Germany sets new record in renewable energy generation
In Germany, one of the world’s economic and industrial powerhouses, renewable energy production increased appreciably in 2020, both in absolute terms and relative to the country’s overall power generation capacity. But as the “Energiewende” (energy transition) progresses, when will consumers see a significant decline in prices? And when will Germany become fully climate-neutral?
News reports at the end of October indicated that Germany was on track to generate significantly more solar energy than in the previous year. So far in 2020, solar energy has accounted for 43 terawatt-hours (TWh) as net solar electricity production surpassed the total amount for 2019. This is the equivalent of 12.4 percent of Germany’s overall energy mix, and enough to power all private households twice over.
Total renewable power generation as of the end of October 2020 was 195 TWh, a figure that includes all forms of renewable energy, ranging from solar and wind power to hydropower, biomass, etc. When industrial energy consumption is factored in, electricity from all renewables accounted for 52.2 per cent of total net public production, compared to 46 per cent in 2019.
The share of renewables has never dipped below 15.6 percent this year, and it was highest on 4 July, when green energy accounted for 86.9 percent of all electricity generation. Over the first ten months of 2020, a total of nearly 389 TWh of electricity were produced from all sources, including fossil and nuclear power.
Green energy for in an industrial powerhouse
The increased share of green electricity in Germany follows a multi-year trend as the country is in the midst of an energy transition away from fossil and nuclear fuels towards a zero-emissions energy system. Nevertheless, the success of solar power in the past ten months is to some extent also due to the global slowdown of economic activity triggered by the coronavirus crisis.
With a GDP of US$4.44 trillion (PPP), Germany is the world’s fourth-largest economy and the economic leader of Europe. This wealth rests to a large extent on exports of industrial goods on the global market. The ongoing COVID-19 pandemic has led to a slowdown of industry activity, with an accompanying 7 percent decline in electricity consumption. Due to the priority given to feed-in of renewables, this consumption shortfall was compensated by powering down conventional generation capacity.
At the same time, declining demand also pushed down prices, which has meant that legacy assets such as lignite plants are no longer competitive, given the cost of carbon emissions certificates to offset the pollution for which they are responsible.
Transitioning to sustainable renewable energy generation
As part of the “Energiewende” (energy transition), the German government under Chancellor Angela Merkel has decided to phase out all nuclear power plants and will shut down the remaining reactors within the next two years. This turnaround is in line with public opinion in Germany, which has increasingly turned against nuclear power since the disaster in Fukushima, Japan in March 2011. At that time, nuclear plants accounted for nearly a quarter of Germany’s energy supply. The energy transition also dovetails with the EU’s European Green Deal, a plan to make the continent climate-neutral by the middle of the century.
The deregulation of electricity markets since the 1990s has failed to bring down the cost of electricity; for private households, the average price of a kilowatt-hour in 2020 was around €0.32. A significant part of that was due to taxes, network fees, and other external costs. During the 2020 COVID-19 pandemic, spot prices on the European electricity markets occasionally dipped into negative territory due to demand shortfalls, and some observers have called for the base prices charged to consumers to be adapted accordingly.
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The share of renewable energy sources (wind, solar, hydropower, geothermal, biomass) in electricity generation has been increasing in the past decade. When will the first OECD country generate all of its electricity from renewable sources in a given year? Visit the Supertrends App and search for ‘green hydrogen’ to make your own prediction. Not part of the community yet? Visit the Supertrends Pro – page to learn about your benefits and request a trial – for free!
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