Environment Forum

Will Germany kill its energy golden goose?

Will Germany kill the goose laying the golden eggs?    Germany is understandably proud of its renewable energy sector — wind and solar power supply more than 15 percent of the country’s electricity. Its Renewable Energy Act (EEG) has fuelled its rapid growth over the past decade and been copied by more than 40 countries around the world.    But is the party over?    A new centre-right government announced plans to slash the EEG’s guaranteed feed-in tariffs (FIT) that utilities are required to pay the myriad of producers of solar energy, many of whom feed the modest amounts of solar power from their roofs into the local grid. The EEG already foresees a FIT decline of about 10 percent per year — a built-in incentive to keep overall costs falling.    Environment Minister Norbert Roettgen wants an additional 15 percent cut in April on top of the 10 percent from Jan. 1, 2010 and ahead of the next 10-percent cut on Jan. 1, 2011. In the past decade, the previous two environment ministers from the Greens party and the centre-left Social Democrats (SPD) worked closely with the solar industry before making changes.    Roettgen made it clear those days of compromise were over. He said he spoke to solar firms last week before proposing the cuts, but rejected their offer to a one-off mid-2010 cut of 5 percent. “This is not a compromise,” he told journalists in Berlin on Wednesday. “It’s a bullseye.”  He said the cuts would save consumers about 1 billion euros a year over the next decade. Consumer groups and some industry groups had wanted deeper cuts, Roettgen noted.    Solar companies in Germany, which have until now worked closely with the government on reducing the tariffs the utilities pay to producers of green electricity, criticised the cuts which amount to about 35 percent within 13 months. They fear they will cripple the sector and kill jobs. Roettgen said he wants solar power, which now generates about 1 percent of Germany’s electricity, to be providing 4 to 5 percent by 2020 even though the support is being slashed by one-third in the course of 13 months. He portrayed the cuts as if he were doing the industry a favour.     Several leading German companies — such as SolarWorld, Q-Cells and Solon — said there were dark days ahead for the solar industry. They pointed out that prices, and support, were already falling steadily and would reach grid parity by the middle of the decade. Why, they asked, ruin a good thing? Frank Asbeck, CEO of Germany’s biggest solar company by revenue SolarWorld, called the plans unacceptable. As my colleague Christoph Steitz reported here, the cuts would cause problems for solar companies around the world.    Carsten Koernig, managing director of the BSW solar industry lobby, said “a radical cut like that will rob German companies of the foundation for business”.    Claudia Kemfert, an energy policy expert at the independent DIW economic research institute, said: “This level of 15 percent is quite problematic. It means a 25 percent cut within a few months and I consider that to be too much. It’s going to hit the small and medium sized companies very hard. It’s going to bring a lot of uncertainty into the market.”    The German Renewable Energy Association also used strong language, saying: “The radical cuts endanger the expansion of renewable energy.”

Is it a done deal? It’s hard to say at this point. There could be a lot of resistance from key conservative-ruled states such as Saxony, Saxony-Anhalt, Thuringia, Bavaria and Baden-Wuerttemberg. They have important solar power industries and in the past succeeded in watering down attempts to cut the FIT.

Which countries make the grade in solar power?

Germany is still at the top of the class when it comes to solar power, according to a new report by nonprofit Global Green USA.

The group graded 16 countries plus the state of California in terms of how much solar power they added in installations and what kind of policies they have for future development.

Germany– the world’s biggest solar power market — again got the highest grade, with an A minus.

Italy and environmental trendsetter California pulled a respectable B minus, with nearly 400 percent annual growth in installed capacity.

The group gave Poland and Russia both failing grades because their “governments focused marginally on other renewable energy sources” and do not have any incentives that target photovoltaic solar power systems that turn sunlight into electricity. (Read the full report here.)

With Germany expected to change its solar incentives next year and other places like Ontario moving to support the sector, who will rank at the head of the class in 2010?

