energy transition

In Germany it's called the Energiewende − the energy transition. It's a deliberate decision to move away from nuclear power and fossil fuels in favor of renewables and energy efficiency. And it's working. Renewables are skyrocketing, nuclear reactors have closed and more shutdowns are on the way, and coal use is declining too¹, despite the misleading claims of renewable energy haters.

Here in the US, it isn't called anything −  if we have an "official" government policy at all it's "all of the above", which is the same as saying meaningless. But an ad hoc energy transition is nonetheless taking place in the U.S.

In April, 100% of all new electric generating capacity in the US was wind and solar –511 MW of wind and 50 MW of solar.² For the year so far, renewables account for 84.1% of new capacity, with natural gas supplying the rest. The amount of solar is understated, however, since it doesn't account for rooftop solar and other distributed generation. Nor, of course, do these numbers, compiled by the Energy Information Administration, attempt to quantify the effect of energy efficiency on avoiding the need for new generating capacity. There has been no new capacity from nuclear, coal or oil.

This is an energy transition already underway, quietly, with some government support but without an actual transition policy − indeed, with a policy that is inherently hostile to the transition.

As Ken Bossong of the Sun Day Campaign points out, "Renewable energy capacity is now greater than that of nuclear (9.14%) and oil (3.92%) combined. In fact, the installed capacity of wind power alone has now surpassed that of oil. In addition, total installed operating generating capacity from solar has now reached and surpassed the one-percent threshold −  a ten-fold increase since December 2010."

But it's an energy transition with a long ways to go. Germany is the clear global leader in solar power −  despite its relatively low solar potential −  with 38,200 MW of solar installed as of the end of 2014. The US ranked fifth then with 18,280 MW of installed capacity, also behind China, Japan and Italy −  although the US likely has passed Italy by now. Given solar's low capacity factor, that's only about 4.5 large nuclear reactors worth of power installed in the US.

And it looks worse when you look at solar from a per capita basis.³ The US barely cracks the top 20 of installed solar capacity per person, at 19th in the world, the US is behind nations like Bulgaria (8th), non-nuclear Austria (13th) and even nuclear-dominated France (15th).

Still, the US is a big country with a lot of generating capacity (China is even bigger, and thus doesn't even make the top 20 on a per capita basis). It takes a while to install that amount of any form of generating capacity. And solar is growing faster than any other form. Remember that 10-fold increase in solar capacity in less than five years. With no indications of slowing down, there's good reason to believe that before the end of this decade another ten-fold increase will occur. That would put solar alone above 10% of our electricity generation, and wind will provide even more.

Another ten-fold increase after that would be impossible of course, since it would make solar the only generating source in the US. But this is how the energy transition in the US is occurring: without formal policy, without significant government support. Even though the nuclear and fossil fuel industry hacks continue to carp about subsidies for renewables, the reality is that their industries have been far more heavily subsidized over the years than renewables. If renewables do get the majority of the subsidy crumbs left on the table by the budget-slashers these days, and that's by no means clear, it's simply because it's their due for being ignored so long while untold billions of dollars were heaped on dirty energy technologies.

The US can, must, and all indications are will continue to bring renewables online rapidly. And as that happens, higher-cost and dirtier nuclear and coal plants inevitably will continue to close. The rationale for keeping them open with ratepayer bailouts becomes thinner and thinner even to those expected to be warm to utilities clinging to expensive and outdated dirty power plants. In the last week of May alone, the Illinois legislature deferred action on Exelon's 18-month pursuit of a nuclear bailout⁴, while the Ohio Public Utilities Commission has put off its action on a similar request from First Energy to bail out the Davis-Besse reactor and some coal plants.⁵ Whichever way those entities end up deciding on those issues, it's clear that the old arguments aren't working for the utilities. Even skeptics are now having to acknowledge the economic and environmental benefits of clean energy technologies.

And so the transition continues, largely out of sight to the average American and perhaps even less so to the average politician. But that doesn't make it any less real.

Michael Mariotte regularly writes at www.safeenergy.org

References:

1. http://reneweconomy.com.au/2015/nuclear-isnt-the-only-energy-phase-out-h...

2. www.renewableenergyworld.com/articles/2015/05/wind-and-solar-account-for...

3. http://breakingenergy.com/2015/05/25/actually-the-us-is-a-dismal-solar-p...

4. www.chicagobusiness.com/article/20150527/NEWS11/150529874/springfield-ne...

5. www.dispatch.com/content/stories/business/2015/05/28/issue-of-coal-plant...

