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Germany Leads the World in Alternative Energy
By JANET L. SAWIN (08-19-03),
Worldwatch Institute in Washington DC
Clusters of tall white wind turbines spin
gracefully atop green hillsides. Solar photovoltaics (PVs) are integrated into
windows and rooftops of modern homes, factories and office blocks. Even the old
renovated seat of government is fitted with solar panels.
A utopian fancy? No, just Germany today. Remarkable considering that in 1990
Germany had virtually no renewable-energy industry and appeared an unlikely
candidate for it. Utility monopolies, entrenched nuclear and coal industries and
a general conservatism made Germany appear barren ground for renewable-energy
advocates.
Joschen Twele, a wind-energy expert recalls: ‘When I started my job in wind
energy [in the 1980s] I thought it had only a chance in remote areas of
developing countries. So I concentrated on Africa.’
Yet by the end of the 1990s, Germany had transformed itself into a
renewable-energy leader. With a fraction of the wind and solar resources of the
U.S., Germany had almost three times as much installed wind power capacity by early 2003 (38
percent of global capacity) and is now a world leader in solar photovoltaics as
well.
And it has created a new, multibillion-dollar industry and tens of thousands
of new jobs. The German wind industry now employs more people than nuclear power
(an industry that provides 30 percent of the nation’s electricity) without a
commensurate increase in electricity costs.
Germany now generates 4.5 per cent of its electricity with the wind and
appears on track to meet government targets of 25 per cent by 2025. The
government also considers solar photovoltaics an option for future large-scale
power generation.
What’s more, the government recently pledged to reduce its carbon dioxide
emissions to 40 percent below 1990 levels by 2020, much of this to be achieved
by switching to renewable energy. Not quite the 60 percent many climate-change
experts say is required worldwide, but vastly more impressive than commitments
made thus far under the Kyoto Protocol.
How has Germany done it?
The main obstacles that keep renewables from producing more than a small
share of energy in most of the world are lack of access to the transmission
grid, high up-front costs, lack of information, and biased, inappropriate and
inconsistent government policies.
Germany’s dramatic success has been achieved through a combination of
consistent, ambitious policies designed to address these barriers and create a
market for renewable energy. These policies were driven by the public’s rising
concerns about global climate change, risks associated with nuclear power, and a
need to reduce dependence on imported fuels.
Most significant has been the grid access and standard pricing law, enacted
in 1991 and inspired by effective Danish policies. Under this law, renewable
energy producers receive above-market payments for power they feed into the grid
and the costs are shared among all electricity consumers in Germany. These
preferential payments for renewables are not considered subsidies, but means of
internalizing the social and environmental costs of conventional energy and
providing compensation for the benefits of renewables.
But some barriers remained. For example, as the number of wind turbines
skyrocketed in some regions, local opposition and lengthy, complex siting
procedures had the effect of stalling the development of new projects. The
government responded by encouraging communities to zone specific areas for wind
energy—a step that addressed concerns such as noise and aesthetic impacts and
assured prospective turbine owners that they would find sites for their
machines.
To address the start-up costs barrier, the German government has offered
long-term, low-interest loans and income tax credits to projects and equipment
that meet specified standards.
These initiatives have drawn billions of dollars to the renewable energy
industry, while technology standards have reduced risk and created confidence by
keeping out substandard machinery. The government has also promoted awareness of
renewable technologies and available subsidies through publications and training
programs.
Such rock-solid policies ended uncertainties about whether producers could
sell their electricity into the grid and at what price. They also provided
investor confidence—attracting investment money and making it easier for even
small renewable power producers to obtain bank loans. Germans from diverse
backgrounds and income levels have been able to invest in renewable energy
projects, leading to a surge in installed capacity and associated jobs, and
reinforcing political support.
Increased investment has also driven improvements in technology, advanced
learning and experience, and produced economies of scale resulting in dramatic
cost reductions. Between 1990 and 2000 the average cost of manufacturing wind
turbines in Germany fell by 43 percent. Between 1992 and 2001, PV capacity
experienced an average annual growth rate of nearly 49 percent. German PV
manufacturers plan to expand their facilities significantly over the coming
years to meet rapidly rising demand, a step that will further reduce costs and
increase employment.
Germany has demonstrated not only that it is possible for renewable energy
increasingly to meet the energy needs of industrialized society but also that
the transition to a more sustainable energy future can happen rapidly with
political will and the right policies. To begin with, policies must be
consistent and long-term. On-and-off policies in the U.S. have created market
cycles of boom and bust, making it difficult to develop strong domestic
industries. As a result, the U.S. is the only country where total
wind-generating capacity has actually declined in some years.
Market creation must also be prioritized. Germany began funding research and
development of renewable energy in the 1970s but saw little commercial
development until market incentives were enacted two decades later. Today at
least 300 companies are involved in supplying solar panels. Last year Germans
installed more than 2,000 new wind projects, all of them feeding into the grid.
It is estimated that more than 100,000 Germans own shares in wind energy
projects, while many own shares in solar PV and other renewable projects as
well.
The issue of who owns the production and distribution of electricity is
highly significant. When a nation’s electric system is centralized and
utility-owned, power is concentrated in the hands of a few, both literally and
politically. In the U.S., for example, some of the most politically powerful
voices are those of the various energy-related industries. But when almost
anyone can be an energy producer, as in Germany, the public can play a greater
role in decision making, creating a more democratic society.
Renewables now generate eight percent of Germany’s electricity and the
country has nearly two-fifths of the world’s wind capacity. But the share of
total wind capacity owned by large companies is also rising, as the sizes of
machines and projects—and thus costs—increase.
The advantages of shifting away from conventional energy and towards greater
reliance on renewables are numerous and enormous: climate stability, air
quality, health, job creation, political and economic security, to name but a
few. Renewable energy also offers models for diverse and democratic ways of
producing, buying and selling power. Yet change is never easy and there are
strong forces globally—including politically powerful industries—that wish to
maintain the status quo. While resistance to change is inevitable, the world
cannot afford to be held back by those who are wedded to energy systems of the
past.
Janet L Sawin is an energy and climate change writer and researcher based at
the Worldwatch Institute in Washington DC.
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