History of the German Energiewende

Germany’s transition to renewable energy has its roots in the environmentalist movements of the 1970s. Conservation was embraced by conservatives and liberals alike, and churches were an important part of the Energiewende.

Origin of the term “Energiewende”

In the 1970s, the term “Energiewende” was born in an attempt by opponents of nuclear power to show that an alternative energy supply was possible. The term “Energiewende” (which we translate here as “energy transition”) did not just come about in the past few years. In fact, it was coined in a 1980 study by Germany’s Institute for Applied Ecology.

That groundbreaking publication was perhaps the first to argue that economic growth is possible with lower energy consumption – a theme later taken up in many books, such as Factor 4 from 1998. Previous publications, such as Limits to Growth (1972), mainly consisted of warnings without proposing specific solutions. The Energiewende was one of the first attempts to propose a holistic solution, and it consisted of renewable energy and energy efficiency. Published as a book in 1982, Energiewende’s subtitle is “Growth and Prosperity Without Oil and Uranium.”

The Institute of Applied Ecology had itself only just been founded with funding not only from environmental organizations (such as Friends of the Earth), but also from a Protestant organization that funded research. To this day, conservation and conservatism remain closely related in Germany, and this connection means that conservative politicians in Germany cannot be assumed to oppose renewables, as is the case elsewhere. On the contrary, a number of prominent proponents of renewables are members of the Christian Democrats (CDU), such as Peter Ahmels, who headed the German Wind Energy Association (BWE) for eleven years.

Another good example is German solar activist Wolf von Fabeck, who helped institute the first feed-in tariffs in Germany in his town of Aachen in the late 1980s. A former military officer, von Fabeck became an environmentalist when he saw the effects of acid rain brought about by coal plant emissions, and he became a proponent of solar when he realized the impossibility of protecting nuclear power plants from military attack. The first meetings he held about solar power took place at his local church, and his pastor was his main associate in the beginning. Other examples include Franz Alt, author of Der ökologische Jesus (The Ecological Jesus). A number of modern churches in Germany have solar roofs.

The fight against nuclear power at Whyl

The Energiewende movement came out of the movement against nuclear power in the 1970s. One reason for the sustained success of the movement over the past few decades is its inclusiveness; from the outset, conservatives and conservationists worked together.

The Energiewende movement came out of the movement against nuclear power in the 1970s. In 1973, plans were announced to build a nuclear plant in the village of Wyhl in the Kaiserstuhl winegrowing area on the border to France. The decision turned out to be fateful, for it created a strong, sustained resistance movement across large parts of society. Students from nearby Freiburg joined forces with Kaiserstuhl winegrowers and scientists like Florentin Krause, author of Energiewende.

In 1983, the governor of the state of Baden-Württemberg reacted to the incessant protests by declaring the Wyhl project “not urgent,” essentially abandoning plans for the plant indefinitely. The success of the movement encouraged people across Germany and Europe to believe that they could stop nuclear plants from being built. Throughout the 1980s, a number of local Energiewende groups were formed throughout Germany as people looked for ways to act locally.

This anti-nuclear movement was one reason why the Greens were founded as a political party. Around 1980, the Greens began consistently getting more than five percent of the vote – the limit required to enter Parliament.

Oil crises lead to energy efficiency

The oil crises of 1973 and 1979 also got people thinking about how energy supply could be changed. For the first time, Germany realized the economic risk of rising energy prices and that, as US President Jimmy Carter told Americans in 1977, “Conservation is the quickest, cheapest, most practical source of energy. Conservation is the only way we can buy a barrel of oil for a few dollars.”

In Germany, conserving energy was also found to be a way of reducing dependency on imports of raw materials. Some of the steps taken in Germany were short-lived (such as the ban on Sunday driving) or had limited effects (such as the implementation of daylight saving time). Nonetheless, the foundations were laid for a new policy of efficiency. Germany’s Economics Ministry launched the first campaign, which was entitled “Conservation – our best source of energy.” An important step came in 1976, when Germany passed the Energy Conservation Act, which set forth the first requirements for building insulation: “Those who construct buildings must design and install insulation so that preventable energy losses for heating and cooling are avoided in order to conserve energy.” Even today, the current Conservation Act still begins with this first sentence of the original law.

On June 27, 1980, the Bundestag’s Inquiry Commission on Future Nuclear Energy Policy made most of its energy policy recommendations under the heading of “promoting energy conservation and renewable energy.” Suggestions for the transport sector included “adopting rules for limits on specific fuel consumption in vehicles” and “speed limits on the autobahn.”