Only eight months through, 2013 is already a remarkable year for the anti-nuclear power movement in the US. Where Germany is following a deliberate government-mandated path to phase out nuclear power entirely, in the US the atomic industry is simply collapsing on its own − aided by concerted and strategic grassroots organising campaigns and legal actions.

Entergy Corporation's August 27 announcement of the pending shutdown of the Vermont Yankee reactor at the end of its current fuel cycle was just the latest blow to the industry, which already has seen four other reactor shutdowns (the most in one year ever) and the abandonment of six proposed new reactors, not to mention cancellation of several power uprates. And more may be coming.

As economist Marc Cooper of the Vermont Law School's Institute for Energy and the Environment put it, "What we are seeing today is nothing less than the rapid-fire downsizing of nuclear power in the United States. It is important to recognize that the tough times the U.S. nuclear power industry faces today are only going to get worse."

And indeed, there are several − perhaps the word should be many − other reactors, both operating and proposed, that sit on the edge of the same intersection of cost and safety concerns that are bringing the industry down faster than anyone would have imagined just a year ago.

Conventional wisdom holds that it is the current abundance and dirt-cheap prices for natural gas brought about by the fracking boom that is undermining nuclear power, making it impossible for marginal ageing reactors to compete economically, much less for utilities to even consider extraordinarily expensive new reactors. When Duke Energy took a second look at its $24 billion Levy County, Florida project for example, it didn't take long for it to realise it could build the same amount of natural gas-fired capacity for a fraction of that amount.

Conventional wisdom isn't always wrong. And the availability of cheap natural gas is certainly taking its toll on the industry. There is no doubt that Wisconsin's Kewaunee reactor − by all accounts about as problem-free as an old reactor gets − would still be operating today if it could compete with low-cost gas. The UBS investment firm predicted Vermont Yankee's demise months ago, arguing that it couldn't compete in the regional marketplace.

Renewable energy

But over the long term, natural gas isn't what the nuclear industry should be most worried about. Clean alternatives to nuclear power, especially solar and wind, are growing at a frenetic pace as costs plunge. A rooftop photovoltaic system is now being installed in the US every four minutes, and that will become every 90 seconds by 2016.[1].

John Wellinghoff, the chairman of the Federal Energy Regulatory Commission, said in August 2013 that "Solar is growing so fast it is going to overtake everything." If a single drop of water on the pitcher's mound at Dodger Stadium is doubled every minute, Wellinghoff said, a person chained to the highest seat would be in danger of drowning in an hour. "That's what is happening in solar. It could double every two years," he said.[2]

The goal of a nuclear-free, carbon-free energy system by mid-century suddenly seems quite attainable. According to the Energy Information Administration, for the first five months of 2013, renewable energy sources (including hydropower) provided 18.48% more energy to the US than nuclear power. Solar grew by 32.26% from a year ago while wind grew by 20.99%, continuing a trend of the past few years. And this actually underestimates solar power: non-utility and small-scale (residential and commercial rooftop) photovoltaic systems don't show up as electric generation since to the utilities that provide generation statistics they represent only a reduction in demand.

Indeed, no one seems to know just how much rooftop solar power there is in the US, but with a new installation every four minutes, the amount is growing rapidly.

This movement toward small-scale distributed generation is turning the traditional utility model on its head and in the process scaring the pants off of utility officials. David Crane is CEO of NRG Energy, itself a major utility and operator of the two existing South Texas nuclear reactors. But after Fukushima, NRG dropped out of a project to build two new reactors there and is now betting heavily on solar power. Crane recently predicted to Business Week that "in about the time it has taken cell phones to supplant land lines in most U.S. homes, the grid will become increasingly irrelevant as customers move toward decentralized homegrown green energy."[3]

This coming change in the fundamental structure of electric utilities bodes poorly for large baseload power plants of any kind − especially nuclear power which cannot be powered up and down quickly − and has become another reason utilities are scrapping marginal power plants, both nuclear and coal.

Still, dinosaurs thrashing their tails didn't always go down easily, and neither do nuclear reactors. They have to be helped along by effective grassroots opposition.

Grassroots opposition

No one can doubt that Southern California Edison would still be trying to run the San Onofre reactors, even after their botched steam generator repair job, if it weren't for the sustained and stunningly-effective opposition mounted by Friends of the Earth and numerous grassroots groups in southern California, aided by the Nuclear Free California network formed in August 2011.

At Vermont Yankee, the history of protest and opposition dates back to the 1970s. While Clamshell Alliance protests at Seabrook were larger and got more attention, Vermont Yankee was a Clamshell target as well. The New England Coalition has been filing legal challenges in every venue possible for just about as long.

