The Case of Germany

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Similar to many other European countries, the energy situation in Germany is dominated by the lack of significant fossil resources, oil and gas. The exploitation of domestic mineral coal is decreasing continuously in recent decades and mines which are still in operation receive billions of Euros fiscal support in order to survive against low priced coal on the world market. In some regions in Germany, lignite is exploited, mostly used for the firing of thermal power plants. The geographic and climatic conditions in Germany for the use of renewable energy sources cannot be considered to be optimal. In comparison with other European regions, U.K., Ireland, France, and Denmark, the wind potential of

TABLE 2.3 Scheme of Support Mechanisms for Renewable Energies in the EU

Country Supply Support Demand Support

Country Supply Support Demand Support

TABLE 2.3 Scheme of Support Mechanisms for Renewable Energies in the EU

FIT

Quota

Investment Support

Fiscal Support

Tendering

Quota Fiscal Support

Green Pricing

Austria

y!

#

#

Belgium

#

#

y!

Denmark

y!

#

#

y

Finland

y!

#

#

y

France

y!

y

Germany

y!

#

#

Greece

y!

Ireland

#

Italy

#

y

Luxembourg

y!

#

#

Netherlands

#

#

y!

y

Portugal

y!

y

Spain

y!

Sweden

#

Turkey

y!

U.K.

#

#

y! #

#

Source: From Badelin et al. 2004. Current experience with supporting wind power in European electricity markets, Global Windpower Conference 2004, Chicago.

Source: From Badelin et al. 2004. Current experience with supporting wind power in European electricity markets, Global Windpower Conference 2004, Chicago.

Germany is only moderate, except for sites close to Germany's coastlines. Insulation conditions for solar applications are also not ideal due to the unsettled climatologic conditions in contrast with countries, in the Mediterranean region. However, the goal of the German government to double the share of energy supply from renewable energy sources by the year 2010 in comparison with figures from 2000 are quite ambitious; this means that at least 4.2% of Germany's primary energy consumption and 12.5% of the electricity supply shall be produced by renewable energy sources. In the medium and long term, the targets are to achieve a share of 20% by 2020 and 50% by 2050 of the primary energy consumption. The results reached by now are very promising. Germany counts the world's highest number of wind turbine installations. In 2004, some 16,000 MW wind capacity fed 26 TWh or approximately 6% of Germany's total electricity supply into the public grids. The cumulated capacity of PV installations surpassed the 700 MWp level. The market for solar thermal absorbers is by far the largest in Europe; more than 6 million square meters equivalent to 4,400 MW are mounted to the roofs of German homes. Biomass in solid, liquid, or gaseous form is used for many applications, domestic heating, cogeneration, and transportation; nowhere else more biodiesel is sold to fuel cars and farming vehicles. In total, 5.1% or 131 TWh of Germany's end energy supply for electricity, heat, and transportation was provided with renewable energy sources. The structure of different energy sources for the supply with renewable energies is shown in Figure 2.2.

These promising achievements have been possible only with the assistance and support of policies, guidelines, and regulations in favor of renewable energy and energy conservation. Looking back three decades in history, the activities in the field of research in renewable energies and energy conservation came into focus again after the first oil crisis back in 1973. Several and continuous measures for technology push and market pull activities were initiated by the German Federal and State governments in order to pave the pathway towards a new and sustainable energy future. Some milestones in German energy policy measures for the promotion of renewable energies have been from the 1970s until 1998.

• The demonstration program "250 MW Wind" (1989...ongoing) to gain practical and long-term experience with a large number of wind turbines by different manufacturers,

Final energy supply 131 TWh

FIGURE 2.2 Distribution of renewable energy sources to end energy supply.

□ Hydropower

Biofuels transportation

□ Biofuels, electricity

□ Biofuels, thermal

□ Solar thermal

Photovoltaics

FIGURE 2.2 Distribution of renewable energy sources to end energy supply.

technologies and at various site conditions in Germany. Most of the participating operators received their annual support by production (per produced kilowatt) instead of an initial investment subsidy. This has proved to be a very simple but efficient regulation to motivate operators to keep their turbines operating in a good condition.

• Special Loans with reduced interest rates by the German State Bank who put up nearly 3 billion Euros between 1990 and 1998 for financing renewable energy projects.

