Bursting the Bubble

Electoral change & energy transformation; where is the German “Energiewende” headed after its September polls?

16 September 2013 | by

An Epoch-marking energy agenda

As the German federal election campaign is kicking into full gear, German energy policy has emerged as a key bone of contention.

Boosting renewable energies (largely photovoltaic and wind) in Europe’s biggest industrial economy from a 22% to an 80 % share in 2050 is tantamount to the country’s massive reconstruction efforts after World War II, carrying a price tag of around €550 billion.

Experts agree that the country urgently needs to enact major reforms to master its energy transformation (Energiewende) after the polls of 22 September.

Missing a roadmap

While Germany will soon reach a watershed moment, at which renewables will be expected to produce a 50 % share of its energy mix, the reforms’ adjustment challenges become increasingly apparent; as network expansion is not keeping pace with mushrooming renewable energy plants, there is mounting concern over a lack of a comprehensive and strategic roadmap which would include the EU level.

The electoral campaign has brought to light a smouldering conflict between the country’s powerful energy industry, car-makers and renewable-energy advocates which are supported by a whopping 82% of Germans. Concerns over dwindling competitiveness have led to exemptions from renewable surcharges for the country’s energy-intensive industry. Yet the country’s inadequate infrastructure, as well as soaring electricity costs, demands more sustainable solutions.

Moving towards net expansion?

The biggest parties agree on the reforms’ basic goals, (phasing out of nuclear energy by 2022, build-up of renewables by 2050, CO2 reductions) but disagree on the way to get there.

The two most likely coalitions emerging from the elections are expected to continue exemptions for energy-intensive industries, but while a CDU/CSU-FDP coalition would end feed-in tariffs and privileged access to the grid for renewables, a grand CDU/CSU-SPD coalition would compromise on these two policies, maintaining coal as a core component of the German energy mix in the foreseeable future.

Under a scenario hailed by some experts and conservatives, Germany would shift priorities from building up renewables to expanding its grid, (in need of adding 3700km in transmission lines alone by 2022) as well as storage facilities.

Emerging conflicts with the EU

These outcomes are likely to clash with the European Commission’s energy plans.

Energy Commissioner Oettinger recently warned that cutting promised subsidies for renewables would seriously hurt investor confidence, while Germany’s minister of economic affairs Rösler accused the EU of meddling into national competences in energy policies.

The Commission is also expected to launch an illegal state aid probe into the exemptions from the renewables surcharge for energy intensive industries.

Moreover, the Council of the EU is expected to reach a decision by late autumn – after a new German government is formed – on limiting carbon emission certificates (backloading); support from a possible new grand coalition government is likely, after the current coalition has postponed forming a position due to a disagreement between the supportive environment and the industry-friendly economy ministers.

Whether energy reforms by the future government will produce a much-desired long-term roadmap for Germany’s and indeed, Europe’s energy transformation is uncertain.

A safe bet for its post-election agenda is that Europe’s frontrunner in energy-efficient, and green technologies will continue standing up for concerns of its powerful industry in confrontations with the EU level.

What do you think?