Germany leads in the installation of renewable energy in the EU
In 2022, Germany announced a series of initiatives to transform the focus of the energy landscape into renewable energy. Their highly ambitious goals included achieving an 80% share of renewable sources in electricity generation by 2030 and 100% by 2035.
These ambitious targets require an average expansion of 20 GW of renewable energy annually. Although Germany is well known for having fewer sunshine hours a year, its commitment to nature-based energy sources is encouraging. With continuous effort, the country has claimed the fifth position in installed renewable energy capacity in 2023 (Figure 1), after China, the U.S., Brazil, and India.
This makes the country a leader in the installment of renewable energy in the Europe. The government's commitment to green energy is expected to further assist the development of energy technologies. With that, the growth in the sector will continue, particularly in solar and wind power.
In 2023, renewable energy sources collectively produced approximately 260 terawatt-hours (TWh) of electricity (Figure 2), marking a 7.72% increase from the previous year's production of 242 TWh.
The Fraunhofer ISE stated that renewables reached a record share of 59.7% of Germany's net public electricity generation in 2023. The year particularly witnessed record-breaking performances in wind and solar power with the generation of 53.5 TWh and 139.8 TWh, respectively to public net electricity (Figure 3).
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The rise and fall of Germany's solar industry
Following the Renewable Energy Sources Act (EEG) of 2000, many German companies heavily invested in solar technology, reaching its initial peak in 2012 by surpassing 7 GW in annual additions. The legislation ensured preferential treatment for renewable energy sources, offering investors guaranteed remuneration over 20 years.
Between 2008 and 2013, Germany experienced a remarkable increase in solar power capacity, soaring from approximately 6 GW to 36 GW. The industry generated around 150,000 jobs in the country by 2011.
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However, the competition was enormous. Foreign competitors, particularly from China, flooded the market with solar panels offered at significantly lower prices compared to those from German manufacturers. As a result, many investors opted for foreign suppliers to optimize their returns.
This dropped the PV expansion in Germany by 80% within two years between 2013 and 2015. Several key players, including SolarWorld, Q-Cells, Solon, and Conergy were obliged to cease operations and the workforce shrank dramatically.
Initially, the industry had protection from Asian competitors through trade barriers imposed by the European Commission in 2013, which established minimum prices on Chinese imports. However, the EU Commission abandoned the trade restrictions in 2018, acknowledging their ineffectiveness in sustaining European manufacturers.
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Top two renewables
The Fraunhofer ISE research institute stated that solar power has emerged as the most economical mode of power generation in Germany. The cost of generating one kWh through solar panels can range as low as 3.7 euro cents, depending upon the installation type and the intensity of sunlight at the specific location.
Still, wind power turned out to be the most popular to generate electricity in 2023. This makes solar and wind the top two renewables in the country. Figure 4 shows the newly installed solar and onshore wind capacity growth from 2017 until 2023.
Solar: In 2023, PV systems contributed approximately 59.9 TWh of electricity generation. Of this total, 53.5 TWh were integrated into the public grid, while 6.4 TWh were utilized for self-consumption. Moreover, PV capacity expansion in 2023 significantly surpassed the German government's targets by reaching in total of 14.4 GW— higher than the anticipated 9 GW.
Wind: By the end of 2023, Germany was home to a total of 28,677 onshore wind turbines. It accounted for 115.3 TWh electricity generation (compared to 99 TWh in 2022), while offshore production slightly decreased to 23.5 TWh (compared to 24.75 TWh in 2022). Despite its significance, the expansion of wind energy fell short of government targets. In 2023, only 3.6 GW of onshore wind capacity were newly installed, failing to meet the planned 4 GW. Similarly, offshore wind farm expansion progressed slowly, with only 0.23 GW of new capacity installed in 2023 compared to the planned 0.7 GW.
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Future of renewable energy in Germany
Driven by the nation's efforts to become energy-independent, particularly in the wake of Russia's invasion of Ukraine, interest in solar energy has seen a steady rise in recent years.
Industry groups have generally praised the initiatives undertaken by Chancellor Olaf Scholz's government to accelerate the expansion of renewable energies.
In 2022, two German states implemented mandatory solar PV requirements for specific construction projects, a move that was later imitated by several other states.
Furthermore, the government has outlined plans to mandate rooftop solar installations for new commercial buildings and to establish them as a standard feature on new private buildings. Additionally, there are proposals to open up more agricultural spaces for solar PV installations.
Homeowners and business owners too are enthusiastic about installing solar panels on their roofs. According to Rystad Energy, more than 70% of the additional capacity in 2023 comes from rooftop installations, with homeowners accounting for 6.5 GW of the new installations. Figure 5 shows the top 10 solar installations in the EU between 2022 and 2023. Although Spain topped the list in 2022, Germany surpassed Spain’s installation by about 6.2 GW in 2023.
Germany still faces the challenges of less sunshine in a year. However, sunny weather and high temperatures don't always result in increased solar power output.
At the moment, solar panels have a capacity of half of what wind power can deliver. So, should the country continue to embrace solar panels as its preferred renewables, it needs increasing capacity to safeguard against fluctuating weather variation.
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While the competition is still there with Asian manufacturers, Germany maintains a competitive advantage in research focusing on module system integration and innovative applications of renewable energy.
The decline in panel prices, enhanced productivity, sustainability, and flexibility are likely to become important driving factors in meeting the country's goals.
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