The German wind industry sits at the heart of a European energy market preparing for a disruptive transformation intended to promote integration and allow the rich wind resource of the North to fuel continent-wide growth, without the risks of nuclear power and reliance on foreign energy producers.
It is a comprehensive, ambitious vision that in Germany alone the environment minister Peter Altmaier has compared in scale to the country’s painful post-Communist reunification.
The EU is preparing to release its latest communication on an integrated energy market ahead of a goal of operational integration it has set for 2014. The energy market remains one of the rare nation-state functions that has hardly been impacted by European integration at all, despite the EU’s origins in a post-WWII agreement over the continent’s coal sector.
Coal’s share of European energy supplied has shrunk drastically in the past 50 years, but wind energy has only recently taken off as costs have fallen, technology has improved and doubts about the reliance of large economies like Germany’s on nuclear energy and natural gas have risen. Germany used its additions of nuclear power to fuel a wider technology sector, and in the wake of a post-Fukushima decision to abandon the generation type has set its eyes on renewable technologies like wind and solar to revive the country’s technology base and boost employment.
The jobs and technology exports benefits are cited by countries across Europe adopting wind, European Wind Energy Association CEO Christian Kjaer said in September when announcing that the EU countries had surpassed 100 GW of total installed wind energy capacity. EWEA said that was equivalent to the power production of roughly 39 nuclear power plants.
But the EWEA figures also illustrated some of the challenges for the German, and by extension the European, wind energy sector. Roughly half of the total European wind power capacity has been added in the past six years in response to government support, and the addition of so much intermittent generation has placed a strain on a system designed for fossil fuel technologies and based on a market with protected energy pricing and lack of links from where renewable energy is being produced to where it is needed.
The problem of energy resource outpacing the capacity to deliver it is hardly new; it has characterized energy booms and busts for the life of the industry. In the case of wind energy in Germany, the race to develop new capacity has been accelerated by access to a feed-in-tariff and by policies that prioritize delivery of renewable power. A German energy market reform in 2005 that kicked off the renewable energy sector’s development failed to reckon with the slower-moving energy demand technology and a stultified market reform process that would leave its wind energy trapped and difficult to integrate with existing infrastructure.
That hasn’t kept the German or the broader European corporate sector from responding to government and customer interest in wider use of renewable energy with both investment and participation.
German industrial firm Sto was the second largest buyer of renewable energy in absolute terms in 2011, purchasing 11MW of its 13MW in power from renewable energy sources. That put it at 44 on the 2011 Corporate Renewable Energy Index, compiled by Bloomberg New Energy Finance as part of the Energy Transparency campaign for Vestas. Deutsche Telekom joined its fellow German firm in the global top ten for absolute purchases of renewable energy, and came in at 82 on the CREX, which ranks by percentage of renewable energy.
The high profile efforts of other German brands like BMW, which owns its own wind farms, and Deutsche Bank were also highlighted in the CREX.
More than 80% of the German companies responding to questions from Bloomberg about their renewable energy use for the CREX said that either government support made an impact on their decisions about procuring renewable energy or that regulatory support needed to be expanded. The centrality of the government’s approach to wind is palpable in the German corporate sector and across Europe, with governments like the UK and Denmark standing out for their continued support of renewables as other countries struggle to prioritize energy policy against the background of ongoing financial crises.
Figuring out the infrastructure and reworking market design have now top priority for Europe’s energy regulators, who are suddenly facing the mixed blessings of abundant renewable energy supply without the ability to use it most efficiently or price it correctly.
This piece appears on Breaking Energy as part of the Energy Transparency series in partnership with Vestas.