Germany Feed Law

September 8, 2014
Volkmar Lauber

Whither Energiewende after dismantling the philosophy of the Renewable Energy Act (EEG)

One of two succinct and hard-hitting presentations by Volkmar Lauber explaining the abrupt U-turn of the German government on the use of feed-in tariffs to drive the Energiewende.

Lauber has been observing and writing about Germany’s use of feed-in tariffs for more than a decade (see below) from the other side of the German-Austrian border in Salzburg. His presentations will resonate with those of us in the English-speaking world who have stared in disbelief as Germany has unraveled the world’s most successful renewable energy policy—and one that granted opportunity to all German citizens not just corporate titans in Frankfurt and Berlin.

The presentations confirm a truism: elections do make a difference.

The SPD is the Social Democratic Party, equivalent to the Democrats in the US and the Liberal Party in Canada. The CDU is the Christian Democratic Party, more akin to the right wing of the Democratic Party (Blue Dog Democrats) in the US and the Liberal Party in Canada. The FDP is the Free Democratic Party, Germany’s official neoliberal party. They resemble the Republican Party in the US and the Conservative Party in Canada. The current German government is composed of a grand coalition between the CDU and the SPD. Whereas there have been CDU-SPD coalitions in the past, this one is quite different.

Below are some highlights adapted from Volkmar Lauber’s presentation for the Free University of Berlin, 7 June 2014.

Brief Summary or Take-Away

Efforts of EU Commission and U-turn by SPD in 2013/14 terminate EEG philosophy

What was so special about EEG’s philosophy?

A strategy for the long haul
How? By breaking the cycle between low demand of RE and its high cost
Stable demand will lead to mass production
Investing in learning-by-doing
Not paid from state budget, but by consumers
“Fair” price for RE, predictable 20-year revenue stream
Different price for different technologies
Planned price degression
Implemented by two successive red-green governments and CDU-SPD

Neoclassical Critique

EU Commission and FDP offer classical neoliberal critique
Preferred quotas and opposed solar PV in particular

CDU Ecological Wing Ascendent

CDU position more nuanced
Bragged about early support of 1990 StrEG
Ecological wing cooperates with SPD across party lines

Impact of RE on Incumbents

PV surge reduces daily peaks—coal’s most lucrative market
Volume and price of coal seriously affected—profits decline
Coal plant overbuild and booming RE generation creates over capacity
RE dramatically cuts wholesale price—utilities begin closing coal plants

RE Paradox

Lower wholesale prices increase EEG cost to consumers
Increases in industry “exemptions” from EEG surcharge

Clash of storylines/Misleading the public

SPD’s Gabriel defends bidding by saying EU requires it
But EU said EEG is not state aid, but “exemptions” were
Did SPD’s Gabriel trade “exemptions” for the EEG at the EU?

CDU & SPD Hand Over RE Sector to Incumbents

CDU’s business wing beats its ecological wing in 2012
SPD’s coal wing wins in 2013 election
Coalition agreement redefines Energiewende to mean something different
Caps on RE/year
Introduce bidding redefined as auctions
Eliminates priority dispatch to prevent losses to incumbents from fall of wholesale price
No significant reductions of “exemptions” for major industries

Lasting Effects of EEG

Broke up structure of generation, something that “market liberalization” didn’t accomplish
Will be hard to put the RE genie back in the bottle

More by Volkmar Lauber

Switching to Renewable Power by Volkmar Lauber--A Review

Three decades of renewable electricity policy in Germany by Volkmar Lauber

European Union Policy on Support Schemes for Electricity from Renewable Energy Sources

Einspeisetarife und Quoten-/Zertifickatsysteme by Volkmar Lauber und David Toke

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