Germany, the world’s fourth largest economy, is proving that renewables are no longer marginal, but rather viable sources of energy. Renewable electricity generation in Germany has tripled over the last decade, and growth is accelerating. Nearly a third of Germany’s electricity came from renewable sources in 2015. This compares with just 13 percent of electricity coming from renewables in the United States. On particularly windy and sunny days, Germany’s renewable share can exceed 80 percent, giving the world a glimpse of what’s possible.1, 2

Across the country, solar panels cover homes, barns, schools, and fields. Together with the hundreds of industrial-size windmills dotting the landscape, they are reminders of Germany’s grand plan to transition its economy off fossil fuels and nuclear to renewable sources of energy--what it calls the energiewende.

The overarching goals of the German energy transition are to phase out nuclear power by 2022, cut greenhouse gas emissions 80 percent by 2050 (compared to 1990 levels), and generate 80 percent of electricity from renewable sources, largely wind and solar, also by 2050. Getting there will require the closure of the coal plants that still supply the bulk of Germany’s electricity.3

While wind is Germany’s largest source of renewable energy, solar is growing in importance. Solar photovoltaic panels, also known as PV, provided 6 percent of Germany’s electricity in 2015.4 Polling shows solar to be Germany’s most favored form of energy.5

Solar energy is attractive for a number of reasons. One, it is abundant. It is often noted that the solar energy hitting the Earth’s surface in one hour could power the global economy for a year. Unlike oil or gas, solar is non-depletable: the amount of solar power used today has no effect on how much can be used tomorrow. Two, solar is widespread. Solar power’s potential is highest in sunny areas, like the U.S. Southwest, but cloudy Germany shows that solar works outside of deserts. Three, solar panel installations can go up rapidly, require no moving parts, and generally last decades without needing repair. And four, solar power is increasingly cheap. Panel costs have fallen 75 percent over the last five years.6 To top it off, the fuel is free.

The road to solar energyThe story of how a country that typically gets less sunshine each year than Seattle became a world leader in solar power and the vanguard in a global energy transition is instructive. It started at the grass roots, with citizen opposition to nuclear energy. Anti-nuclear sentiment gained strength following the 1986 Chernobyl nuclear disaster, where an explosion at a nuclear generating station led to the radioactive contamination of 58,000 square miles in Ukraine, Belarus, and Russia, and detectable radiation levels across much of the northern hemisphere.

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Village equipped with solar panels.

schmidt-z/istockphoto.com

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In 1990, on the heels of reunification, a national law established a “feed-in-tariff” granting renewable energy producers the right to put electricity onto the grid and be paid for it by utilities.7 Initial rates were high enough to spur some wind energy development, but solar costs were still too high for widespread adoption. After the 2000 Renewable Energy Act increased the feed-in-tariffs for renewables nationwide, rapid solar deployment began. The act has been amended several times since.

Such political and economic support allowed Germany to quickly become the world leader in solar panel installations. In 2000, Germany had 76 megawatts (MW) worth of installed solar panels. By 2005, Germany overtook Japan as the world’s leading solar installer, with over 2,000 MW. Over 40 percent of the world’s solar cells were on German rooftops and fields.8

Rapid growth continued. In each year since 2006, Germany has added over 1,000 MW of PV capacity. In the top years of 2010-2012, annual installations were in the ballpark of 7,000 MW--think 7 nuclear power plants.9 10

Igniting solar power worldwideGermany maintained the number one solar spot globally until 2015, when China took the lead.11 In that year, 1,500 megawatts (MW) of PV were installed in Germany, bringing the country’s total to 39,700. At the same time, China added a whopping 15,200 MW, taking its total installations to 43,500 MW.12 It was Germany’s heavy demand for PV that led to the economies of scale in solar cell production that dropped the costs low enough to be affordable for Chinese consumers, and not just the export market. Germany still leads in PV installations per person.13

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While reductions in economic incentives have slowed Germany’s solar energy expansion in recent years, solar-generated electricity is the fastest growing source of energy globally, increasing by over 60 percent annually over the last five years. The same solar panels playing a role in Germany’s energiewende are being deployed in greater numbers in utility-scale plants for technology giants Google and Apple and gracing the roofs of over 260 U.S. Walmarts aiming to save on electricity expenditures.14

Solar panels are also the most accessible source of power for the 1.3 billion people in the world without electricity. In Bangladesh, the World Bank is helping to install over 70,000 solar home systems each month.15 In India, the country with the largest off-grid population, villagers are swapping out kerosene lamps for solar panels that can power a lightbulb and charge a cell phone. Such a system typically pays for itself in about 3 years. Coal India, the world’s largest coal producer, is even installing PV on its mines to cut electricity costs. 16

A sunny futureSolar’s future is bright. Both India and China have ambitious goals to increase their solar capacity beyond 100,000 MW in the coming years.17 18 This alone would nearly double the 227,000 MW installed worldwide by the start of 2016.19

As solar adoption spreads, costs continue to fall. In Australia, for instance, where much of the cost of electricity is for transmitting and distributing power over long distances, government data show that using PV to produce electricity from the sun is cheaper than burning coal, even if the coal were given away for free.20 Germany is one of a growing number of markets where solar power costs the same or is cheaper than average electricity prices.21 22

The widespread adoption of renewables and falling wholesale electricity prices have put traditional utilities in a tough spot. Germany’s top electric utilities, E.On and RWe, both posted major losses in recent years. Since the 2011 Fukushima nuclear disaster in Japan, E.on’s share prices have dropped nearly two- thirds and RWE’s have fallen by three-quarters.