After having successfully closed the Yankee Rowe reactor in nearby western Massachusetts, the Citizens Awareness Network turned its attention to Vermont Yankee and the first Nuclear Free New England action camp was held there in 1998. Twenty-one people were arrested at the plant gates at the culmination of that camp on August 27, 1998. The reactor closed 15 years later to the day.

During those 15 years, CAN, the New England Coalition, VPIRG and more protested, lobbied, filed legal briefs, and never let up. New groups were formed, like the Shut It Down affinity group − composed entirely of women over 70 − which held monthly protests for more than eight years and often were arrested and the Sage Alliance, an umbrella group which brought together perhaps the largest Vermont Yankee protest ever in March 2012, more than 1,000 people in Brattleboro (which has a population of about 12,000), resulting in more than 130 arrests.

By the end, just about the entire state of Vermont was united against the reactor. The State Senate had voted 26-4 to close the reactor. The Governor wanted it shut, so did the entire Congressional delegation. Entergy had fought vigorously against all these efforts, and in early August had pretty much won a court victory that determined the state could not close the reactor on safety grounds, and that it was safety issues that had dominated the Senate's vote (though the decision left open the door for some different state actions that might have closed the reactor).

Some believe that Entergy closed the reactor now to keep that court victory as a precedent and prevent other state action that might also be viewed as precedent − Entergy also owns the much larger Indian Point reactors near New York City, where another major grassroots campaign, supported by Governor Andrew Cuomo, is underway to prevent relicensing and close them permanently.

The nuclear "renaissance" in the US began in the summer of 2007, when the first license application in more than 30 years was filed with the Nuclear Regulatory Commission, for the Calvert Cliffs-3 reactor in Maryland. On March 11, 2013 − the second anniversary of the Fukushima disaster − the NRC Commissioners upheld the denial of a license for that reactor, the first in this year's remarkable sequence of shutdowns, cancellations and abandonments. All that's left are two reactors under construction in Georgia (which state officials now admit they might not have approved in today's climate), two in South Carolina, and one old TVA reactor that's been under construction for three decades.

Instead of a renaissance, the nuclear industry is being routed. Its ageing reactors face safety issues, big repair bills and growing public opposition. Its new reactors are too expensive to build. And, scariest of all for nuclear utilities, their entire business model of large, inflexible baseload power plants is being challenged not by off-the-grid hippies, but by other utility executives who see the writing on the wall.

The 2013 collapse of the U.S. nuclear power industry may seem astounding today. Over the next few years, it's more likely to seem routine.

[1] www.greentechmedia.com/articles/read/america-installs-a-solar-system-eve...
[2] www.greentechmedia.com/articles/read/ferc-chair-wellinghoff-sees-a-solar...
[3] www.businessweek.com/articles/2013-08-22/homegrown-green-energy-is-makin...

World Nuclear Association scales back projections
A new World Nuclear Association (WNA) report, 'The Global Nuclear Fuel Market: Supply and Demand 2013-2030', revises and reduces the Association's pre-Fukushima projections of nuclear power growth. Compared to current installed capacity of 334 GWe, the WNA projections range from a lower scenario of no net growth, a reference scenario of 72% growth (574 GWe by 2030; 3.0% annual growth) and an upper scenario of two-fold growth (700 GWe in 2030; 4.2% annual growth).

Both the upper scenario and the reference scenario are "significantly lower" than the projections in the WNA's 2011 report. World Nuclear News reports: "The lower projected rate of growth of the nuclear sector in the latest edition of the WNA market report (compared with the 2011 edition) reflects the current and expected increased level of challenges facing utilities aiming to commission new nuclear power plants. These challenges are not only a result of the post-Fukushima calls for the industry to demonstrate higher levels of safety, but also the need to cope with stronger competition from alternative generating technologies at a time of more modest power demand growth expectations."[2]

In the reference scenario, uranium demand would reach 97,000 tU by 2030, from today's level of 62,000 tU. Provided that all uranium mines currently under development enter service as planned, the report finds that the uranium market should be adequately supplied to 2025; beyond this time new mines need to be operating.[2]

The IAEA has recently released its Annual Report for 2012, projecting nuclear power growth of 23% to 100% percent by 2030.[3] As with the WNA, the IAEA has scaled back its nuclear growth projections. The report notes that last year the UAE became the first country in 27 years to break ground on its first nuclear power plant. On the disposal of spent nuclear fuel, the IAEA report notes that most of its 158 member states have delayed the construction of repositories.

Historically, upper scenarios from the WNA and IAEA have always been fanciful, whereas lower scenarios are usually much closer to the mark.

