Winning with Wind — Part II
By: Tuuli Martin
[In Part I of Winning with Wind, Virginia Tech Master of Natural Resources student Tuuli Martin introduced Germany’s Energiewende (the transition toward renewables) program. Next, she’ll examine the role of public opinion in Germany’s shift to renewable energy.]
Stable Investment Environment
The leadership role in renewable energy development has largely been determined by the scientific and political consensus in Germany. There is also a strong public support for clean energy in the country. Although the history of efforts is much longer, one of the most important climate protection tools was established in the beginning of the new millennium.
The Renewable Energy Act of 2000 (Erneuerbare Energien Gesetz, EEG) created a legislative and financial system that gives energy from renewable sources a priority over conventional power.1 Incentives for investing in renewable energy include feed-in tariffs, locally owned power projects, and long-term contracts. Energy intensive industries are made exempt of surcharges to support economic competitiveness. The key elements of EEG have been preserved in all revising processes to sustain a reliable and stable investment environment.2
One of the most important elements of EEG is established targets that shall ensure a steady growth in renewable energy deployment.3 The growth targets for the share of renewables in the gross final energy consumption are set as:
- 18 percent by 2020
- 40-45 percent by 2025
- 55-60 percent by 2035
- 80 percent by 20504
Fixed targets provide security for existing investments, both to renewable and conventional power plant operators and grid operators, as general trends are made predictable.5 The majority of new investments in renewable energy are made in wind power. Wind energy accounted for more than 44 percent of all new energy capacity installed in Germany in 2015.6 Together with solar energy, wind energy is considered to be the backbone of Energiewende.7 The potential of wind energy is reflected in both expert estimates and public opinion.
According to opinion polls, public support for the energy transition has remained high over the last five years. Close to 90 percent of German citizens think Energiwende is important or very important, despite lower satisfaction with the proceedings of the transition. More than half of the surveyed citizens are not satisfied with the pace of the transition.
Public opinion about Energiewende.8
Public polls also reveal how people would like to see the energy system in Germany. Approximately 77 percent of people think the power system should be based on wind in the future. All sources of non-renewable energy are clearly disfavored by German citizens.
Public opinion on the future energy market.9
Expert estimates support public opinion. Solar and wind will be the two sources of renewable energy that can deliver desired outcomes. Other renewable energy sources, such as hydropower and biomass have already reached their maximum capacity. Natural gas has become economically incompatible. Its price has been outcompeted by other energy sources.10 These conclusions have been reached over time through public-private partnerships. German people have learned about the government’s energy policy and experienced both the costs and benefits of Energiewende on a household level.
Decentralized Management: Community Power
Germany’s energy policy emphasizes citizen involvement. The Renewable Energy Act mandates that renewable power generators are given a right for an immediate grid connection.11 It is also required by the law that network operators expand their grid capacity according to demand. Individually or regionally controlled power generation provides a direct supply to the stakeholders and the surplus can be sold. These measures encourage investment and ownership of renewable power development. In addition to financial benefits, citizens’ involvement in energy schemes can foster a wider support for renewable energy production and climate goals.
The concept of citizen-owned energy projects has been called “democratization of the energy system.”12 That means both profits and risks are socialized. Such decentralized energy management is encouraged by reliable policies and financial incentives. High initial investment costs of community projects are balanced by paybacks over a long period. Producers of renewable energy are guaranteed a fixed price per kilowatt-hour for 20 years.13 Long-term arrangements increase investment security and decrease market risks.14 These safeguards are especially important factors for small actors. In order to align financial incentives with the decreasing installation costs as the market matures, the feed-in tariffs for new connections are lowered annually.15 In other words, the earlier the grid connection is established, the higher the payback. The benefits of developing renewables are not limited to project owners.
Citizens have also benefited from employment opportunities. More than any other renewable energy sector, wind industry has created a large number of skilled, semi-skilled, and unskilled jobs. Approximately 142,900 people were employed in the wind energy sector in Germany in 2015.16 The Global Wind Energy Council estimates that the number is over a million worldwide and is to rise dramatically.17
Overall, the policy framework has proven to be attractive to German citizens; 46 percent of installed renewable energy capacity was owned by the citizens and citizen energy cooperatives in 2012.18 Tangible benefits from shared energy management and job creation explain the strong public support for Energiewende. Social norms may also play a part in the transition progress.
Shares of ownership of installed renewable energy capacity in 2012 (megawatts and percent).19
It is possible that engaging citizens may have been easier in Germany than it will be in other societies. The cooperative model that is integrated into the Energiewende has a long history in Germany.20 Social norms and history of citizen cooperatives can influence outcomes and should be considered in policy planning. Incentives such as direct energy supply and jobs are likely to be attractive motives everywhere in the world. Encouraging early investment accelerates the deployment of renewables, reduces technology prices, and is crucial for achieving ambitious targets. However, it should be expected that some form of resistance will arise with novel changes such as reforming the energy system.
[Creative Commons License photo from Flickr courtesy of: Windwärts Energie.]