Renewable Energy Policy in Germany

Abstract

Paul Runci

January, 2005

Pacific Northwest National Laboratory Technical Lab Report PNWD-3526

Renewable energy technologies have deployed rapidly in Germany since 1990 largely as a result of energy policies adopted by the German government and the European Union. For example, installed wind capacity has grown by more than 2000% since 1990, biomass by more than 500%, and solar photovoltaic installations by more than 15,000%. While the 1990 baseline for each of these technology areas was very low, the steady rise of renewable energy in Germany is noteworthy nonetheless.

The rising importance of environmental issues in the German electorate, initially in the 1970s and 1980s, and legislation such as the 1990 Electricity Feed Law and 2000 Renewable Energy Law played major roles in advancing the deployment of renewable energy technologies. These laws mandated the purchase of renewably generated electricity by electric utilities and also offered large subsidies and government loans to renewable power producers. A 1997 Directive on Renewable Energy Sources adopted by the European Union (EU) also contributed to the cause of renewable energy by aiming to boost the renewable share of the electricity generating fuel mix to 22% by 2010. Similarly, the EU’s ratification of the Kyoto Protocol has given all EU member states additional legal incentives to reduce their domestic greenhouse gas emissions through the use of renewable energy. Renewable energy technologies are part of a broader long-term German energy strategy to reduce greenhouse gas emissions and other environmental impacts of energy use, to curtail dependence on the oil and gas imports that now satisfy some 62% of German energy demand, and to contribute to German economic growth via high technology exports.

The successes of renewable energy in Germany over the past decade must be balanced with other considerations. For example, some community and environmental groups are mounting opposition to the continued expansion of wind power installations because of their impacts on the landscape and bird populations, due to the noise generated by wind turbines, and due to concerns regarding the transparency of the siting and permitting processes for new wind plants. Increasingly, suboptimal sites have been developed for renewable energy production as the highest quality (and lowest cost) sites both onshore and offshore have been exploited. Also, Germany’s gas, coal, and electric power industries have objected to mandates for the purchase of more expensive renewable power and to the subsidies granted to renewable producers. In addition, the accelerated deployment of renewable energy technologies in Germany has paralleled a sharp decline in investment in energy research and development by the German government, prompting concerns that early deployment of renewable technologies may come at the expense of future generations of energy technologies. While renewable energy is likely to make further gains in Germany and throughout Europe in the near- to mid-term, domestic growth of renewable energy may be slowed in the longer term by political pressures and technological limitations.