Green Energy in Germany
Introduction
Germany is considered as one of the world’s largest producers of solar energy considering that it accounts for 74% of the global market. In addition, in terms of total capacity, Germany is considered as a world leader with approximately 25GW installed (Federal Ministry of Economics and Technology, 2014). Through polices such as Renewable Energy Sources Act (EEG) of 2000, the German government was able to ensure favorable retunes on investments through the creation of a high installation volume hence improving on the effectiveness and efficiency of the market of green technologies (Grigoleit & Lenkeit, 2015). The main objective of this study is to assess the role of the German government in promoting the adoption of green energy.
The German government in developing green energy policies
The German government played an essential role in promoting the adoption of green energy as part of its long-term economic and environmental strategy. The main themes in Germany’s energy policy include three essential goals, which include the need to ensure security of supply, the use of climate change efficient energy and economic and environmental efficiency (Grigoleit & Lenkeit, 2015). Through its renewable energy policy, the German government also supported an Energy Concept in support of structural changes in energy supply. The government has also been able to develop a long-term energy strategy that targets the reduction of carbon dioxide emission and an increase in the amount for renewable sources of energy used in the realization of economic functions by 2050 (Federal Ministry of Economics and Technology, 2014).
The ambitious goal of this strategy is to address the existing challenge of ensuring the provsionof sustainable energy. To ensure the realization of this ambition, the German government passed a legislation that focused on an increase in the use of renewable sources of energy and an improvement in energy efficiency. Furthermore, the government has also been able to ensure the promotion of green energy strategy as part of government’s initiative by signing a climate change package based on goals aimed at cutting emissions and expanding renewable energy by 2020. In terms of prioritization, the climate change package signed by the German government was aimed at a 90% reduction of greenhouse gas emission compared to the levels of emission in the 1990s (Federal Ministry of Economics and Technology, 2014). Furthermore, through this approach the government also aimed at an 80% increase in renewable energy share of the power mix, a large percentage of which was to be generated from wind and solar PV. Currently these initiatives have enabled Germany, Europe’s latest economy, to realize a 20% renewable energy power mix which is considered as an effective attempt towards the realization of the 35% target of renewable energy share by 2020 (Grigoleit & Lenkeit, 2015).
An essential part in the role of the German government in the adoption of green energy polices is the enactment of the Renewable Energy Sources Act (EEG) of 2000. Through this legislation, the German government has been successful in ensuring the expansion and integration of renewable energy sources as part of the country’s energy mix. This has been realized while establishing the position of Germany as leader in the eco-friendly technologies market (Grigoleit & Lenkeit, 2015).
Through the Energy Concept developed by the federal government, Germany was able to ensure in the formulation guidelines defining the development of green energy strategies. This concept was followed by the development of the specific action plan in 2011, which was definitive of the targets and measures for the realization of the country’s renewable energy strategy. For the federal government, an essential element of these measures was to ensure the implementation of the pivotal political objectives for the country’s energy system. Through these policies, the government had the objective of strengthening its competition in an energy-oriented market as a way of sustainable economic prosperity.
The role of the Renewable Energy Sources Act (EEG) in the promotion of green energy in Germany
The government was able to ensure the incorporation of green energy as part of Germany’s economic initiatives through the EEG by requiring grid operators to purchase a percentage of electricity from renewable energy sources before feeding in electricity generated from non-renewable sources of energy (Federal Ministry of Economics and Technology, 2014). Through this initiative, the government guaranteed the protection of feed in tariffs (FITS) while progressively decreasing tariffs annually. This inspired plant builder to engage in a processes that resulted in systematic innovation and cost reduction in energy production. Furthermore, through this approach to the incorporation of green energy, the German government was able to ensure favorable retunes on investments through the creation of a high installation volume hence improving on the effectiveness and efficiency of the market of green technologies (Grigoleit & Lenkeit, 2015).
An additional role of government initiative in the promotion of green energy through EEG was the way the adoption of the Biofuel Quotas Act of 2006 and the renewable energy Heat Act (EEWärmeG) of 2009. Heating is considered as one of the major consumers of the energy produced in Germany despite the single digit percentage of heat produced by green energies. Through the EEWärmeG legislation, the aim of the government was to ensure a 14% increase in energy production from renewable sources to 4% by 2020 (Federal Ministry of Economics and Technology, 2014). Through this legislation, it was a government requirement for all the players involved in energy production to integrate heat production from renewable sources as part of construction as a way of ensuring the use of green energy as substitute to non-renewable energy sources.
Four major provisions define EEG; they include:
- It is the role of the German government is to ensure investment protection by guaranteeing feed in tariffs. Through this approach, the investors of new energy plants are guaranteed a fixed rate of tariffs for every kilowatt of energy they produce.
- Through the EEG, every new plant focused on the production of green energy is guaranteed interconnection to the national grid. The preferential treatment accorded to green renewable sources of energy was aimed at ensuring more investors to engage in green energy.
- Annually, FITS rates are expected to decrease for new plants by a defined percentage. This is because the initial objective of reduced tariffs was to ensure that the investors in renewable energy benefit from incentives such as lower initial investment cost.
- FITS is completely financed by consumers and the markets. Upon generation, renewable energy is sold to wholesalers to determine the market price. Consumers in the form of electricity bills pay the difference between the market price and the predetermined FIT.