[1] World Nuclear Association, 'The Global Nuclear Fuel Market: Supply and Demand 2013-2030', www.world-nuclear.org/WNA/Publications/Publications-for-Sale/Global-Nucl...
[2] World Nuclear News, 12 September 2013, 'Uranium supply and demand in balance for now', www.world-nuclear-news.org/ENF-Uranium_supply_and_demand_in_balance_for_...
[3] IAEA Annual Report 2012, www.iaea.org/About/Policy/GC/GC57/GC57Documents/English/gc57-3_en.pdf

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France: Energy transition
Launching a two-day conference on France's energy transition, President Francois Hollande reiterated his 2012 election pledge to see nuclear's share of French generation capped at 50% by 2025, and the closure of France's oldest nuclear power plant, Fessenheim, by the end of 2016.[1]

Prime Minister Jean-Marc Ayrault told the conference that revenue from existing nuclear plants would be earmarked to fund the country's move to an energy mix featuring more renewables. The unspecified nuclear tax would augment a new tax on fossil fuel consumption, expected to amount to one billion euros annually by 2016. [1]

Over 170,000 people have taken part in regional debates concerning the energy transition. Energy minister Philippe Martin has been charged with drawing up a law enshrining the energy transition, to be voted on by the end of 2014.

The move to reduce reliance on nuclear power is contested. A French parliamentary commission recently called on the government to delay the start of the replacement of nuclear power until 2030 and to extend the process to the end of the century (which makes little sense as existing reactors will be shut down long before the end of the century).[2]

Electricite de France SA (EDF) operates 58 power reactors in France. The reactors are on average 27 years old and are spread over 19 sites.[3] In July, the regulator Autorite de Surete Nucleaire said EDF would have to improve safety at its nuclear plants including ensuring spent fuel storage and reactor vessels are secure before it can approve operation beyond 40 years. "EDF must propose ambitious improvements for the safety of spent fuel storage" and be prepared to replace equipment on a large scale, ASN said. In April, ASN head Pierre-Franck Chevet said "we are a long way from making a decision" on extensions beyond 40 years.[6]

France's Green party has threatened to withdraw support for the Socialist government over the slow pace of its energy policy initiatives.[4]

French nuclear generation fell to its lowest level in at least six years on June 22−23, after EDF reduced output by around a third to manage oversupply in the grid and prevent prices turning negative for the second consecutive weekend.[5]

Meanwhile, progress is being made at a test facility near the small village of Bure in northeastern France, which the nuclear industry hopes to turn into a repository for intermediate- and high-level nuclear waste. The test facility has been completed at a depth of 480 metres underground. ANDRA − L'Agence nationale pour la gestion des dechets radioactifs − is planning to apply for construction approval for the final disposal site in 2015 for a planned start of construction in 2019. Cost estimates range from 14 billion euros to 55 billion euros. Opponents of the proposal, including some villagers, have prevented residents' debate sessions − a necessary step for obtaining construction approval − from being held. [7,8,9,10]

[1] World Nuclear News, 23 September 2013, 'Nuclear to fund French energy transition', www.world-nuclear-news.org/NP-Nuclear_to_fund_French_energy_transition-2...
[2] NucNet, 16 September 2013, 'Commission Calls On French Government To Delay Nuclear Phase-out', www.nucnet.org/all-the-news/2013/09/16/commission-calls-on-french-govern...
[3] Tara Patel / Bloomberg, 17 May 2013, 'France Must Decide on Energy Mix Before Reactors Close, ASN Says', www.bloomberg.com/news/2013-05-17/france-must-decide-on-energy-mix-befor...
[4] Tara Patel / Bloomberg, 22 September 2013, 'France to Tax EDF Nuclear Output for Energy Shift to Renewables', www.bloomberg.com/news/2013-09-21/france-to-tax-edf-nuclear-output-for-e...
[5] Argus Media, 24 June 2013, www.argusmedia.com/News/Article?id=852782
[6] Tara Patel / Bloomberg, 3 July 2013, 'EDF Must Boost Nuclear Safety to Operate Plants Beyond 40 Years', www.businessweek.com/news/2013-07-03/edf-must-boost-nuclear-safety-to-op...
[7] Hiroaki Miyagawa, 19 September 2013, 'Test under way at planned nuclear waste disposal site in French village amid protests', The Mainichi, http://mainichi.jp/english/english/newsselect/news/20130919p2a00m0na0150...
[8] 'Public comment on French waste disposal', 16 May 2013, www.world-nuclear-news.org/WR_Public_comment_on_French_waste_disposal_16...
[9] Tara Patel / Bloomberg, 19 June 2013, 'French Nuclear-Waste Repository Debates Postponed by Protesters', www.businessweek.com/news/2013-06-19/french-nuclear-waste-repository-deb...
[10] Tara Patel / Bloomberg, 13 June 2013, 'Scariest Atomic-Waste Burial Plan Has French Villages Up in Arms', www.bloomberg.com/news/2013-06-13/scariest-atomic-waste-burial-plan-has-...