Catching rays + cutting emissions

The phrase “catching a few rays” might conjure up images of lying on a sunny beach.

But Germany’s Renewable Energy Act has given that phrase a whole new meaning. I’ve discovered that you can get paid for capturing the sun’s energy on your roof, converting it into CO2-free electricity with the help of special equipment, and feeding it into the grid — and watch the investment yield handsome long-term returns.

The German feed-in tariff system is as simple as it is successful – which is probably why Germany produces as much solar power as the rest of the world combined. German utilities are obliged under the Renewable Energy Act to pay above-market feed-in tariffs to producers of photovoltaic or wind energy for a period of 20 years. Germany will add up to 3 gigawatt of PV electricity this year. 

Here’s how the system works. 

Two years ago, after writing this feature on why Germany leads the world in photovoltaic electricity production despite being covered by clouds half the time, I decided to crack open my piggy bank and borrow some money on top of that to invest in a modest 6.8 kWp solar power system for my roof (below left). I added a carport (above right) so that I could put up more solar panels. 

The system cost a total of 30,000 euros and it produces about 5,000 kilowatt hours of electricity each year. More importantly, that saves about 2,700 kg of CO2 emissions. The 5,000 kWh is about 500 kWh a year more than we use. The local utility is required to buy those 5,000 kWh of CO2-free electricity that spin through a meter and into the grid from me at 49 cents per kilowatt for a fixed 20-year period. I buy about 4,500 kWh back each year at the current market rate of about 18 cents per kWh. That amounts to about 2,400 euros of revenue per year, with monthly payments from the utility peaking at about 500 euros in June. (I pay a separate 70 euros per month to the utility for the electricity we use).

A rocket man’s view of solar energy

After nearly 25 years in the computer science and aerospace industries, including a stint at NASA’s Jet Propulsion Laboratory, Doug Caldwell decided to pursue a career-long dream of putting his engineering skills to use for the environment. So the Southern California native left his own start-up, a company that builds cameras for spacecraft launch systems, to explore his options.

He didn’t have to look far, or for very long. Within months Caldwell had landed work on a solar power development project, recruited by an old buddy from his days launching model rockets in the desert. Perhaps more ironic is the company he ended up working for — Boeing Co.

Two years later, Caldwell, 47, is chief engineer of the project, which employs about 60 people in a $45 million endeavor to design a new type of photovoltaic solar technology for what would be a 20-megawatt power plant.

One thing he has learned from the experience is that renewable energy development is more of a dollars-and-cents proposition than building rockets. “It’s not about engineering. It’s about business and finance,” Caldwell says.

While space science is largely mission-driven, albeit within the confines of a budget, the paramount concern for clean energy is making it cost-effective and achieving a reasonable return on one’s investment. Moreover, he says, the history of U.S. energy development, and how closely it’s tied to the economy, will make the nation’s transition to cleaner energy especially tough.

Americans, he says, are “spoiled” by cheap energy prices that fail to account for the true costs of environmental damage wrought by extracting and burning fossil fuels, or the national security implications of maintaining access to foreign oil.

“Everybody wants to be green, but no one wants to pay for it,” he says. With sizable investments required to transform the energy sector, the development of low-carbon alternatives is going to be “very dependent on public sector incentives.”

New ‘gold rush’ buzz hits Germany over Sahara solar

A “gold-rush-like” buzz has spread across Germany in the last week over tentative plans to invest the staggering sum of 400 billion euros to harvest solar power in the Sahara for energy users across Europe and northern Africa. Even though European and Mediterranean Union leaders have been exploring and studying for several years the idea of using concentrated solar power (CSP), the Desertec proposition suddenly captivated the public’s attention a week ago when German reinsurer Munich Re announced it had invited blue chip German companies such as Deutsche Bank, Siemens and several major utilities to a July 13 meeting on the project. The 20 companies aim to sign a memorandum of understanding to found the Desertec Industrial Initiative that could be supplying 15 percent of Europe’s electricity in the decades ahead.