With the country’s Energy Concept as illustrated by the EEG legislation, the German government has been able to ensure the creation of attractive investment opportunities in green energy and technologies. This explains why Germany is considered as a global leader in renewable energy, moving towards 18% renewable energy share of total consumption by 2020 and approximately 59% by 2050 (Federal Ministry of Economics and Technology, 2014). Despite the success that the government has been able to realize through the introduction of EEG legislation, there are still challenges of integrating electrify generated by decentralized green energy plants into the power grid to ensure that the country addresses the problem of energy shortage and increases cost of energy consumption at the consumer level. This strategy designed to address this challenge includes the option by the German government to develop long-term objectives, which are aimed at expansion of the use of green energy while improving on energy efficiency. This can only be realized through developing a strategy that aligns the market and the grid systems while integrating and preserving the basic principles of feed in compensation and priority feed in that define the EEG legislation. The target path for the German government in the process of realizing the objective of integrating green energy has been to ensure that 35% of total energy consumed in the country is derived from green and renewable energy sources by 2020 (Grigoleit & Lenkeit, 2015).
Investment promotion policies by the German government
The German federal government was involved in the definition of its aims towards the promotion of research, which is an essential contributor to the production of environmentally friendly, affordable, and reliable green energy supply in the future. This led to the implementation of different measures in its Energy Concept through the adoption of new Energy Research Program in 2011 (Grigoleit & Lenkeit, 2015). The federal government invested approximately 3 billion euros in supporting research and development into sustainable energy technologies such as wind, solar energy, and soft coal. Compared to the previous investment in 2009, this is considered as a 75% increase majority of which was financed through the Energy and Climate Fund (Federal Ministry of Economics and Technology, 2014).
Through its renewable energy research and development strategies, the government of developed solar support programs, which facilitated an increase the country’s share of wind energy and solar PV in its energy, mix. This was essential in enhanced transition into the adoption of an electric system powered by renewable energy (Grigoleit & Lenkeit, 2015). Through the adoption of this technological transition, it became possible to adopt new technologies that required the development of a public support system dedicated towards the realization of energy objectives. Other than massive investment in solar energy, the government through energy polices targeting reduction of tariffs for renewable energy has been able to improve on the country’s level of investment in offshore wind. The government has been able to install 2.l GW of offshore wind capacity. This was developed with the objective of achieving a renewable power generation capacity of 78% (Federal Ministry of Economics and Technology, 2014).
The German government, in attempt to ensure the use and development of green energy infrastructure such as solar, wind power and soft coal, has been able to provide investors with incentive packages aimed at reimbursing the expenditure of investment projects. This is based on the realization that in the form for green energy, innovation plays an essential role with regard to constant improvement of existing technology. This means that research and development programs were considered important for many companies involved in the production of green energy (Grigoleit & Lenkeit, 2015).
To ensure successful incorporation of green energy as part of the country’s economic objectives, the German government was able to ensure a range of research and development incentives for companies at the national level. Through its High-Tech Strategy 2020, the German government was able to offer grants for research and development ejects in climate and energy sectors. Furthermore, at the regional level 16 federal state governments in Germany have been able to provide research and development incentives with the objective of encouraging investment in green energy sources (Grigoleit & Lenkeit, 2015).
Germany is considered as one of the world’s largest producers of solar energy considering that it accounts for 74% of the global market. In addition, in terms of total capacity Germany is considered as a world leader with approximately 25GW installed (Federal Ministry of Economics and Technology, 2014). Since the introduction of the EGG legislation towards the adoption of green energy, the subsides provided by the government to solar, wind and soft coal has grown to about 20 billion euros annually (Federal Ministry of Economics and Technology, 2014).
The success of Germany as a leader in the use of green energy emanates from the commitment by the government to develop polices dedicated towards the promotion of renewable energy. Through its energy transformation strategy, Energiewende, the government has been able to advocate for a carbon reduced and nuclear free economy through vast deployment of green energy technologies. Through massive investments in solar and wind energy, the government has been able to enhance its goal of reducing carbon dioxide emissions by approximately 90% compared to early 1990s (Federal Ministry of Economics and Technology, 2014). In addition, through the development of legislations such as the EEG, the government is in in the process of developing strategies of ensuring complete eradication of nuclear energy buy 2020 (Grigoleit & Lenkeit, 2015).
In an attempt to act in accordance with the European Union directive of renewable energy, all European nations began developing polices and support mechanisms to ensure successful deployment of renewable energy. The German government adopted FITS, a subsidy program aimed at the provision of incentives that increase the production of green energy. Through this policy, the government guarantees the investors a 20 years fixed tariffs per unit of green energy produced. The essence of the fixed tariff is their independence from market prices and the involvement of the government in setting the rates, which are often dependent on the amount of energy produced and the technology used in the production process. For the German government, FITs became the main support mechanism to ensure the realization of renewable energy goals by the European Union.
The government while acting in accordance with the requirements of the EU introduced the first FITS legislation in 1990. The objective of this law was to foster the development of renewable energy while promoting domestic manufacturing and rubella economic development. In 2000, the FIT law was revised to include the EEG legislation. Through this legislation the government was able to promote production of green energy by guaranteeing renewable energy developers interconnection to the national grid. For the government the introduction of subsidy was considered as an essential foundation for the rapid increase in the production and use of renewable energy in Germany (Grigoleit & Lenkeit, 2015).
Conclusion
Through its renewable energy policy, the German government also supported an Energy Concept in support of structural changes in energy supply. Other than massive investment in solar energy, the government through energy polices targeting reduction of tariffs for renewable energy has been able to improve on the country’s level of investment in offshore wind. The government has also been able to develop a long-term energy strategy that targets the reduction of carbon dioxide emission and an increase in the amount for renewable sources of energy used in the realization of economic functions by 2050.
References
Federal Ministry of Economics and Technology. (2014). Germany’s New Energy Policy:
Heading Towards 2050 with Secure, Affordable, and Environmentally Sound Energy. Federal Ministry of Economics and Technology: Berlin, Germany
Grigoleit, T & Lenkeit, D. (2015). The Renewable Energy Industry in Germany: A Glance at
Industry Promotion Polices in Selected Energy Secto