Germany

Current Situation
A stable policy framework stimulated continuous growth of RES in the electricity, heat and biofuel sector. Main driver for the strong development of RES have been the German Renewable Energy Act in case of RES-E, the market incentive programme for renewable heat production and the tax exemption for the biofuel sector. A revision of the feed-in tariff system took effect in August 2004 lowering the tariffs for wind on-shore, increasing tariffs for biomass electricity, geothermal electricity and introducing a feed-in tariff for refurbishment of large hydro. At present, a new revision of the act is under consideration. Tariffs for wind offshore are planned to be increased whereas a continuation of the overall tariff level is foreseen for biogas, biomass and wind onshore. In June 2006 incentives within the market incentive programme have been reduced by 20% to 50% due to high demand for support.

The renewable energy market in Germany is mature showing large growth rates even at high penetration rates. Particularly, in terms of wind energy utilisation, photovoltaics, solar thermal installations and biofuel production Germany takes a leading position within the EU. Photovoltaic applications experienced extraordinary growth in the last 2 years. The improvement of framework conditions for the use of bioenergy lead to significant acceleration of the development of solid biomass and biogas in particular in the electricity sector. Furthermore the increased feed-in tariffs for geothermal electricity lead to significant activities in terms of project development.

The developments in RES-E production have been very dynamic in Germany during recent years. In absolute figures wind energy showed the strongest growth reaching an electricity generation of about 27.2 TWh in 2005. About 50% of the European wind energy capacity is installed in Germany. Hydropower has the second largest RES-E share, but it has not been showing any significant development during the last five years. Biomass electricity, including biogas and the biodegradable fraction of municipal waste, is the third most important RES-E source with about 12.4 TWh of electricity production in 2005. After several years of moderate growth electricity generation from solid biomass experienced a significant increase from 1.57 GWh in 2003 up to 4.6 GWh in 2005. In the biogas sector, electricity generation increased to 4.7 TWh in 2005. Strong growth rates have also been achieved in the area of photovoltaics with the strongest development in 2004 and 2005. Only in 2005 more than 800 MW additional capacity have been installed leading to a total capacity of 1.88 GW achieving an electricity output of 1.28 TWh. The first geothermal electricity plant is in operation since 2003 producing about 200 MWh per year.

The penetration in 2005 in terms of the actual power generation is shown in Figure 15. Especially for wind and hydropower this graph does not perfectly reflect the development of the installed capacities due to hydrological and wind conditions in 2003 and 2004 being below average. In Table 30 RES-E generation is shown for the years 1997 and 2005 as well as the average annual growth during this period.

In the heat sector growth was not as strong as in the electricity sector, but in particular solar thermal collectors experienced a considerable increase due to the market incentive programme. At the end of 2005 a total collector area of 7.20 million m2 was installed. Biomass heating as well as geothermal heat pumps showed lower growth tares over recent years. For geothermal heat generation about 30 medium to large scale plant and 100,000 heat pumps are in operation.

In terms of biofuels, Germany represents the leading market within the EU with a total biofuel consumption of 3,344 ktoe whereof 72% correspond to biodiesel. Bioethanol production in Germany started in 2004 and achieved a consumption of 307 ktoe in 2005.

Perspectives
Germany is an EU leader in wind utilisation, PV, solar thermal installations and biofuel production. Its onshore wind capacity covers approximately 50% of the total installed capacity in the EU. A stable and predictable policy framework has created conditions favourable to RES penetration and growth. Feed-in tariffs for RES-E (Electricity production from renewable energy sources), market incentives for RES-H, and tax exemptions for biofuels have proven to be a successful policy mix leading to a very dynamic market for RES. In 2006, about 70% of renewable energy was generated from biomass, and 11.8% of electricity was generated from RES.

Germany has already exceeded its 2010 biofuel target of 5.75%: in 2006, it achieved 6.3%.

With the aim of promoting RES-E, Germany has introduced the following schemes through its Renewable Energy Act of 2004:
Feed-in tariffs for onshore wind, offshore wind, PV, biomass, hydro, landfill gas, sewage gas and geothermal.
Large subsidised loans available through the DtA (Deutsche Ausgleichsbank) Environment and Energy Efficiency Programme.

A Market Incentive Programme provides subsidies for RES-H (Production of heat and cold from renewable energy sources), with excellent results in solar thermal and mall-scale biomass heat generation. A large increase in budget was foreseen for 2007 (from EUR 39 million to EUR 213 million). From 1 January 2007, firms have been obliged to market biofuels using a quota system: 4.4% for diesel and 1.2% for petrol; this will be increased annually. 2nd generation biofuels, biogas and pure bioethanol (E85) will be granted a decreasing tax incentive until 2015.