Germany’s deputy foreign minister, Guenter Gloser, has been the government’s point man for the project. I had the chance to talk to him about it.

Question: How did this project to turn the sun in the Sahara into electricity for Europe and north African countries get started? Guenter Gloser: About 15 months ago Germany and France proposed including the solar plan into the list of projects for the Union for the Mediterranean. There were institutions that had already done research and we thought: ‘Why don’t we use this sun belt where there is such an abundance of sunshine as a source of renewable energy?’ Together Germany, France and Egypt put forth this solar plan as one of the six projects for the Euro-Mediterranean Partnership and underscored the fact that it could benefit both sides. It was not an idea where just countries north of the Mediterranean will benefit but rather those countries south of it as well as across the EU would also benefit.

Question: What is the current status of the project? Gloser: We agreed to move forward with the project and want to go forward step-by-step towards its implementation. But obviously neither the EU nor the Arab League will be the principal players but rather private investors. Our task for this project is to create the political framework — for example with setting up of the feed-in tariffs, ensuring the infrastructure is built and ensuring that the renewable energy can be transported to Europe. The political framework can also make it possible to expedite the approvals process. But what is also very important is that the energy produced is also available for countries in the region. For example, Morocco can take advantage of its solar and wind conditions on the Atlantic coast to build solar power plants or wind energy parks to provide energy for its domestic market and to sell energy abroad as well. Even countries such as Algeria, which has fossil fuel reserves, could also use the sun belt for solar thermal power for some of their energy needs — and prolong their fossil fuel reserves.

Question: Is there not risk involved in such large-scale investment in a region with a potential for political instability? Gloser: It’s a cooperation that will contribute towards diversifying energy sources, geographically and in terms of energy sources. It’s a truly fascinating project because it’s a win-win for everyone. And the third winner will be the people and institutions that finance this project. Neither the EU nor the countries in the south are capable of financing this on their own. So the question is: can third-parties bringing financing be involved. Energy security is an important issue everywhere. There are energy sources we have today that at times have been somewhat at risk. There’s no contradiction in saying that it’s important to diversify a country’s energy source as well as diversifying the types of energy it receives. It’s not that there is no risk whatsoever but it’s important to keep in mind that there are also some risk factors for other sources of energy that we are now importing.

Question: What impact do you think a project like this could have in the Mediterranean Union? Gloser: I think the partnership approach that we have taken could well have a positive influence of stability for the countries taking part as well as the neighbouring nations. The EU has been enlarged and come closer together in the past decades but there hasn’t been as much of that among Arab countries. Perhaps it would be possible through certain projects, such as this solar energy project or water projects or transportation routes, to increase the cooperation among those countries.

Question: There have been fears expressed that Europe would be exploiting natural resources in Africa, raising fears of a new sort of ‘colonisation’. What would you say to those fears? Gloser: It is not in any way an issue of the north dominating the south. It is not only the north that is interested in acquiring renewable energy but rather other users are interested. And if that mutual need for energy leads to a project that satisfies all sides then that is in my view a good route to take. I don’t think there’s any justification for the notion of this being an ‘energy colonisation’ or anything like that at all. It’s a mutually beneficial project.”

How much electricity do you use in a year?

It was a disarmingly simple question but, embarrassingly, I didn’t have a clue when first asked that 18 months ago. Even though I’d have to describe myself as a genuine tightwad when it comes to expenditures, I simply had no idea, strangely enough, about how much money my four-person household was spending on electricity — nor how much carbon dioxide was being produced.

Now, after a year of carefully tracking the daily use of electricity, I’ve discovered a bit about when and where power is being used and, in theory, saved — without much pain. It seemed like a no-brainer and it honestly was not hard to cut our consumption by 1,000 kilowatt hours in 2008 to 5,000 kWh — saving about 200 euros and 500 kg of CO2 in the process. There were only minor sacrifices: rigidly turning off “standby” switches and unused lights, pulling plugs on little-used appliances, putting in energy-efficient lightbulbs, using the washing machine sparingly and the dryer only rarely, and replacing an inefficient dishwasher with a low-energy model.