German energy policy is increasingly being influenced by a diverse and growing group of renewable energy supporters. They pursue a transition towards an energy system predominantly based on renewable energy. After the Fukushima nuclear disaster, these actors became dominant in Germany's energy policy arena. Consequently, the Energiewende, as the transition has been coined, has been taken up as a broad societal challenge, pursued by parties across the political spectrum and actively supported by a large part of the German public.

These forces, the renewable energy supporters, have convinced the Merkel government to transform the nuclear and fossil-fuel dominated energy system into one based predominantly on renewable energy sources: the "Energiewende". Germany's nuclear sector has been the first victim, but pressure on the coal sector is growing as well. The German renewables advocacy coalition will likely be able to continue to use their clout to tilt the energy playing field in their favor. Their biggest challenge will be to convince neighboring countries of the merits of the Energiewende.

The German government's rapid decision to exit from nuclear power after the Fukushima disaster on 11 March 2011, raised eyebrows across the globe. It was generally viewed as overly hasty. It means that Germany will be one of the few industrial countries to do entirely without nuclear power.

However, even before the Atomausstieg, in 2010 the German government had taken another momentous decision, namely to transform the German energy system from one based predominantly on nuclear and fossil fuels to one based primarily on renewables. This is called the Energiewende (Energy Transition). The Atomausstieg-decision should be seen in the context of the Energiewende. It is made possible by the successful growth of the renewable energy sector and the growing influence of its supporters. Understanding this context helps to make sense of the seemingly radical recent decisions and to be able to anticipate Germany's future energy policy, with its potentially large impact on neighboring countries and the EU as a whole.

Energy Concept
The "Energiekonzept" (Energy Concept) which sets out the direction for the Energiewende was published in September 2010 (coinciding with the Merkel's government controversial decision to reverse Germany's first nuclear exit decided on in 2002). Its main goal is that: 'Germany should become one of the most energy efficient and environmentally friendly economies of the world'. Furthermore, 'with the Energiekonzept the federal government describes the way into the renewable energy era'.

This vision has been translated into binding goals for 2050 (cut back CO2-emissions 80-95% compared to 1990, 60% of primary energy consumption and 80% of electricity consumption to be supplied by renewables and energy efficiency to be improved 2% per year). It also includes binding intermediate targets for 2020 (35% of electricity consumption from renewables), 2030 (50%) and 2040 (65%).

The German Ministry of Economic Affairs had asked a consortium of research institutes to make scenarios for the Energiekonzept which came out in August 2010. They focused on the economic effects of the Energiewende. In August 2011, the consortium updated the work to include the Atomausstieg.

Both scenarios project that the contribution of conventional power plants will decrease over time. Furthermore, it is presumed that renewables will gradually replace conventional sources and eventually become the dominant source of electricity. Existing conventional capacity is expected to be used more intensively in the short run, to fill the gap left in the wake of the nuclear exit. In the updated scenario more investment in coal-fired power plants than the capacity currently under construction is deemed unrealistic before 2020, while in the longer run coal with CCS could play a role, albeit a minor one. Contrary to coal, natural-gas-fired plants could see an increase from 2015 on, according to the most recent scenario. Hence, in this scenario it is presumed that natural gas will fill most of the gap left by the Atomausstieg. Nevertheless, Germany is expected to remain a net exporter of electricity until 2020.

The Environmental Ministry, too, had research carried out by a consortium of research institutes led by the German Aerospace Centre. This study, called The Leitstudie, deviates from Prognos' scenarios primarily in that the share of renewables increases faster and will be larger overall. The Leitstudie shows the role of natural gas as increasing only marginally. Both studies formed important input into the formulation of the Energiekonzept and the Energiewende.

Renewables Advocacy Coalition
So what makes German energy policy so much more "progressive" than in most other countries? The explanation lies in the success of an influential coalition of renewable energy supporters, who have managed to convince a majority of the public and the political classes that an energy system based on decentralized, renewable energy sources is feasible and indeed in many ways beneficial to the environment as well as to the economy.

