Germany: A Model for Renewable Energy Policy
According to Bill McKibben of 350.org, Germany is the only large economy that is taking the threat of climate change seriously. But, what makes Germany different? Why are they on pace to producing 80% of their energy from renewable sources by 2050 while countries like Canada are… well… let’s say “not as ambitious”?
You could argue that the move towards renewable energy in Germany began in 1986 with the accident at the Chernobyl nuclear power plant. A big cloud of radioactive gas floating over Europe gave the German population a good reason to dislike nuclear power. In addition, many Germans argued that it was unethical to burden future generations with the radioactive waste produced by nuclear power plants.
However, the policy that made the transition to renewables possible was the Renewable Energy Act of 2000 (locally known as the EEG). The EEG had two major goals. First, replace coal and nuclear power with wind, biomass, solar, geothermal and hydroelectric power. Second, democratize and decentralize energy production.
Eva Stegen is the communication director for EWS, Germany’s first clean energy cooperative. Here is how she summarized the importance of decentralizing power generation:
Einstein said that the way that leads into a catastrophe cannot be the way that leads out. Centralized power is the problem. So we needed to find a new way. And that is what the EEG gave us.
More specifically, what the EEG did was give every German the right to generate and sell power to the grid through a Feed-in-Tariff (FiT). The FiT is a guaranteed premium price for energy produced from renewable sources of electricity. In other words, the FiT rewards anyone that decides to invest in solar panels or wind turbines by guaranteeing for 20 years the rate at which producers will be able to sell their power to grid. This makes the spending of thousands (if not millions) of dollars for PV panels or wind turbines a much safer and more attractive investment. Also, the FiT has been reducing every year which encouraged early investment into renewables.
And it seems that the EEG and its Feed-in-Tariff have worked as planned. Since 1999, the amount of energy produced from wind has increased 10-fold. Also since 1999, the production of solar energy has increased 1,000-fold! This latter number is even more impressive when you consider that Germany gets about as much sun as the Canadian territories.
All in all, Germany currently produces 25% of its electricity from renewable sources. On a sunny day, the amount of power that Germans produce from solar energy is equivalent to 13 nuclear power plants! In addition, as mentioned earlier, Germany is “ahead of schedule” to meet its target of producing 80% of its power from renewables by 2050.
And as was the goal, the production of renewable energy in Germany is decentralized and democratized. Rather than depending on major utility companies, the production of renewable energy is the hands of communities, local businesses and individuals. In fact, average citizens are the biggest investors in renewable energy.
Today, over one million Germans are involved in the production of renewable energy, either as producers or investors. A growing trend is the creation of citizen-led cooperatives that invest (for as little as 500$ per person) in PV farms or wind turbines.
Interestingly, among the first to take avantage of the FiT were farmers. The relatively small footprint of a wind turbine combined with large fields made wind energy a great investment for farmers who were struggling to survive only a decade ago. Now, wind power is an additional source of revenue that allows farms to keep doing what they love.
Of course, someone has to pay for the Feed-in-Tariff. And while the government sets the rates of the FiT, all the ratepayers of Germany share the cost of the tariff. On average, monthly energy bills in Germany add up to $108 per month. Of that, $11,50 is the “renewable energy surcharge”. And while that may seem like a lot, there is a broad consensus in Germany that paying a little more for electricity is fair exchange for moving to a clean energy future.
I couldn’t agree more.