Renewables unlikely to fill nuclear gap without bold policy changes

Germany has decided to phase out nuclear power, but can renewables satisfy the energy needs of Europe’s largest economy? Experts say better policy, not technology, is needed for renewable energy to reach its potential.

Renewables unlikely to fill nuclear gap without bold policy changes
Photo: DPA

A recent report by the Federal Environment Agency (UBA) indicated that Germany will need to rely heavily on renewable energy sources as the country’s nuclear power plants are gradually phased out.

Germany is already a global leader in renewable energy production, having generated 17 percent of its electricity through renewables in 2010, but some believe Germany could be doing even better.

And the country will have to ramp up such “green” energy production considerably if Chancellor Angela Merkel’s government still intends to reduce carbon emissions by 40 percent from 1990 levels by 2020, as part of efforts to combat global warming.

“Germany’s highly developed infrastructure, creative economy, innovation-oriented demand, and civil society” all factor into renewable energy taking on a more prominent role, Martin Jänicke, founding director of the Environmental Policy Research Centre (FFU) at the Free University of Berlin, told The Local.

But while Germany’s technology prowess remains top rate, some believe its outdated energy policies are slowing the progress of renewable energy production.

“Policy, at this stage, is a precondition for technology to develop further and for Germany to realize its energy sustainability goals,” said Rainer Quitzow, a research fellow at the FFU.

Some policy mechanisms already in place have helped spur innovation, such as feed-in tariffs, which pay renewable energy generators a premium price for the energy they produce.

But if renewable energy is to help compensate for the eventual loss of nuclear power, a broader range of policy measures is necessary to create the kind of monetary incentives developers require.

The greatest potential for growth and profit, according to Quitzow, lies in the modernisation of the renewable energy grid – and the key to this is smarter public policy and investment.

“Grid development requires large-scale coordination and investment by the government – the private sector alone can’t achieve that,” Quitzow said.

“Private companies are handling the bulk of grid development right now, but with profit as their main motive, much of their investment also serves the interests of nuclear energy and coal. Only the public sector has the capacity to make the grid both profitable and compatible with renewable energy.”

According to Jänicke, the most promising area of public investment is the “micro-grid” system, in which regional grids serve the power needs of a localized area.

The main advantage of micro-grids is their efficiency. Power is generated and stored locally, so a wind or photovoltaic plant in Lower Saxony, for example, does not waste energy connecting with an energy storage site in Norway.

Nearly eight million people in Germany already receive electricity from these decentralized networks, and as nuclear power plants are taken offline, investment in renewable micro-grids is expected to rise, if for no other reason than the profits to be had.

“Efficient production allows micro-grids to generate a surplus of renewable energy that can be exported for profit to other regions,” Jänicke said.

The micro-grid system produces energy that is both environmentally and financially sustainable, but government investment is essential to keep the market competitive.

“Without market growth, you don’t have technological innovation,” Jänicke said, explaining that a healthy market, in turn, creates incentive for innovation. “There is an interplay of feedback mechanisms in renewable energy creation, and that can be stimulated only by new and ambitious policy.”

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German government announces fresh relief package for high energy costs

With Russia's invasion in Ukraine exacerbating high energy and petrol prices, Germany is set to introduce a second relief package to limit the impact on consumers.

German government announces fresh relief package for high energy costs

The additional package of measures was announced by Economy and Climate Protection Minister Robert Habeck (Greens) on Sunday.

Speaking to DPA, Habeck said the wave of price increases throughout the energy sector were becoming increasingly difficult for households to bear.

“Extremely high heating costs, extremely high electricity prices, and extremely high fuel prices are putting a strain on households, and the lower the income, the more so,” he said. “The German government will therefore launch another relief package.”

The costs of heating and electricity have hit record highs in the past few months due to post-pandemic supply issues. 

This dramatic rise in prices has already prompted the government to introduce a range of measures to ease the burden on households, including abolishing the Renewable Energy Act (EEG) levy earlier than planned, offering grants to low-income households and increasing the commuter allowance. 

READ ALSO: EXPLAINED: What Germany’s relief package against rising prices means for you

But since Russia invaded neighbouring Ukraine on February 24th, the attack has been driving up energy prices further, Habeck explained.

He added that fears of supply shortages and speculation on the market were currently making the situation worse. 

How will the package work?

When defining the new relief measures, the Economics Ministry will use three criteria, Habeck revealed. 

Firstly, the measures must span all areas of the energy market, including heating costs, electricity and mobility. 

Heating is the area where households are under the most pressure. The ministry estimates that the gas bill for an average family in an unrenovated one-family house will rise by about €2,000 this year. 

Secondly, the package should include measures to help save energy, such as reducing car emissions or replacing gas heating systems.

Thirdly, market-based incentives should be used to ensure that people who use less energy also have lower costs. 

“The government will now put together the entire package quickly and constructively in a working process,” said Habeck.

Fuel subsidy

The three-point plan outlined by the Green Party politician are not the only relief proposals being considered by the government.

According to reports in German daily Bild, Finance Minister Christian Lindner (FPD) is allegedly considering introducing a state fuel subsidy for car drivers.

The amount of the subsidy – which hasn’t yet been defined – would be deducted from a driver’s bill when paying at the petrol station. 

The operator of the petrol station would then have to submit the receipts to the tax authorities later in order to claim the money back. 

Since the start of the war in Ukraine, fuel prices have risen dramatically in Germany: diesel has gone up by around 66 cents per litre, while a litre of E10 has gone up by around 45 cents.

READ ALSO: EXPLAINED: The everyday products getting more expensive in Germany

As well as support for consumers, the government is currently working on a credit assistance programme to assist German companies that have been hit hard by the EU sanctions against Russia.

As reported by Bild on Saturday, bridging aid is also being discussed for companies that can no longer manage the sharp rise in raw material prices.

In addition, an extension of the shorter working hours (Kurzarbeit) scheme beyond June 30th is allegedly being examined, as well as a further increase in the commuter allowance.