These proposals led to a lively, controversial discussion among the general public starting in 1982. In the end, the German government was only able to put a stop to the strong public demand for further changes by forcing the automotive industry to install catalytic converters, which can only run on unleaded fuel, thereby forcing oil firms to sell unleaded gas. In 2000, the European Union banned the sale of leaded gasoline altogether. These steps may have helped reduce pollution, but they did not improve energy conservation.

Since 1982, there have been repeated attempts to water down conservation policy. For instance, in the 1990s the tile industry opposed the use of thermal transmittance coefficients to determine the need for additional insulation. Another controversy concerned the obligation of owners of existing buildings to replace old boilers and insulate heating lines even when no other renovation was planned. Nonetheless, the basic idea of conserving energy resources has remained a part of German policy and become even more widespread since the 1970s.

Chernobyl – change comes slowly

In 1986, the reactor in Chernobyl exploded, and radioactive rain fell on Germany. The Germans lost their faith in the safety of nuclear power, but did not know yet how to replace it.

In 1986, the reactor in Chernobyl (Ukraine) exploded, and radioactivity detectors across Europe began registering spikes in ambient radiation levels; the Soviet Union initially did not announce the accident. Germans heard on the radio that it was not safe for children to play outside.

Public trust in the safety of nuclear reactors reached all-time lows, though German engineers and politicians continued to assure everyone that Chernobyl was a fluke – the result of obviously inferior Soviet technology. Over the years, German engineers and politicians repeatedly claimed that German nuclear plants are safe and that no such accident as in Chernobyl is even possible in Germany – a claim made by Chancellor Merkel’s coalition as recently as August 2010, less than a year before Fukushima changed her mind.

Still, the question in 1986 was how to replace nuclear power. Since the publication of Energiewende in 1980, nothing had really changed in Germany. Solar power was still so expensive that it was mainly only used by NASA in outer space and to provide small amounts of power in areas with no grid connections. And while wind power did get off to a big start in the early 1980s, when California already got one percent of its electricity from wind turbines, policy changes during the Reagan administration led the market to collapse. In the late 1980s, only Denmark was still expanding wind power at a considerable extent; Danish turbine manufacturers had been among the main suppliers to those first California projects.

Full-cost compensation for photovoltaics

At the end of the 1980s, local utilities in three German towns introduced “full-cost compensation” — proto feed-in tariffs — for photovoltaics, which led to the implementation of Germany’s first national feed-in tariffs.

In addition to Wolf von Fabeck (mentioned above), others were interested in finding ways to replace nuclear power and, increasingly, coal power; after all, acid rain had become a concern, as had man-made climate change from carbon emissions – with German Chancellor Helmut Kohl of the Christian Democrats even speaking in the Bundestag of the “threat of grave climate change from the greenhouse effect” in 1987.

At the end of the 1980s, von Fabeck’s newly founded Solar Energy Association (SFV) managed to get the local utility in his hometown of Aachen to pay two deutsche marks for a kilowatt-hour of power from photovoltaics after it was demonstrated that the utility already paid that much or more to cover peak power demand, which photovoltaics would offset. The idea – compensation for power generated is sufficient to cover the cost of the investment – has become known as the Aachen Model.

Yet, the idea did not even come from Germany. Aachen was specifically copying a similar policy in two Swiss towns, and California had adopted a similar policy at the beginning of the 1980s with its Standard Offer Contracts.

Indeed, two other German towns – Freising and Hammelburg – had even implemented a full-cost compensation policy slightly before Aachen, but Aachen drew the most attention. One person behind the success story in Hammelburg was Hans-Josef Fell (Greens), who later was one of the chief architects of the Renewable Energy Act (EEG) from 2000 along with Social Democrat Hermann Scheer.

But first, these small, disparate success stories led to the implementation of Germany’s first national feed-in tariffs in 1991 in an unusual coalition between the Greens and the Christian Democrats. At the time, the two parties were hardly on speaking terms with each other (that has since changed). But the CDU had one condition – the proposed law would not be submitted as a joint effort between the Christian Democrats and the Greens, but merely as a Christian Democratic proposal. Legend has it that the law, which was only two pages long, almost did not come about. It was the last thing voted on in the parliamentary session in 1990, and it passed mainly because the CDU did not think that a couple of windmills would do much harm anyway.

EU court says feed-in tariffs are “not state aid”

In 2001, the European Court of Justice ruled that feed-in tariffs do not constitute “state aid” and are therefore not illegal subsidies, thereby paying the way for the boom of renewables.