The German target for renewables according to the EU is 18% (2005=5,8%). The renewables target is calculated as the share of renewable consumption to gross final energy consumption.

Key Players
Germany is a country with a great expertise, technology and experience in renewable energy. It is the leading country (together with Spain and Denmark) in implementation and installation of systems that provide energy by renewable sources.

The two main sectors of activity are the solar (PV) and the wind energy facilities. There are several of private and public companies that dominate the market in the country and in Europe. For instance in PV, among European countries, Germany has been leading the way for several years but Spain took over the number 1 position worldwide with around 45% of the Global market and 56% of the EU market.

When it comes to wind energy, German companies also play a significant role. One of the main centres of Germany’s wind energy industry is Schleswig-Holstein, a northern state situated between the Baltic and the North Seas. Since 1980, the region has been one of the most popular for building new wind farms, and this has boosted competition in wind energy. Today, around one-third of its electricity consumption is met with wind energy, and the sector employs over 7,000 people (Government of Schleswig-Holstein, 2008). The business structure is made up of a large number of small and middle-sized companies, complemented by a solid network of R&D institutes, training and educational centres, universities and financial institutions.

The development of wind energy in Schleswig-Holstein has been supported by the regional government, which has created an attractive environment for investment and ensured that the labour force and the public infrastructure are attractive to the sector. This effort has paid off. According to Prognos Institute (2006), each MW installed produces more than €100,000 of tax revenue during its 20 years of operation. In 2004, fiscal income from wind activity amounted to €7.8 million in Lower Saxony, €5.8 million in Schleswig-Holstein and €1.6 million in Mecklenburg-Vorpommern. By 2009 this amount will have doubled.

The sector is now starting to move offshore. Indeed, another area of Germany which has seen strong development, thanks to the offshore wind industry is the northern state of Bremen, particularly the city of Bremer- haven on the North Sea coast. In the last two year€250 million has been invested in offshore wind energy industry development in the city – mainly private funds but also public investments.

Formerly blighted by declining shipping and fishing industries, the burgeoning offshore wind energy industry has revitalised Bremerhaven, creating up to 1,200 direct jobs in companies manufacturing turbines and components between 2006 and 2008.

There are currently around 40 MW of wind energy capacity installed onshore around Bremerhaven, mostly in the form of prototypes of offshore turbines. It is estimated (Wind Energy Agency Bremer- haven/Bremen, 2008) that by the beginning of 2009 this wind energy capacity will provide electricity roughly equivalent to the needs of all the city households (115,000 inhabitants).

Job demand
It is important to note that a significant proportion of direct RES employment (around 75%) is based in three countries: Denmark, Germany and Spain. Nonetheless, the sector is less concentrated now than it was in 2003, when these three Member States accounted for 88% of EU employment. This is due to the opening of manufacturing and op- eration centres in new markets and to the local nature of many (mostly wind-related) activities, such as project development, operation and maintenance (O&M), engineering, legal services and so on.

The Federal Ministry of the Environment in Germany, BMU, periodically carries out studies on the employment created by the renewable energy sector. According to the most recent ones (BMU, 2006 and 2008) and to the EWEA survey, around 38,000 jobs are directly attributable to wind energy companies. If indirect jobs are included, the number of jobs stands at 84,300. It is interesting that “only” one-third of total employment is direct, while the other two-thirds relate to sup- pliers, sub-suppliers and service companies. The reason is that over 80% of the value chain in the German wind energy sector in 2007 was exported and used in “foreign” wind turbine manufacturing.

When it comes to photovoltaic, we can remark that due to the Spanish cap which has been set at 500 MW for 2009, Germany is expected to take back its number one position as the most mature market with a proven FiT scheme, good financing opportunities via Kreditanstalt fόr Wiederaufbau (KfW), high potential for future development, good availability of skilled PV companies and good awareness of the PV technology.

Seeing as the degression rates of the Feed-in Tariffs will be increased by 1% if the German PV market develops to a size larger than 1,500 MW in 2009, the German market growth will probably slow down in 2010. EPIA estimates that the German market could weigh up to 4 GW annually by 2013 if the present support scheme is maintained, considering that the price of PV systems will decrease accordingly with the FiT degression rates.

Germany

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