In the past year, we used as little as 4 kWh on some days (in the summer) and as much as 30 on others (in the winter) — although most days were in the 10-to-17 range. Annoyingly, the house “wasted” about 3 kWh per day when we were away on holiday — largely due to the refrigerator, which I’ll be emptying and turning off next time. The 2008 total of 5,000 kWh (which amounted to an electricity bill of about 1,000 euros) isn’t bad for four people (one rule of thumb I’ve seen is 1,500 kWh per person/year) but I’m convinced that usage could be even less (the benchmark of 1,000 kWh per person/year is considered “thrifty”).

So the goal at home for 2009 is to cut electricity consumption by another 1,000 kWh (saving another 200 euros and 500 kg of CO2) to 4,000 kWh. Having a photovoltaic system on the roof (it produced 3,800 kWh that went into the grid) has helped wake me up to the mathematics and economics of power consumption and the goal of producing 100 percent of the electricity we need is now tantalisingly within reach. (The utility has to pay me 49 cents per kWh for the solar power I “export” into their grid while I have to pay 20 cents per kWh for the electricity I “import”.)

My wife was not exactly thrilled at first at my turning-the-lights-off crusade, which she saw as an unhealthy obsession rather than a good habit. But I was eventually able to win her to the cause. It didn’t hurt to promise her the “windfall” profits from the power savings. Saving another 1,000 kWh in 2009 won’t be as easy, I fear. A new A++ fridge (refrigerators are the real power guzzlers in most households) is at the planning stage and perhaps a new energy-saving washing machine, too. They aren’t cheap but they should pay for themselves through energy savings in the long run — and save a lot of CO2 in the process. Closely tracking the amount of gas for heating and diesel fuel used for the car in 2008 proved to be insightful as well: we cut both by roughly a third in 2008 by simply turning down the thermostat and driving less.

The electricity-saving habit (or obsession) might not be the magic solution to climate change. It also might not be as glamorous as high-tech solutions. Having seen myself how much electricity (and CO2) can be saved with relatively minimal disruption, it’s opened my eyes to how large the savings could be on a more global scale.

Germany’s ‘Sun King’ Asbeck explains solar power for Vatican

Every once in a while you run into someone with so much energy that you find yourself wishing you could plug something into them to tap a bit of that excess power. On a dark, cloudy December afternoon, I spoke to Frank Asbeck, the chairman of SolarWorld and dubbed the “Sonnenkoenig” (Sun King) by a leading newspaper in his native Germany for turning an idea (mass use of photovoltaic) into a multi-billion euro corporation with 2,500 employees — in little over a decade.

Asbeck, 49, easily the most entertaining chief executive I’ve met in Germany, lit up the room with a 90-minute surge of ideas, witty comments and untempered optimism about solar power — a delightful respite from the economic doom and gloom of the current era.

But what especially interested me about him was his trip a day earlier to the Vatican, where he donated 2,400 photovoltaic panels worth 1.2 million euros that will produce enough electricity for the equivalent of 100 households (300 Megawatt hours) each year. So I asked: “Did you donate the solar panels to the Vatican because:

A) you’re a good guy B) it was an advertising gimmick for solar power in general or C) it was an advertising gimmick for SolarWorld.”

Asbeck answered: “First of all, I am a good person. And, secondly, we’re glad to do advertising in general for solar power because it’s a good thing and, thirdly, we did it as a gesture of thanks for a bit of inspiration I got from Pope John Paul II six years ago.”