Environmental interest groups were the first to argue that renewables offer an environmentally and economically friendly alternative to conventional energy sources. They argue that if external costs are included, the deployment of renewable energies is cheaper than conventional forms of energy and leads to domestic innovation and employment. With the gradual development of renewable energy, industry associations such as the Bundesverband Solarwirtschaft, Bundesverband Wind Energie and the umbrella organization Bundesverband

Erneuerbare Energien came to play an increasingly important role in the policy-making process. Also the Verband Deutscher Maschinen- und Anlagenbau (German Engineering Federation), originally not a 'green' outfit, joined this coalition in 1997 when it realized that developing renewables would mean a lot of work for its members. In September 2011, Siemens, the German engineering giant, joined as well. After the Fukushima nuclear disaster it announced that it would pull out of the nuclear energy business: 'the chapter is closed', Siemens CEO Peter Löschersaid. The company will expand its renewable energy activities instead. The renewable industry associations argue that their sector employs a lot of people (370,000 in 2010) and has large potential for growth. In 2010 investments in renewables in Germany amounted to €26.6 billion. The associations therefore represent an increasingly important pillar of the German economy.

In addition to universities and research institutes, many of which are also involved in research into renewable energy, new agencies affiliated with the German government have been founded which support further development of renewable energy. For example, the Renewable Energies Agency, which is funded by the Ministries of the Environment and Agriculture and the renewables industry, argues that renewables lead to value creation for local communities, mostly because of avoided expenditures on fossil fuel imports. The Umwelt Bundes Amt, the executive branch of the German government regarding environmental law, also provides the government with advice regarding energy issues. It provides scientific support for an energy supply fully based on renewables.

Together, these actors cover a broad range of German society and because of their growing importance and influence, a more decentralized energy system based predominantly on renewable energy sources is increasingly viewed as a viable alternative to the current centralized conventional energy system by the general public as well as amongst decision makers.

Within the government, the leading role in the Energiewende is played by the Ministry for the Environment, which is responsible for renewable energy and nuclear safety. Environment Minister Röttgen (CDU), for example, said: 'Due to the Energiewende, the conflict between ecology and economy has finally been resolved'. Also: 'In future, the energy supply will become more decentralized, structured around the middle class, and technologically more challenging than today. It will be better tuned towards the end user, more efficient and based on local value creation. 'The Ministry of Economics and Technology, responsible for energy efficiency, energy markets and infrastructure and headed by Minister Rösler (FDP) is somewhat reluctantly following the Environment Ministry's lead.

Harmonization
The strength of the renewables advocacy coalition may be gauged from the struggle that broke out at the end of 2009 over the Renewable Energy Sources Act (RESA or EEG – Erneuerbare Energien Gesetz), and in particular the support for solar power. The then newly installed Merkel government announced plans to revise support for solar energy, possibly introducing a cap on total installed capacity. Newly installed solar capacity had grown from 42 MW in 2000 to 3,800 MW in 2009 thanks to the RESA support. It then grew to 7,400 MW in 2010. As a result of the generous support, the RESA-Umlage (the premium end users have to pay on their energy bills to cover the costs of developing renewables) had been rising steadily – from 0.2 ct/kWh in 2000 to 3.530 ct/kWh in 2011 (about €10 per household per month). Conservative powers within the governing coalition wanted to limit these costs. Therefore, a thorough revision of the RESA instrument was put on the agenda.

In response, the German solar industry started a massive campaign. Solar firms went on strike and advertisements were placed across the country to raise awareness about the planned cutbacks. Although the solar lobby had to concede some points, its campaign was largely successful. In a compromise reached in February 2011, it was decided to increase the frequency and extent of the "degressions", the periodic reduction of feed-in tariffs, but not to put a cap on installations. After new record installations in 2011 of 7,500 MW, renewed plans for a1,000 MW cap were announced by Economics Minister Rösler. Again, the renewables coalition managed to avert a cap, although in a deal struck in mid-February by Rösler and Röttgen, cuts in feed-in tariffs of up to 30% were agreed upon.

Moreover the initially announced revision of the RESA, which would have led to fundamental changes in the principles of the support scheme - such as cancelling the preference of renewable electricity over conventional power on the grid - did not come through. Actually, with the draft RESA for 2012, which was agreed upon after the Fukushima disaster, the Merkel government reaffirmed the basic principles of German feed-in policy, namely continued preference for renewable energy sources, an obligation to connect all renewable electricity producers to the grid and paying them a favorable price per unit of electricity for a long time period, mostly around 20 years.