• The Electricity Feed Law (EFL, 1991-2000) which guaranteed grid access and a fixed premium tariff for electricity produced by renewable energies which is fed into the public grid. The EFL in combination with the "250 MW Wind" program and the special loans can be seen as the main drivers for the boom of wind energy applications in Germany.

• More than 1 billion Euros of support for energy research programs of the Federal government between 1990 and 1998.

• The 100,000-roofs-PV-program which boosted the installation of more than 2000 PV systems up to 5 kW peak power.

• The Federal market stimulation program for the promotion of renewable energies.

• Subsidies for solar heating and heat pumps for private house owners.

• Additional measures for education, information, and dissemination.

• Support to the European Union for research activities and the development of renewable energies and energy conservation in a European context.

• Further support of about 1 billion euro was granted by state and regional governments, communities and utilities.

In autumn 1998, the conservative government was replaced by a government led by the "Red" and "Green" parties. One of their targets and major projects is the implementation of a new era of energy policy. The Federal government points out their target to reduce the CO2 emissions by 25% in comparison with 1990 until the year 2005. The main aims are to strengthen renewable energies for a sustainable energy supply, to reduce the demand of energy and to back out of the nuclear energy program. The achievements that have been reached since 1991 and the savings which will be due in the forthcoming years are shown in Figure 2.3.

-100

-150

-100

-150

cP A

aBMWA - Energiezahlen, http://www.bmwa.bund.de/Navigation/Technologie-und-Energie/Energiepolitik/energiedaten.html Informationsdienst des Instituts der deutschen Wirtschaft Köln, http://www.iwkoeln.de/default.aspx?p=content&i=17329

FIGURE 2.3 Total and share of wind energy to reduction of CO2 emissions in Germany. (From Durstewitz, et al., Wind Energy Report Germany, 2005, ISET, Germany, 2005.)

The main policy measures which should pave the way towards a sustainable energy future were:

• The adoption of the "Renewable Energy Act" (REA). This law intends to guarantee fair market chances for renewable energies and remove obstacles and bottlenecks which hinder an intensive use of renewable energies. A revised version of the REA came into force in August 2004.

• The establishment of an "energy consensus" with the energy industry to search for a broadly accepted way towards a sustainable energy mix without nuclear energy.

An intensified promotion for the production and market introduction of renewable primary energy (market stimulation program). This subsidy program supports the installation of technology for the generation of heat and/or electricity. Depending on the kind of technology investment subsidies or special loan programs with options for partial abatement of debt can be granted. Since the start of the Market Stimulation Program in 1999, more than 400,000 projects were funded with more than 500 million Euros. These subsidies or loans have triggered a total investment volume of more than 4 billion Euros.

The implementation of a 100,000-roofs-PV-program (1999-2003) aimed to increase the number of PV installations in Germany. In 1999, about 50 MWp capacity was online in Germany, until 2003 additional 100,000 roofs or 300 MWp should be equipped with photovoltaic systems, most of them on rooftops of private houses. The program was very efficient and contributed significantly to market penetration and cost reduction of PV systems. One stimulus for the private investments of total 2.4 billion Euros was the very convenient conditions for the loans, 1.9% annual interest, term 10 years, 2 years free of redemption, and possibilities for a partial abatement of the debt).

Loans with favorable interest rate for investments in environmental technologies from the German state bank are preferred by investors for financing their projects. The KfW Förderbank, a 2003 merger of Deutsche Ausgleichsbank (DtA) and Kreditanstalt für Wiederaufbau (KfW) supports financing of investments into renewable and energy-saving technologies with different programs since many years. From 1991 until 2003 KfW-Forderbank respectively its predecessors put on the following support measures and gave loan agreements for investments into renewable energies and energy-saving projects in a total of 11.1 billion Euros.:KfW-C02 reduction program (1997-2003, 422.3 million Euros)

KfW-CO2 building redevelopment program (2001-2003, 20.5 million Euros) DtA-ERP-environment and energy-saving program (1991-2003, 6,942 million Euros) DtA-environment program (1991-2003, 3,679 million Euros)

The backbone of the loan programs is the DtA-ERP-environment and energy-saving program, where ERP stands for "European Recovery Program." As a matter of fact, this source of financing was originally granted to the German Federal Republic after the Second World War by means of the Marshall-Plan (1948). This fund was primarily used to rebuild the industry and economy in Western Germany; however, the capital is still circulating and partially used to finance renewably and energy saving projects.

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