Developing and implementing energy policy in Europe’s largest economy has never seemed more difficult but climate change goals and a coalition commitment to renewables should eventually see Germany hold more auctions for offshore wind
Germany’s coalition government has indicated it will launch new auctions for onshore wind and solar. It has been implied that there will also be additional auctions for offshore wind. Until recently industry bodies were bullish about the fact they would happen, but as of the end of July 2018 there was no firm commitment to any of them.
Chancellor Merkel’s political difficulties of late – particularly a dispute about immigration with federal minister of the interior and coalition partner Horst Seehofer – have undoubtedly played a role in the holdup but German economy minister Peter Altmaier recently refused even to specify dates for the additional auctions for onshore wind and solar, citing grid connection issues.
Politics, perennial problems with grid connection that have affected onshore and offshore wind, a lack of ambition and the rather rigid nature of the German market have combined to stall progress in Germany’s offshore wind energy industry, and the Energiewende, the country’s ‘energy transition,’ as a whole.
Factor in the phase-out of nuclear power and coal, missed 2020 climate targets, a commitment to somehow meet 2030 targets and a 2050 climate action plan that aims for ‘climate neutrality’ and energy policy in Europe’s largest economy looks more complex – and intractable – than ever.
Then factor in the fact there will be no new tenders for offshore wind until 2021 unless the government introduces additional auctions, and the industry has reason to be concerned about the direction of policy in the country.
There is however, some good news, as Stiftung Offshore‐Windenergie managing director Andreas Wagner told OWJ, in the form of what he called the three ‘Cs.’ The first C is a broad commitment by the coalition to more renewable energy; the second is climate targets Germany wants to meet, however challenging that may be; and the third is the upcoming COP 24 climate summit in Poland, which he suggested is likely to focus minds in the government. COP24 will take place 3-14 December 2018 in Katowice, Poland. However, he might have added a fourth C to describe the process: complexity.
A draft bill for the reform of legislation on renewable energy (the Erneuerbare-Energien-Gesetz or EEG) was tabled in June 2018 but did not mention higher targets for offshore wind.
“The EEG has to be reformed,” Mr Wagner told OWJ. “Coal is being phased out, and Germany has set a target of 65% of electricity from renewable energy by 2030. Climate goals set by the government cannot be achieved without more offshore wind, but the government needs to be convinced that the grid can take more offshore wind power if more windfarms are built.”
That 65% target is a “very ambitious one,” VDMA power systems unit head Matthias Zelinger told OWJ, and Chancellor Merkel has herself admitted that meeting 2030 climate targets will be “very, very challenging.”
“The 2030 goals set by Germany will bring it more into line with EU policy,” said Mr Zelinger. “States in Germany have also signalled that they expect the Federal Government to meet certain targets and they expect there to be a higher target for offshore wind. As an organisation VDMA supports higher targets for offshore wind, but it is clear there is a lot of work that needs to be done on the grid. Three new power lines are under construction, but in due course we will need a fourth and a fifth and we also need to investigate the potential of power to gas.” Using renewable energy to produce hydrogen that could be distributed in the natural gas grid could one day be a way issues in the electricity grid could be circumvented, he suggested. Doing so is technically feasible, it has been argued, but is not yet economically feasible.
But without a government commitment to another auction, the offshore wind supply chain is going to be squeezed, Mr Zelinger told OWJ. “OEMs need to have better visibility of potential backlog. Not everyone has that right now. The situation is the same, if not more difficult with the companies that manufacture foundations. Another issue is the competition some of them face from low cost countries such as Poland. As long as the European offshore wind market is a free and open one, some German companies will find it hard to compete.”
Back in September 2017, economy and energy ministers in several north German states issued what became known as the ‘Cuxhaven appeal,’ an 11-point paper calling for further investment in offshore wind. This was actually the second such appeal, the first, issued in 2013, having helped shape the debate about German energy policy and the direction of the Energiewende.
More recently, German industry organisations involved in offshore wind energy issued another appeal, calling on the government to beef up targets for renewable energy and said climate targets in the country “can only be achieved with more offshore wind.” In their July 2018 statement, they said a commitment to at least 1.5 GW more offshore wind is urgently needed.
Figures released on 19 July 2018 by VMDA Power Systems, Bundesverband Wind Energie, Stiftung Offshore‐Windenergie, Windenergie Agentur WAB and Offshore Wind Energy Working Group indicate five offshore windfarms with a capacity of 1.944 GW were under construction in the first half of 2018. However, the industry bodies argue, without a commitment from the government for 1.5 GW more, the German Government will miss its renewable energy target and offshore activity could almost come to halt in 2020.
As highlighted above, the German Government has set a goal of 65% of the country’s power generation from renewable energy by 2030, but from an offshore wind industry perspective, the industry associations believe, the German Government is doing too little to achieve this goal.
“No concrete steps have been taken since the formation of the government in March 2018,” said the wind industry bodies, even though a coalition agreement seemed to suggest that additional tenders for offshore wind would be forthcoming.
“The standstill in energy policy in recent months must change. We call on the Federal Government to decide on the special contribution of offshore wind energy immediately after the summer break. Otherwise, climate targets cannot be achieved,” they said.