And that's not all. The renewables coalition also managed to persuade the German government to reject European harmonization of renewable energy support schemes, which some people were advocating. The coalition feared that harmonization would mean the end of the RESA- scheme. The German government agreed. 'EU-harmonization would be the end of our Energiekonzept, we could throw it in the paper bin', said Environment Minister Röttgen. That marked the end of the EU-harmonization debate.

More progressive
The renewables coalition could not succeed without broad political as well as public support. It should be noted that the Atomausstieg and the Energiekonzept, which was written into law, are the products of a conservative government. The opposition in Germany is even more "progressive" when it comes to the Energiewende. This implies that within German politics consensus exists on the general direction of energy policy. Economics Minister Rösler, one of the most conservative forces on this dossier, confirms this: 'Our goal now is to exit from nuclear power faster than previously planned', he said. 'The pace is crucially dependent on how fast we can develop alternative sources of energy. The decision to exit from nuclear power was not satisfying in itself; we therefore initiated or changed 16 laws in order to also safeguard our entrance into renewable energies and ensure a reliable energy supply.'

The German public, too, agrees on the desirability of the Energiewende. A recent poll by TNS Infratest shows that the public broadly supports the Energiewende and is even willing to pay for it: 94% is in favor of an accelerated development of renewable energy and 80% thinks the costs, which currently amount to around €10 per household per month, are 'adequate' or even 'too low'.

Large groups of people are even willing to take to the streets over energy issues, e.g. to prevent nuclear waste transports or to protest the lowering of feed-in tariffs. Energy issues directly influence people's voting behavior. Extending the lifetimes of nuclear plants proved detrimental to the federal government's approval rates and especially after Fukushima led to defeats in state elections. Most noticeably, the populous and economically important state of Baden-Württemberg, which used to be a CDU stronghold, was lost to the Greens.

An important consequence of the development of renewable energy, which may not be sufficiently appreciated outside Germany, is that the RESA has stimulated many households, farmers and small businesses to become energy producers themselves. This means that an increasing number of private people take on an active role in the Energiewende. Fullyover 50% of current installed renewable capacity is owned by private citizens or farmers, compared to less than 10% by the four largest utilities. In addition, many regions are taking steps to become "energy autonomous". This trend constitutes a fundamental change in the organization of the energy system.

Criticism
Clearly the Energiewende and the Atomausstieg also have their critics in Germany, but they are unlikely to be able to turn the tide. Hit hardest are the four large utilities operating in Germany, namely Eon, RWE, Vattenfall and EnBW. These are still heavily dependent on nuclear and coal power and have trouble reaping benefits from a policy that favors decentralized renewable energy systems. It will require huge effort and investments by these companies, which serve close to 90% of the German market, to change their business models and become more active in the energy transition.

Some feel downright threatened by the Energiewende. For example, Jürgen Grossmann, CEO of RWE, commented on the record PV-installations in 2011 by saying that 'Photovoltaic power in Germany makes as much sense as growing pineapples in Alaska'. This comment is understandable from Grossmann's point of view. To make a profit on coal-fired and nuclear power plants, they need to run as much as possible, generally 80 - 95% of the time. However, with an increasing share of variable renewable energy, which has priority in the German grid, conventional power plants need to be operated more flexibly which results in a lower capacity factor and therefore lower returns.

Furthermore, solar PV generally produces energy at times of high demand, which used to be lucrative for utilities as energy prices were also high at these times. Because they have negligible running costs, wind and solar power push down electricity prices at the power exchanges. This means that every kW of wind and solar that is installed, worsens the business case for inflexible conventional power plants. From an end user perspective, however installing solar-PV makes perfect sense, because due to technological innovations and economies of scale, the costs of solar electricity are rapidly approaching the general consumer price level for electricity.

There are also critics who argue that the Energiewende will lead to much higher costs. Energy-intensive industries in particular are concerned. They depend largely on cheap and reliable baseload power and will have to find an alternative. Predictions are that energy prices will rise because of the Atomausstieg by as much as 20% by 2030, and that this will mostly affect energy-intensive industries, since a large part of their energy comes from bilateral contracts with nuclear power plant operators.

The renewable advocacy coalition concedes that in the short run, the price of energy will probably increase, but it points out that a distinction should be made between the price and the real cost of energy. At this moment only part of the actual energy costs are included in the kWh-price born by consumers, the rest is passed on to the public in the form of environmental damage. When accounting for these costs, most renewable sources are already cheaper than conventional energy sources.

