Yesterday the 37th annual International Association for Energy Economics International Conference kicked off in New York. Renewable energy is not only a hot topic in the media but also a frequent topic of discussion among experts at this year’s highly interesting sessions. Issues addressed range from impacts of steadily rising shares of renewables on the critical decisions to be made by grid operators, as well as by utilities, in order to fulfill the latter’s obligation to serve; to regulatory, economic and “business model” implications for the power generation sector. In this respect, lessons learned from different structures in Europe – Germany in particular – are valuable and therefore very much in focus.

Professor Georg Erdmann of Berlin’s University of Technology addressed the “aggregated costs of the German Energiewende” identifying various problems with the current German power market structure. He pointed out that it is pointless to expect investment into power generation without additional state aid. Moreover, the current renewable electricity levy – in his view – implies various “distributional effects of relevant size.” This, in turn, leads to an increasing “complexity of state interventions.”

In this context, Professor Erdmann’s conclusion is straightforward but serves, at the same time, as a cautionary tale for countries attempting to replicate the German model: “The electricity business in Germany has become a lobbying business. [Moreover], if you have overcapacity, it is stupid to subsidize new technology.”

As member of the expert commission on the “Energy of the future” monitoring process he also recently proposed a broader approach of measurement using ten lead indicators for five different dimensions of the Energiewende in Germany:

“They render more compact the list of the German government’s lead indicators and add non-quantified dimensions of the Energy concept to this. (…) [L]ead indicators, enable the developments of the Energiewende in its various dimensions to be measured with the aid of just a few key figures. The system of indicators thus guides the course of action to be taken. Secondly, the lead indicators are backed up by a broad system of indicators providing the information base.”

To follow is a graphic showing this useful indicator system in order to better monitor and analyze the Energiewende in Germany:

Lead Indicators for the “Energy of the Future” Monitoring Process