Run with the wind
Clusters of tall white wind turbines spin gracefully atop green hillsides. Solar photo-voltaics (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 US, Germany now has almost three times as much installed wind capacity (38 per cent of global capacity) and is 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 per cent 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-per-cent below 1990 levels by 2020, much of this to be achieved by switching to renewable energy. Not quite the 60 per cent 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 people’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.
transition can happen quite rapidly with political will and the right policies
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 per cent. Between 1992 and 2001, PV capacity experienced an average annual growth rate of nearly 49 per cent. 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 US have created market cycles of boom and bust, making it difficult to develop strong domestic industries. As a result, the US 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 US, 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 per cent 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.