Each company has had to restructure to separate the money-losing fossil fuel and nuclear operations from the profitable renewables.23

It is unclear exactly how these and other utilities will transform themselves to survive the changing electricity landscape; the only thing that is clear is that the electricity sector in 20 years will look quite different than it does today. Reliance on energy sources like wind that doesn’t always blow or sun that doesn’t always shine requires integrated and nimble electric grids, where electricity can be moved quickly from where it is produced to where it is needed, and stored when supply exceeds demand.

An aerial view of the photovoltaic panels surrounding a runway at the Eberswalde-Finow Airport, 30 miles north of Berlin.

Luca Locatelli, National Geographic Creative

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To help address the intermittency of solar and wind, Germany is subsidizing energy storage. This includes batteries that can be paired with PV to capture the sun’s energy use at night.24 Fortunately, batteries are following solar panels’ downward price trajectory. They can be used not only to power lighting and appliances in buildings, but also to run electric vehicles. The global financial services firm UBS estimates that buying a plug-in electric car plus rooftop solar panels and back-up battery storage should be cost competitive with gasoline or diesel cars in Europe by 2020. The estimated payback time is eight years, after which car-charging would be free.25

As of 2016, Germans were paying a renewable-energy surcharge of about $20 on their monthly electricity bills to help support the energiewende.26 27 Subsidies for renewables help level the playing field with the fossil fuels that have a long history of subsidization and have also shifted the costs of their waste and pollution onto society. And even while paying a little extra each month, polls show that 90 percent of Germans support the energiewende.28 Many of them are directly invested in the transition through their own solar installations or shares in a wind turbine.29 Together they are helping to bring us closer to a cleaner energy future.

Author: Janet Larsen

1Agora Energiewende.(2016). Power Generation and Consumption. Retrieved from https://www.agora-energiewende.de/en/topics/-agothem-/Produkt/produkt/76/Agorameter/

2Agora Energiewende. (2016). Why there was not 100 percent power consumption from renewable energies on Whit Sunday after all. Retrieved from https://www.agora-energiewende.de/en/press/agoranews/news-detail/news/why-there-was-not-100-percent-power-consumption-from-renewable-energies-on-whit-sunday-after-all/News/detail/

3, 28, 29 Agora Energiewende. (2015). Understanding the Energiewende. FAQ on the ongoing transition of the German power system.

4 Meyers, G. (2016). Almost 33% of German Electricity Came from Renewables in 2015. Clean Technica.

5 Graichen, P., Podewils, C. (2016). The energy transition in the power sector: State of affairs 2015. Agora Energiewende. pp. 10

6, 14, 15, 16, 24 Brown, L., Larsen, J., Roney, J., Adams, E. (2015). The Great Transition: Shifting from fossil fuels to solar and wind energy. W. W. Norton, Incorporated.

7, 27 Kunzig, R. (2015). Germany Could Be a Model for How We’ll Get Power in the Future. National Geographic.

8, 9 BP. (2015). Statistical Review of World Energy. Retrieved from https://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-review-2015/bp-statistical-review-of-world-energy-2015-full-report.pdf.

10, 11, 12, 13, 19 IEA International Energy Agency. (2015). Snapshot of Global Photovoltaic Markets. Pp. 5, 8, 14-15 http://www.iea-pvps.org/fileadmin/dam/public/report/PICS/IEA-PVPS_-__A_Snapshot_of_Global_PV_-_1992-2015_-_Final_2_02.pdf

17 Sirvaram, V., Shrimali, G., Reicher, D. (2015). Reach for the Sun. How India’s Audacious Solar Ambitions Could Make or Break its Climate Commitments. Steyer-Taylor Center for Energy Policy and Finance.

18 Reed, S. (2015). China Raises Its Targets for Renewable Energy. New York Times.

20 Parkinson, G. (2014). Solar Has Won. Even if Coal Were Free to Burn, Power Stations Couldn’t Compete. The Guardian.

21, 32 Deutsche Bank (2015). Deutsche Bank report: Solar grid parity in a low oil price era. Retrieved from https://www.db.com/cr/en/concrete-deutsche-bank-report-solar-grid-parity-in-a-low-oil-price-era.htm.

22, 24 Shah, V., Booream-Phelps, J., (2015). Clean Technology: Solar Report. Deutsche Bank Markets Research https://www.db.com/cr/en/docs/solar_report_full_length.pdf.

23 Financial Times. (2016). E.On and RWE pursue radical restructurings. http://www.ft.com/intl/cms/s/0/316ce884-1cdc-11e6-a7bc-ee846770ec15.html#axzz49SPc4tAr

25 Hummel, P et al. (2014). Global Utilities, Autos & Chemicals: Will Solar, Batteries and Electric Cars Re-shape the Electricity System? UBS Zurich.

26 Thalman, E. (2016). What German households pay for power. Clean Energy Wire. Retrieved from https://www.cleanenergywire.org/factsheets/what-german-households-pay-power;