POWER January 2014 - 34

2014 INDUSTRY FORECAST
are now in the red, " said CFO Bernhard
Günther. " This is the greatest crisis our industry
has faced for many decades. "
With this background, the sudden loss of
5 GW of nuclear capacity in 2011 is not the
most significant issue for Germany's Energiewende.
Nor, in itself, is the plan to get 80%
of the country's electricity from renewables
and to cut GHG emissions by 80% to 95% by
2050; after all, the rest of Europe should be
doing the same. The question is how to get
the share of renewables in power production
up from 20% now to 35% by 2020 without
breaking the grid or upsetting the voters. A
secondary challenge will be to avoid relying
too much on coal-traditionally, an important
fuel in Germany and the obvious fallback
when gas is too expensive.
In February 2013, Federal Environment
Minister Peter Altmaier met with disbelief
and head-shaking when he suggested that the
energy transition could cost one trillion euros
by 2040. That's still less than the estimated
cost of German reunification in the 1990s-
some might say another crazy scheme that,
nevertheless, had to be carried through. Of
course, Germany's " big four " are all doing
well out of green power. " Renewables are a
mainstay of our earnings, " said E.ON's Teyssen
recently.
Following the election of September 2013,
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Germany's new coalition government has
confirmed a target of 55% to 60% electricity
from renewables by 2035 and said it will
reform the Renewable Energy Act (Erneuerbare-Energien-Gesetz,
EEG) by Easter 2014.
The EEG's targets for renewables penetration
remain largely unchanged, but the high costs
of supporting renewables will be pushed
down. Changing the subsidies " will be the
central project of the grand Merkel coalition, "
Altmaier said, with policy becoming
" more predictable and lastingly affordable. "
Germany's photovoltaic (PV) power industry
has crashed since 2011 as cheap
Chinese solar panels have flooded onto the
market, and tens of thousands of jobs have
been lost. Yet PV growth continues to meet
its ambitious targets, with 226 MW installed
in October 2013 alone. By the end of that
month, total PV capacity was 35 GW and
the country was on course to meet its target
of adding 2.5 GW to 3.5 GW each year. The
new government says it will not change the
support scheme for PV.
Support will be reduced for onshore
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wind power, whose installed capacity grew
by 2.4 GW during 2012 to reach 31 GW
by year end. Support will be unchanged
for offshore wind, but capacity targets
have been reduced to 6.5 GW by 2020
and 15 GW by 2030, down from 10 GW
and 25 GW respectively, in recognition of
the technical risks and shortage of capital.
Offshore wind, although expected to form
the mainstay of future growth, has not yet
reached 400 MW installed capacity. Turbine
manufacturer Siemens says it plans
to cut the levelized cost of offshore wind
power by up to 40% before the end of the
decade, to less than €0.1/kWh.
Heavy grid investment will be needed
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for all this distributed generation, especially
because wind power is concentrated in the
north of the country while industry is biased
towards the south. Fragmented grid management
and considerable public opposition are
making the job harder. To avoid the delays
associated with getting overhead cables approved,
Germany's four transmission system
operators are cooperating on four high-voltage
direct current underground lines from
north to south. ■
-Charles Butcher is a UK-based POWER
contributing editor.
POWER | January 2014
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POWER January 2014

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