments are forcing the other producers to do that, which is an indirect "invisible" subsidy to the renewable energy because it costs the other producers money and efficiency to ramp their production up and down as the wind blows. They have to keep running more expensive rolling reserve to do the adjustment, and they lose income by not being able to sell power.

Put simply, the real value of renewable power like wind and solar is much less than its production cost even when its technically at grid parity because its supply cannot follow demand.
dvdrushton
5 / 5 (2) Apr 11, 2014

It has, but it still can't survive without subsidies


And thus you show you show your inability to see the big picture. There are a couple of issues here. 1. As the price falls further, both wind and solar will survive without subsidies. As you point out - all governments are in the business of subsidizing all energy sources. Why do renewables suddenly get criticized for receiving subsidies? So governments are making a smart investment in the energy of the future. Why was that OK for fossil fuels, but you are now against subsidies for renewables? 2. The environmental/health costs of fossils means we must move to clean energy sources - subsidizing them until they are fully cost competitive is very smart.
dvdrushton
5 / 5 (2) Apr 11, 2014
Put simply, the real value of renewable power like wind and solar is much less than its production cost even when its technically at grid parity because its supply cannot follow demand.


Which is why we are learning to develop the needed technologies to overcome this issue. Demand management, storage, energy transport. Do some reading - and you will see that we are well on the way to a very exciting new paradigm - and perhaps the people of Beijing will be able to breath again.
dvdrushton
5 / 5 (1) Apr 11, 2014
Ukraine has its own shale gas fields and could become energy independent in ten years


So you would promote a finite, expensive, dirty energy source, over an infinite, cheap, clean energy source. Maybe you should take a look at some of the studies coming out about the true cost of fracking. Here - I will start you off - https://stateimpa...prairie/

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