Germany Sets Aside $130 Billion for Renewable Energy

German Chancellor Angela Merkel announced on 30 May that Germany, the world’s fourth-largest economy and Europe’s biggest, would shutter all of its 17 nuclear power plants between 2015 and 2022, an extraordinary commitment, given that they currently produce about 28 percent of the country’s electricity.

Underlining the government’s seriousness in changing the country’s energy matrix, Germany’s Kreditanstalt fur Wiederaufbau (German Development Bank) is to underwrite renewable energy and energy efficiency investments in Germany with $137.3 billion over the next five years, Germany Trade and Invest reported. Overall, the German government’s 6th Energy Research Program has made an extraordinary $274.6 billion available for joint funding initiatives in energy storage research over the next three years.

It is by any yardstick an extraordinary (and expensive) commitment that may well have the collateral benefit of unlocking similar funding worldwide for renewable energy projects.

The new Kreditanstalt fur Wiederaufbau loans and projects are designed to underwrite a broad array of energy areas, including energy efficiency and smart grids, as well as wind and solar energy generation. Last year Kreditanstalt fur Wiederaufbau financed 40 percent of all photovoltaic installations in Germany.

Germany is already the world’s strongest photovoltaic market and also accounts for Europe’s largest share of installed wind capacity. Moving resolutely into the field of renewable energy, by 2020, renewable energy sources are expected to account for 35 percent of Germany’s energy output, soaring to 80 percent by 2050. Germany now produces 20 percent of its electricity from renewable energy sources, now, up from just 6 percent in 2000. The effort is in turn creating thousands of jobs and new industries.

Industry expert Tobias Homann observed, “With the decision to abandon nuclear power earlier this year, it was clear that the road ahead would be challenging. But Germany is in a very promising position to be the first industrialized country to rely entirely on renewable energy.”

One of the current major shortfalls of the renewable energy market is its inability to store generated energy but Germany is working on this dilemma, focusing on the development of battery and smart grid technology.

According to Germant Trade & Invest CEO Jurgen Friedrich, “Germany has established the ideal prerequisites for the rapid development of the energy storage industry. The unique combination of renewable energy generation, innovation and implementation through such projects makes Germany an optimal location for companies looking to enter this budding industry.”

Germany is also assiduously pursuing improving solar technology. Germany’s photovoltaic installations and solar facilities recently surpassed hydropower in Germany’s total energy generation matrix.

In the area of offshore wind power generation, Germany projects 4,000 turbines off its Baltic coast producing electricity by 2030. Germany’s northeastern Mecklenburg-Vorpommern state on the Baltic will produce 100 percent of its electricity from renewables by 2015-2017, and then export the excess to other German states. Mecklenburg-Vorpommern premier Erwin Selling told reporters, “Renewable energy has become extremely valuable for our state. It’s just a great opportunity – producing renewable energy and creating manufacturing jobs. From an industrial point of view we’d been one of Germany’s weaker areas. But the country is abandoning nuclear power. That will work only if there’s a corresponding and substantial increase in renewables. It’ll be one of Germany’s most important sectors in the future. We want to be up there leading the way.”

The picture is not completely rosy, however – there have been delays in expanding and upgrading the national grid of high-voltage transmission lines from sparsely populated coastal regions such as Mecklenburg-Vorpommern to areas where the power is needed in Germany industrial and densely populated western and southern regions. While Berlin is working to remove infrastructure bottlenecks, if the nation’s electrical grid is not expanded soon it could cause future problems when more off-shore wind power goes on line.

Such problems aside however, Germany, as Europe’s leading creditor nation and technological powerhouse is surging forward on weaning itself off of nuclear energy and strongly moving towards alternative renewable energy sources, an experiment that will doubtless be watched by other industrialized societies from Tokyo to Washington.

Article by John C.K. Daly, appearing courtesy OilPrice.com.