Over the years, the development of renewable energy in Germany has been, foremost, on the basis of the German Renewable Energy Act (EEG). Whereas traditionally the German scheme for renewable energy relied on fixed feed-in tariffs provided under the EEG, the current version – the EEG 2017 – has shifted the framework to an auction system for the more significant onshore forms of renewable energy production (wind energy and large-scale photovoltaic solar installations (solar PV)). Tenders for offshore wind energy are subject to a separate law, the Code on the Development and Support of Wind Energy at Sea.
The main drivers, and the focus of both investment and financing, in renewable energy in Germany are onshore wind energy, solar PV and – specifically because of its very large project volumes – offshore wind energy. Biogas and biomass played a more significant role in previous years. There are also some utility-scale geothermal projects to be seen, as well as some hydropower projects.
Because of fundamental errors in the design of the EEG 2017 auction system, newly installed capacity in onshore wind in Germany declined. The most recent evaluation by the German institute for renewable energy, IWR, of the Federal Network Agency’s core energy market data register shows that new onshore wind turbines with a capacity of around 900MW (compared with 2,400MW in 2018) were commissioned in 2019 – a decline of more than 60 per cent from the previous year and the lowest level in the past 20 years. The figures indicated represent gross values (i.e., excluding decommissioned or shut-down old turbines). In comparison, in 2017, the gross capacity increase of new onshore wind energy in Germany was 5,330MW. Newly installed capacity for solar PV in 2018 in Germany has outperformed onshore wind energy, with 2.81GW of new photovoltaic capacity (compared with 1.66GW of photovoltaic in 2017). At the end of 2019, Germany had a total installed solar PV capacity of 49.0GW, with more than 1.8 million installations of all types (from small domestic household installations to utility scale). By comparison, Germany has 2.4 million (mostly small-scale) solar thermal installations, with a total of 14.8GW of solar thermal capacity. In 2018, 140 new offshore wind turbine generators (WTGs) were installed, with a rated power total of 970MW (compared with 1,250MW in 2017). In 2019, 160 WTGs with a capacity of 1,111MW were newly installed in Germany. Following the decline in annual capacity expansion to around 970MW in 2018, the capacity increase in 2019 is equivalent to growth of around 14 per cent. A total of around 1,470 WTGs with a total capacity of around 7,500MW are now connected to the grid. Overall, offshore wind energy in Germany accounted for 6.38GW of rated power at the end of 2018, which is slightly above one third of the total installed capacity for offshore wind in Europe.9
Final energy consumption in Germany has hardly decreased at all since the early 1990s. Although more and more energy is being used more efficiently and in some cases saved, economic growth and increases in consumption are preventing a more significant decline in consumption. In 2019, the shares of the various energy sources in the national energy mix have shifted further compared to the previous year: fossil energies declined overall and carbon intensity was reduced further. However, a broad energy mix remains characteristic. A good 60 per cent of domestic energy consumption is accounted for by oil and gas. While statistics from different sources differ, hard coal and lignite together cover about 18 per cent of consumption. Renewables contributed about 17 per cent.
In 2019, Germany saw fewer renewable energy transactions for newly developed projects, mainly because of the significant reduction of newly installed capacity in the onshore wind sector. German investors and German financing banks have therefore put more focus on international business and projects outside Germany, mainly within Europe. This trend is expected to continue in 2020. New legislation (specifically against the background of the German administration’s climate protection programme) is to be expected and there are significant differences in public opinion whether the programme really supports the sector or – as many think – puts a further burden on and will cause further slowing down of renewable energy development. Among other concerns, restrictions on permissible distances between onshore wind installations and residential homes have been criticised as limiting available onshore wind areas, although the government has addressed this issue in a recent announcement (see Section II.vi). Another element of the programme subject to debate is financial incentives for local communities and residents, where the incentives have to be earned by the project concerned.