Brattle principal Jürgen Weiss has authored an article for the January 2015 issue of Electricity Policy’s Electricity Daily that discusses Germany’s transition away from fossil fuel generation toward renewable energy. In particular, Dr. Weiss’ article examines the lessons from Germany’s experience that can be applied to the U.S.
Germany has been aggressively supporting the deployment of renewable energy since the beginning of the 21st century, as part of its commitment to closing its remaining nuclear power plants by 2022 and eliminating its dependence from fossil fuels by 2040-2050. With over 37 GW of solar PV, the country has positioned itself as a world leader in renewable capacity. Their model has been based on technology-specific Feed-in Tariffs (FITs) paid by the transmission system operators, who in turn recover the payments through a renewables levy paid by all customers, FITs and the renewables levy are adjusted annually at the national level. Under this system, renewable energy has grown rapidly, and Germany is on track to meet its 2020 and longer term goals. Under the system, retail prices, particularly for residential customers, have increased significantly. Dr. Weiss points out, however, that while Germany’s rates are nearly three times those of U.S. rates, average electricity usage per household is about one-third of the average U.S. usage so that bills are comparable to those in the U.S.
After examining Germany’s experience transitioning its energy market toward renewables, Dr. Weiss identifies several key takeaways that can be applied to the United States. First, the technologies Germany has been supporting to transition to a low- or no-carbon electricity system are beginning to compete economically with conventional fossil power generation. Dr. Weiss argues there is already evidence of this shift happening in the United States, with wind and solar power purchase agreements (PPAs) signed in some regions being at prices cheaper than conventional power. Dr. Weiss concludes that the most important lessons are likely forward looking, as much work remains both in Germany and the U.S. in designing energy and ancillary service markets, to reward flexibility, take advantage of demand-side measures, and encourage optimization over larger geographic areas.
Dr. Weiss’ article, “What can (or should) we take away from Germany’s renewable energy experience?” can be downloaded below or viewed on Electricity Policy’s website.