They noted that the expansion of offshore wind energy in Germany is proceeding according to plan, but only until 2020. At the end of the first half of 2018, 1,169 turbines with an output capacity of 5.387 GW were feeding electricity into the grid. Five projects with an output capacity of 1.944 GW are under construction. Of these, offshore wind turbines with an output of up to 1 GW are expected to be connected to the grid by the end of the year.
The share of offshore wind energy in total power generation increased from 2.7% to 2.9%. The share of all renewable energies in power generation was ahead of lignite and hard coal for the first time in the first half of 2018. However, the industry bodies said, increased expansion targets and additional tenders are “indispensable” if climate targets are to be met.
“From the industry’s perspective, the German Government must act now if it takes the 65% target seriously,” they said. “An expansion of at least 20 GW is required for offshore wind energy in Germany by 2030. At least 30 GW of offshore capacity must be installed by 2035. The existing expansion target of 15 GW by 2030 does not meet the Federal Government’s new targets.”
Without 1.5 GW of additional capacity, they argue, further investments and jobs in the wind energy sector will be endangered, as a recent industry survey conducted by IG Metall Küste showed.
Mr Wagner agreed with this sentiment, as did AGOW spokesperson Tim Bruns, when they spoke to OWJ shortly before the latest appeal from the industry was issued. There is spare capacity for offshore wind left over from the latest, highly successful German auction, that they suggest could be used if an additional auction is tabled by the government. “The problem is that without another auction, we can see a gap approaching,” said Mr Wagner.
MAKE offshore analyst Søren Lassen agreed that connecting the energy-rich north of the country to energy-intensive industries in the south continues to be a major issue for German planners. “Germany really needs to get transmission system operators (TSOs) more involved in the process. Developers have argued they should be given greater responsibility over the grid. A more centralised approach to offshore wind tenders could help too,” he said. Mr Zelinger said he agreed that changing to a centralised system could have benefits.
Mr Bruns explained that in June 2018 the Bundesnetzagentur – Germany’s federal net agency – approved the so called ‘Szenariorahmen 2019-2030,’ which includes scenarios for all types energy generation, including offshore wind, onshore wind and coal. The 2019-2030 plan included two scenarios for offshore wind – 17 GW and 20 GW by 2030 respectively – both of which lie above the current plan of 15 GW by 2030.
That is good news, but as Mr Bruns and Mr Wagner explained, that’s only part of the problem. The second part is getting energy produced offshore to power-hungry industry in the south.
“The TSOs need to step up,” said Mr Bruns. “They are very well aware of the grid bottleneck but the grid highways that take the power south are also an issue.” Connecting the energy-rich north of the country to the south is likely to continue to be an issue for some time. Transmission lines above ground are unwelcome in much of Germany; three new underground lines are being built, but are behind schedule, Mr Wagner told OWJ.
TenneT, one of Germany’s four TSOs, has suggested German offshore windfarms in the western part of the German North Sea could be connected to the grid in the Netherlands to help overcome grid connection issues. It said such a move could help Germany overcome bottlenecks in the grid on land.
One such cost-effective solution could be a connection to Eemshaven. “Because this grid connection point is on the coast, it would be possible to save 100 km of underground cabling in Germany and thus around €200M (US$234M), bypassing bottlenecks in the German electricity grid,” TenneT said.
The TSO said the necessary legal certainty could be achieved through a German-Dutch treaty, which would stipulate that German windfarms and grid connections continue to be subject to German regulation.
In the German North Sea, TenneT currently has 10 offshore grid connection systems with a total capacity of 5.332 GW. This means TenneT could provide more than 80% of the Federal Government’s expansion target of 6.5 GW of offshore wind capacity by 2020. By the end of 2023, TenneT will have completed three additional grid connection systems, which will provide 8.032 GW of transmission capacity in the North Sea.
By 2027, three more connections will be implemented by TenneT or will be pending, according to the preliminary design of the land development plan of the German Federal Maritime and Hydrographic Agency. This will increase the transmission capacity in the German North Sea to almost 11 GW.
Although in the short-term government commitment to more auctions is clouded by uncertainty and indecision, in the longer term there is little doubt that offshore wind has a big role to play in Germany, with the potential of cross-border projects with France already being touted.
A Franco-German declaration signed in Paris on 21 July could see the countries collaborate in the realisation of offshore wind and other renewable energy initiatives. The declaration noted that France and Germany believe co-ordination in the field of EU energy policy should be complemented by concrete projects and measures.
It welcomed the fact that the Fessenheim nuclear power plant in Germany will be closed “as soon as possible” and said that as part of their co-ordinated climate and energy strategy both countries will launch initiatives to realise a part of their respective national renewable energy deployment through joint pilot projects, such as the development of offshore wind in the North Sea.
The declaration also said France and Germany agreed to work on requirements for implementing a test project for cross-border renewable energy auctions. France and Germany are also committed to increasing their interconnection capacity, and to strengthening internal networks that currently constrain capacity.
The European neighbours also plan to work together on batteries and other forms of energy storage and strengthen co-operation on power to gas and the take-up of hydrogen in the energy mix.
“France and Germany see the European energy transition as a huge opportunity to deliver modernisation, innovation, digitalisation and job opportunities,” the declaration said, noting that Germany will phase out its last nuclear power plant by the end of 2022 and “continuously increase its share of renewable energies.”