Monday, 08 February 2021
According to the latest data from the Fraunhofer Institute for Solar Energy Sytems ISE, 2020 marked the first time in Germany where the renewables share for electricity generation exceeded 50%. Wind power contributed the largest share with 27% with generation from Solar PV contributing 11%, an increase of 9.3% when compared to 2019 figures.
In 2020, Germany's net public electricity generation was 488.7 TWh of which renewables accounted for 50.5% (247.01 TWh) while non-renewable electricity accounted for 49.5% (241.65 TWh). This marked the first time that renewables comprised the majority of generation in the country. It is of note that this net electricity generation is from power plants supplying the grid and self-generation in the industry was not included in this data. However according to the German federation of energy and water industries (BDEW), when self-generation from industry was included the total share of renewables in total gross electricity generation was around 44.6%.
Wind turbines produced more electricity than lignite and hard coal plants combined, having generated 132 TWh (27%), an increase of 5% when compared to the previous year. Of the 132 TWh produced, the highest share came from onshore wind which produced 105 TWh although offshore wind also increased its output contributing 27 TWh, up from 24.5 TWh in 2019. According to Fraunhofer ISE, by the end of October 2020, the installed onshore capacity was 54.64 GW (having increased by 1.5 GW) and offshore was 7.74 GW (increased by 0.14 GW).
In 2020, German Solar PV generation had the highest growth among renewables in terms of generation share on the grid having generated 51.42 TWh (10.5%) and grown by 9.3% when compared to 2019 figures. This increase has been attributed to the 4.4 GWp increase in new solar PV installations that expanded German solar installed capacity to 53.6 GWp (as of November 2020).
Interestingly, on 1 June 2020 at 13:00, solar power production peaked at 37.25 GW which at the time corresponded to 56% of the total electricity production at that moment. Data showed that from March to September German solar PV plants generated more electricity per month than hard coal power plants.
When combining the electricity generated from wind power and solar PVs (183 TWh) they exceeded the total of all fossil fuel sources i.e. coal, oil and gas (178 TWh) by 5 TWh.
This increase in renewables share on the grid was due to Germany experiencing favorable wind conditions and a high number of sunshine hours in 2020, combined with slight increases in RE installed capacity. However what really allowed the space for renewables to take over was the decline in industrial electricity demand due to COVID related lockdown measures.
Baden-Württemberg (ZSW) and BDEW, suggest that lower energy consumption in Germany contributed to the comparatively large share of renewables on the grid in 2020. However if the Coronavirus effect was to be removed and business ran as usual then the share of renewables would have only been 44%.
“The share of renewable energies has increased also this year,” said BDEW chairwoman Kerstin Andreae, she continued “But the lower power consumption hides the fact that the expansion of renewables is not progressing fast enough”.
The main driver behind Germany's renewable energy reform especially in the wind and solar sectors is its Renewable Energy Act (EEG). The latest amendments to the Act came into force on 1 January 2021 (EEG 2021). The main theme behind the EEG 2021 is Germany's goal to become carbon neutral by 2050 driven by zero-emission electricity generation. The new EEG further implies that electricity generated with German borders and imported electricity must meet this carbon neutrality target by 2050.
The New EEG plans on increasing solar PV capacity to 100 GW from the current 52 GW, onshore wind to 71 GW (currently at 55 GW), biomass to 8.4 GW and offshore wind to 20 GW. An additional 500-850 MW per year will be tendered in "innovation auctions" for combined technologies such as onshore wind, solar PV, biomass and/or power storage that work in unity to stabilize the grid. As such it is expected that leading to 2050 we will continue to see an increased share of renewables on the German grid.
Annual tender volume of renewable installations in Germany as per EEG 2021 Act:
While there seem to be some positive movements in terms of the expansion of renewables on the German grid this is expected to not have an effect on the German GO market. The issuance of German GOs has not kept up with expanding renewables production and this is mainly due to a clause in the EEG that mandates that GOs can only be issued if the respective electricity does not receive government support (feed-in tariffs or market premiums). The EEG further states that power plants can receive support for a period of 20 years. This means that since 1 January 2021, some early power plants that received state support have essentially lost their right to receive payment. This means that they may seek other forms of revenue which could include GO sales.
That said the new EEG has proposed an interim solution for these plants. Small solar PV installations (up to 100 kW) will be given an interim remuneration for their electricity until 2027, amounting to the market value minus marketing costs. However, old onshore wind turbine installations of 16 GW would lose support by 2025 and will not benefit from this rule since they rarely have turbines with a capacity under 100 kW. They will however retain their feed-in priority over fossil fuels and will still be connected to the grid. The bill does include an interim payment solution for onshore wind turbines until the end of this year (2021) to alleviate COVID-related economic troubles that led to low electricity market prices.
During the first 6 months of 2021, the German Energy Ministry will pass a regulation specifically targeting old wind turbines that have lost/will lose their tariff payments at the end of 2020 and 2021. This regulation will allow for these plants to participate in renewable installation tenders for 1.5 GW in 2021 and 1 GW in 2022. This tender volume represents around 40% of the plants that will no longer be subsidized. The energy ministry expects 3.7 GW of onshore wind energy to be withdrawn from the market in 2021 and 2.4 GW in 2022.
Greenfact expects that as plant owners lose their state support they will apply for the issuance of GOs which could potentially lead to an increase of German GOs in the market further increasing the supply in the market and putting downward pressure on European GO prices. However, that said Germany does have quite a large appetite for GOs, being the largest net importer of GOs in the market due to an ever-widening demand from green domestic consumers and corporations.
An analysis of the German GO market is available to Greenfact platform subscribers. To gain access to GO price updates and analytical reports contact info@greenfact.com.
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