Germany Could Raise Renewable Targets

www.greentechmedia.com
October 26, 2007

According to a Greentech Media report, the country met its 2010 goal this year and its environmental ministry has proposed raising targets for 2020 and 2030 to a whopping 27% and 45%, respectively. The German Ministry for the Environment is proposing to increase its renewable-energy targets after surpassing its 2010 goal this year, according to a Greentech Media Research report scheduled to be released Monday. Germany's goal was to get 12.5 percent of its electricity from renewable sources, and the country exceeded that percentage this year, according to the report. The Ministry has proposed increasing its 2020 target to 27 percent, from 20 percent, and setting a 2030 target of more than 45 percent, according to the report.

"The Germany government is really committed to this and it's not just [to] reduce emissions; it's an economic decision," said Greentech Media analyst Oliver Guinness, who wrote the report. "They see opportunities for substantial job creation, exports and economic growth. I think they will remain one of the leaders globally." Germany ranks third -- behind France and Sweden -- in the total amount of renewable energy it uses, but that ranking is due mainly to hydro power in the two top countries, according to the report. When large hydro-power projects are excluded, Germany ties with the United States for first place in the total installed capacity of renewable energy.

According to the Ministry, Germany has 23 gigawatts of installed solar, geothermal, biomass, wind and small hydro capacity, while the rest of the EU25 -- made up of the first 25 countries to join the European Union -- has a total of 63 gigawatts of installed renewable capacity. That would mean most European countries average only 2.52 gigawatts of capacity.

Sean Brownlee, a cleantech consultant and former partner with European-based venture-capital firm 3i, said it's not surprising that Germany plans to continue to aggressively support renewable energy. "Germany's been having the most active [solar-electric] programs and is now a world leader in solar," he said. "My guess is Germany had a good experience and would consider doing it again."

Germany is by far the largest market for solar power today, with 2.54 gigawatts of peak capacity installed and €3.8 billion in revenue in 2006, and is expected to continue to grow, according to the report. The industry is seeing a rush to get projects up and running before 2009, when the price Germany pays solar-project owners for delivering solar electricity to the grid is expected to drop, Guinness said. Projects that are completed before the deadline are guaranteed a set price for 20 years.

Another reason for the rush? The European Union funds up to 50 percent of the capital expenses for companies in eastern Europe. That "enormous" incentive is scheduled to end in 2013, according to the report. "That eliminates one of the key incentives for operating here," Guinness said. Brownlee said the new Ministry proposal could be an indication the country wants to expand more into other renewables. "I could see the government wanting to increase its presence in other renewable energies," he said. "Solar is basically a manufacturing play, and now that China's got some of the biggest manufacturing facilities, I think Germany wants to remain strong on the R&D front and wants a toehold in other renewables." To that end, Germany seems to be turning to offshore wind.

According to Guinness' report, the government projects that electricity from wind energy will increase from 5 to 7 percent today to at least 25 percent by 2030. Fifteen percent of that will come from offshore projects, according to the report. That's a big expectation considering that none of the electricity comes from offshore wind energy now, Guinness said. "Germany's really ramping up its offshore market," he said. The country has created a pipeline that will help transmit power from offshore wind farms to the mainland, he added, and also is about to increase its feed-in tariff for offshore wind to stay competitive with other countries.

At the same time, the country is rejecting nuclear energy as a solution to its energy needs. While other countries, including France, Finland and China, have embraced nuclear energy -- and the United States has begun reconsidering the controversial source -- Germany is eliminating it, according to Guinness. The country has shut down six of its plants already and is phasing out its other 11, he said. It plans to replace the electricity from these plants with electricity from other renewables, according to the report.