Asbeck explained that the original idea to cover the 5,000-square metre roof of the Vatican’s Papal audience hall next to St. Peter’s Cathedral came in 2002 when he presented Pope John Paul with a sample solar cell made from sand (raw silicone) in the course of a general audience. “I showed him a solar cell and mentioned that we were able to produce energy from sand and sun,” Asbeck said, smiling at the fond memory. “And he said to me ‘God can do everything’. That gave me tremendous motivation to think more deeply about this photovoltaic technology and that we could be doing a whole lot more with it than we were. So as a small gesture of gratitude for that inspiration we installed the beautiful solar system.”

It all sounded very sincere from this extraordinarily energetic character. But, in this day and age, I still found myself wondering if his motives were truly genuine or not. What do you think?

German power boss goes renewables route…at home too

You know the wind is changing for renewables — so to speak — when the head of Europe’s biggest power producer becomes an advocate — and then even decides to reduce his own personal reliance on fossil fuels by powering and heating his new house with photovoltaic and geothermal energies.

Wulf Bernotat, the chief executive of E.ON, admits he became rather belatedly an advocate for renewable energy, even if his company still gets the lion’s share of its 70 billion euros in annual turnover in 30 countries from burning fossil fuels. The reasons for the change of heart? It’s one answer to climate change, it’s the way the political winds were blowing, and there are profits to be made.

“We had a certain reservation about renewables until about a year ago and then we abandoned those reservations because we recognised that renewables are desired politically,” Bernotat said after a recent presentation to a group of journalists in Berlin. “That’s why it’s the right decision for us to get more actively involved.”

Bernotat also predicted that renewables will replace fossil fuels as the world’s most important energy source by 2050 and possibly even “completely displace fossil fuels by the end of this century.” It was an amazing forecast from a company so closely linked to coal-burning power plants — like a butcher saying everyone would become vegetarian by the end of the century.

Less known is Bernotat’s own personal commitment to renewables — he did not make a big deal about it but had mentioned once in passing in a German TV talk show that he planned to use geothermal power and photovoltaic on his new house. So when I asked him about it, his face lit up like a Christmas tree. He said using renewables made economic sense in the long run despite the heavy initial investment — he had to drill six holes 100 metres deep in his back yard to tap geothermal power for hot water and heating (I wish my wife would let me do that). He said he did it for his daughter, who would be able to reap the longer term return on the investment in renewables — although he too is reaping handsome returns now too. “It’s easier when you build a new house,” he said. “Then it’s easier to reduce CO2. But if you’ve got a house already and the gas-burning furnace is only five or 10 years old, it’s a more difficult matter. Do you really want to replace a furnace like that now?”

When I mentioned to him that a local E.ON subsidiary was buying my 6,000 kilowatts of photovoltaic power off my roof for nearly 3,000 euros each year — and thanked him half in jest for the prompt monthly payments — Bernotat just laughed and said: “Don’t thank me. It’s the other energy users (who pay higher monthly electric bills to subsidise photovoltaic providers like me) who are paying you for that. So thank them!”

Solar power for less than your cable bill

Solar power companies have been working around the clock to drive down the price of clean electricity from the sun so it can one day be as cheap as the energy we get from dirtier sources, like coal plants.

Until we get there, however, some solar panel installers have come up with a solution that they say will give more people access to solar energy. How are they doing it? By allowing customers to lease, rather than buy, the photovoltaic solar panels for their roofs.

It’s the same idea, really, that has enabled some people to get behind the wheel of a luxury car they could otherwise not afford — low or no upfront costs followed by a monthly bill.

SolarCity, based in Foster City, California, is one company that recently started offering leases to its customers. Chief Executive Lyndon Rive told Reuters he wanted to do away with the hefty cost of buying solar panels — on average about $20,000.

“Even those who really want to make an environmental change can’t part with $20,000… the solution is just too costly for them.”

Under SolarCity’s lease program, customers with a small home could pay as little as $70 a month for a 2.4 kilowatt system, Rive added. The company is also allowing customers who sign up before July 31st to put no money down on their system. After that, upfront costs should be between about $1,000 and $3,000, Rive said.

“We can essentially make it so that everybody can now afford clean power,” Rive said.