Renewable energy policy in Germany: pioneering and exemplary regulations

Abstract

The development of renewable energy in Germany has been a great success: 9 % share of green electricity in 2002, world leader in terms of installed wind capacity amounting to 13,512 MW in October 2003 (nearly 40 % of the global capacity), second largest installed photovoltaic capacity in the world (nearly 350 MW at the end of September 2003), European leader in the sale of biodiesel (550,000 tonnes per year at the end of 2002) and in solar heating systems, with 4.75 million m 2 of installed systems at the end of 2002. To understand the success it is necessary to know that it results from – besides suitable background conditions – a comprehensive promotion approach which was launched at the beginning of the 1990s and has been given a further boost, since the coming into office of the Social Democratic-Green government in autumn 1998, through a series of promotion measures. Since 1991, with the coming into force of the first German feed-in law, the Act on Supplying Electricity from Renewables (Stromeinspeisegesetz, StrEG), fixed remuneration has been paid to electricity based on renewable energy sources (RES), leading to the market breakthrough in wind energy. Its successor, the Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz, EEG) in April 2000, improved the regulations of the StrEG in many respects and made market entry possible for other renewables such as solar photovoltaics and biomass energy. The positive RES development in Germany can be explained by, besides this key promotion measure which served as a subsidy for the operational costs, several promotion programmes, which supported RES through investment subsidies (in the form of grants or soft loans), tax exemptions (within the scope of the Environmental Tax Reform) or in a more indirect way, through the decision to phase out nuclear energy, by means of information dissemination (i.e., the RES export initiative of the federal government) and corporate financing schemes in the case of wind energy.