The law quickly led to a boom in in wind power in particular, so the conventional power sector decided to challenge the policy’s legality. EU Competition Commissioner Karel van Miert openly stated that he considered feed-in tariffs to be illegal subsidies, and around that time German power provider Preussenelektra (which merged with Bayernwerk in 2000 to create E.On Energie) decided to challenge feed-in tariffs in court. The matter went all the way to the European Court of Justice, which ruled in 2001 that feed-in tariffs did not constitute “state aid” and were therefore not illegal.

Though this ruling concerned the first feed-in tariff act of 1991 and not the EEG of 2000, the court’s decision was widely understood as applicable to both, which was one reason why the EEG was not challenged until the EU in Brussels became concerned about industry exemptions to the renewable energy surcharge in 2012.

As the Court explained in 2001, EU member states can require private power firms to purchase renewable power “at minimum prices higher than the real economic value of that type of electricity, and, second, distribute the financial burden resulting from that obligation” to consumers because renewable energy is “useful for protecting the environment” and for reducing “emissions of greenhouse gases which are amongst the main causes of climate change which the European Community and its Member States have pledged to combat.”

In layman’s terms, the Court basically ruled that feed-in tariffs are in fact open to everyone, including large power corporations, so they do not discriminate against any market players and therefore do not distort competition. Rather, they promote a particular type of energy to the disadvantage of other types in order to reach goals for the common good supported throughout Europe. Specifically, they are not subsidies because no particular firm receives payment from the government, and the cost of feed-in tariffs is passed on to ratepayers, not taxpayers; it is not an item in the government’s budget.

Renewable Energy Act (EEG)

Germany’s Renewable Energy Act guarantees full-cost compensation to cover the actual cost of a specific investment in terms of size and technology. The rates offered are guaranteed for 20 years starting in the year of installation to protect investments, but the rates drop for newly installed systems each year to put price pressure on manufacturers.

The main difference between the Feed-in Act of 2000 and the Feed-in Act of 1991 was that feed-in tariffs were no longer linked to a percentage of the retail rate, but were instead differentiated by the actual cost of the specific investment in terms of system size and technology type.

In 2004, the law was adjusted to do away with the 100,000 Roofs Program for photovoltaics, which provided an upfront bonus for the purchase price; instead, solar arrays were now eligible for feed-in tariffs in full. In 2009, the law was once again amended, making it three times larger than in 2004; what had begun as two pages nearly two decades before now had 51 pages. The law was most recently amended in 2012 and 2014.

“EEG closer to the market”

The EEG of 2009 was the first to be amended by the grand coalition of Social Democrats and Christian Democrats, with the Green Party no longer in power. While the basic tenants of the EEG were retained – feed-in tariffs and the priority of renewable energy – a number of Social Democrats and Christian Democrats felt that the policy should be changed to bring renewables “closer to the market.”

The main changes in the 2009 EEG therefore reflect what these politicians thought constitutes a market. For instance, producers of wind power were increasingly encouraged to sell directly on the power exchange instead of receiving feed-in tariffs, and a “marketing bonus” is also offered because of the extra work involved. Yet, this option only needs to be exercised if it proves more profitable than feed-in tariffs, so it essentially constitutes a risk-free bonus – not exactly what  you would expect from a policy that promises “more market.” Germany’s traditional onshore wind sector overwhelmingly opposes this option because it provides windfall profits and unnecessarily raises the cost of the energy transition for consumers.

In 2016, a first-instance EU court ruled, however, that the EEG of 2012 did indeed constitute “state aid.” The German government had notified the EU in Brussels of the policy support, but the European Commission insisted that it have input. Berlin responded by showing a willingness to negotiate but insisted that this openness was voluntary, claiming that the EU had no right to such input. The court found, however, that the EU did indeed have such a right. Because the negotiations resulted in a compromise satisfactory to both parties (Berlin and Brussels), the EEG of 2012 does not need to be changed retrospectively. The court merely specified that Berlin does not have the right to refuse negotiations with the EU. Finally, feed-in tariffs are considered admissible aid, because the EU and its member states have renewable energy, climate and environmental targets.

Which brings us to where we are today: Germany has kept feed-in tariffs for systems smaller than 750 kW but is now using auctions for larger projects. The 2014 EEG also implemented, for the first time, limits on the growth of renewables: no more than 45 percent by 2025. Previous iterations of the EEG law always spoke of “at least” a certain percentage.