Furthermore, the renewables advocates argue that the costs of most conventional energy sources will probably go up in future, either through the need of increased safety measures in the case of nuclear power, or by the increasing challenges in extracting fossil fuels, whereas the costs of most renewable technologies will go down, as they still have large potential for innovation and cost reduction. Studies, such as the 'Energy Concept 2050 for Germany with an European and Global Perspective' by a consortium of seven renown research institutes, including the Fraunhofer Institute for Wind Energy and Energy System Technology, show that in the long run an energy system based fully on renewables is achievable and will in the end prove cheaper than continuing business as usual, even when the costs of grid expansion and electricity storage are included.

Dogmatic focus
Some critics point out that Germany still needs to import nuclear power sometimes, which they argue is hypocritical. But the renewable energy supporters counter that a dogmaticfocus on national markets is outdated anyway. After all, France also regularly buys wind and solar power from Germany when conditions favor such purchases, for example, during the recent cold spell in Europe, when France's nuclear power plants could not produce enough electricity for the country's largely electric heating systems.

Then there are experts who say that the Atomausstieg and Energiewende pose technical risks to the electricity system. Grid operators and the Bundesnetzagentur, the German Federal Network Agency, warned of the possibility of black-outs and marked the winters of 2012 and 2013 as critical. Idle capacity has been made available and Austria has been found willing to provide reserve capacity, if necessary, to stabilize the German grid. With these measures in place and great efforts from the Transmission System Operators (TSOs), the situation is 'manageable', according to the Bundesnetzagentur.

Finally, with regard to the Atomausstieg, defenders of nuclear power point out that it will make it more difficult for Germany to reach its CO2-reduction targets. Prognos expects that emissions will go up by 30 to 50Mt CO2 as a result of the Atomausstieg. However, it adds that these emissions fall under the European emission trading scheme (EU-ETS) and that higher emissions in Germany will lead to higher CO2-prices (around 1 to 2 euro increase), which will then improve conditions for new investments in low-carbon technology. On this basis, Prognos concludes that the Atomausstieg will not lead to higher CO2-emissions EU-wide. Whether this holds true depends largely on the proper functioning of the EU-ETS.

Redefining the rules
So what can we expect of future developments in Germany? The renewables advocacy coalition is still primarily focused on cementing the status of the RESA, as we saw before. But it is also taking other actions, for example, agitating against coal-fired power.

Most vocal on this front is BUND (Friends of the Earth Germany), which leads a campaign against construction of new coal-fired power plants under the slogan 'climate killer coal'. They say their actions have led to the prohibition or cancellation of sixteen coal fired power plants so far, of which eleven in the last three years.

The negative trend for coal-fired power is confirmed by the Prognos scenario studies mentioned earlier. The first scenario study in August 2010 showed new coal-fired power plants with a total capacity of around 14 GW planned and/or under construction. However, in the updated scenario published only one year later, they lowered their estimate for new coal fired power plants to less than 11 GW. They also said that investment in new coal-fired power plants are not likely before 2020.

The renewables coalition may also be expected to use their new-found power to redefine the rules of the energy game, increasingly tilting the playing field in favor of renewables. At this moment, the energy market is still configured in a way that favors centralized conventional sources of energy. The renewables advocates may be expected to lobby for legislation to correct market failures in the current energy system, for example by putting a price tag on pollution. This would enhance the competitiveness of renewables compared to fossil fuels. Favorable planning procedures for renewable generation capacity and the necessary (grid) infrastructure are being pushed as well.

The largest question mark for the future is probably the international dimension of the Energiewende. The German renewables coalition is quite focused on domestic issues and policies. This carries risks in the increasingly integrated European energy market.

Instead of alienating their neighboring countries with unilateral decisions and fighting harmonization of support schemes, Germany and its powerful renewables advocacy coalition might do well to channel their power to aligning its European partners in the energy transition. Strengthening cross-border interconnections of the electricity grid could reduce the costs of the transition. In addition, increased cooperation will result in the opening up of markets for Germany's leading clean tech firms.

If on the other hand, Germany will not be able to convince its neighboring countries of the merits of the Energiewende, the tensions and inefficiencies in the European market would greatly intensify, even to the extent that they could put the success of the Energiewende at risk.

Source and contact: Rick Bosman, first published in 'European Energy Review', (www.europeanenergyreview.eu), 27 February 2012.
Rick Bosman is MSc-student Renewable Energy Management at the Albert-Ludwigs Universität Freiburg, Germany, and founder of the Energy Transition Blog. Rick on Twitter: @r_bosman. This article is based on his paper published by the Clingendael International Energy Program on 16 February: "Germany's Energiewende: Redefining the Rules of the Energy Game", available at: www.clingendael.nl/ciep/publications/?id=8788&&type=summary