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Germany: Leader in Renewable Energy

by Stacie Leone

Always at the forefront of innovation, Germany is currently leading the way in renewable energy production. As the world’s fifth largest energy consumer, Germany relies heavily on imports to meet its needs, which has pushed the country to find renewable energy sources within its own borders. The other major impetus for Germany’s burgeoning renewable energy economy is that its reliance on domestic brown coal has led to serious air pollution, acid rain, and habitat degradation.

Germany is the world's leader in wind energy. It is also among the
leaders in small hydropower, solar and biofuels. The country nearly doubled gross electricity consumption from renewable energy sources (from 6.3% in 2000 to 12% in 2006) and has already exceeded EU targets.

Germany’s success is largely owed to Feed in Tariff legislation.  Known as a revenue-neutral way to encourage continued installation of renewable energy, a feed in tariff provides government incentives to offset the cost of generating renewable energy.  Utilities are required to purchase renewable energy at slightly above market prices, by the time the cost is passed on to consumers it becomes negligible.  Following is an example of how Feed in Tariffs (FiT) work, excerpted from Wikipedia:

“…if the retail price of electricity is 10¢/kWh then the rate for green power might be 40¢/kWh. The difference is spread over all of the customers of the utility. For example, if $100,000 worth of green power is bought in a year by a utility that has 1,000,000 customers, then each of those customers will have 10c added on to their bill annually.

Thus, a small annual increase in the price of electricity per customer can result in a large incentive for people to install renewable energy systems. This is the essence of a FiT: it is a mechanism to instigate a change in the way power is produced, gradually shifting from present polluting means to non-greenhouse methods.”

Under the German Feed in Tariff law, known as the Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz / EEG), electricity produced from renewable energy sources is given priority for grid connection, grid access in either distribution and transmission grid, and power dispatch.  Grid operators are obliged to feed in electricity produced from renewable energy and buy it at a certain price within their supply area. The regulation also introduced a German-wide scheme to equalize the costs incurred by grid operators, as the amount of energy from renewables being fed into the system differs depending on the region.

Germany recently strengthened its Feed in Tariff laws under a new "Climate Package," the goals of which include saving 250 million metric tons of CO2 and reaching 30% renewable energy electricity production by 2020.


Germany leads the worldwide wind energy sector in expertise as well as with $5 billion in sales annually (as of 2005; in a $13.5 billion overall market).

According to the German Wind Energy Association:

  1. Seven percent of Germans’ electricity is produced by wind, which generates 39.5 Twh of electricity per year (as of 2007).  There are around 9,500 wind turbines, with a total capacity of 22,247 MW, installed throughout Germany.
  2. German turbine and components manufacturers have a world market share of 37% and earnings of about six billion euros in 2007 in exports. The sector currently employs more than 100,000 people.
  3. By 2020, the overall German onshore wind machine capacity could be 45,000 MW, with an additional 10,000 MW offshore wind. With a generation of approximately 150 TWh/year wind energy could provide 25% of electricity in Germany.

Of course, wind energy is under close scrutiny in Germany as elsewhere for its impact on the environment and effect on the landscape.  Offshore wind power generation may provide the solution.  According to a report commissioned by the EU, wind speed at sea is 70 to 100% higher than onshore and much more constant. A new generation of 5 MW or larger wind turbines, which are capable of making full use of the potential of wind power at sea, have already been developed. This makes it possible to operate offshore wind farms in a cost-effective way once the usual initial difficulties of new technologies have been overcome.


According to the German Energy Agency (DENA), there are 7,500 hydropower plants in Germany which produce about 3.5 percent of the country’s electricity (as of 2007).  Here too, the Renewable Energy Sources Act has helped operators upgrade plants and reactivate older power stations.  The total installed capacity in Germany was about 4,700 megawatts at the end of 2006 and analysts believe there is potential for at least 2,000 additional megawatts. The hydropower sector in Germany enjoyed an annual turnover of approximately 1.27 billion euros in 2006.


According to a recent independent study in Germany, nearly thirty percent of Germans would prefer to use solar thermal energy for heating their homes, and the solar industry in Germany is ready to comply. There were 1,300,000 solar plants in Germany in 2006, with 220,000 new plants erected in 2006 alone.  In Germany, solar thermal plants are predominantly used to generate hot water and to augment the heating system in private households, but they are also increasingly being used in larger community facilities and open air swimming pools. Despite the relatively high initial outlay, the popularity of solar thermal and photovoltaic heat and power generation can be explained by comprehensive state support programs, especially for photovoltaic plants through the EEG, and by increased environmental awareness. The fact that solar development has been so successful is remarkable considering the northern latitude of the country.

Freiburg, in southern Germany, recently made international headlines with its unique Schlierberg Solar Village, which consists of eco-friendly dwellings built from clay and straw with solar-powered roofs.  The homes use just 10 percent of the energy consumed in average homes.

Biofuels and Biomass

Germany is also a major producer of biofuels, such as biodiesel and ethanol.  However, recent policy changes are set to increase prices of biofuels which has already led to decreased demand.   Biofuels have also come under attack in Germany for environmental reasons, for causing food shortages and because many cars in Germany are not able to run on a mixture of oil and biogases.   Nevertheless, political forces in Germany are pushing for 17 percent of energy to come from biofuel by 2020.

The recent changes to the German renewables energy law (Climate Package) are geared towards increasing the use of biomass to generate electricity from wood, forestry residues, organic wastes or energy crops converted into electricity via combustion, gasification, or biogas fermentation systems.


Exporting renewable energy systems is a major component of Germany’s renewable energy strategy.  The German Energy Association, a public/private initiative, seeks to dramatically increase German exports through a campaign entitled “Made in Germany.”  Most US wind energy systems are exported from Germany.  German renewable energy systems are used worldwide.  The country is also heavily active in investing in renewable energies in developing countries.

Finally, good old-fashioned conservation to curtail CO2 production also plays at least a small part on the new energy agenda of Germany and the EU overall.  An EU-wide campaign launched in 2004 to conserve energy solely through cost-free measures (i.e. behavioral changes such as turning off lights, turning down the heating etc. - no investments in new equipment or energy saving light bulbs etc.) was successful in getting major businesses to reduce energy consumption by as much as 30 percent.  In Germany, Dresdner Bank was awarded ‘The European Energy Trophy’ for reducing its energy consumption by 19% in one year (which saved the company about €100,000). This was achieved by simple measures such as adjusting warm water boilers in the toilets, optimizing the air conditioning regulation and asking staff to turn off all office equipment at the end of the day.


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