Germany's Energiewende


Lessons learned for U.S. utilities – drawn from first-person fact-finding.

Lessons learned for U.S. utilities – drawn from first-person fact-finding.

Fortnightly Magazine - November 2014

The German Energiewende (energy transformation) has been discussed in many academic and trade publications, all heralding either the transformational, unparalleled successes of the program, or else the dismal failure and shortsighted focus of politicians and policy makers in designing and executing the transition.

On one hand, the Energiewende has successfully brought on substantial levels of solar and wind energy in Germany. However, rising electricity rates for residential consumers, coupled with the huge losses in market capitalization for the incumbent German utilities, have raised significant questions on how successful the policy has been and whether it will be sustainable over the long term. The result is much confusion about the true nature of the Energiewende and, more importantly, what lessons learned can be applied in the U.S.

To learn first-hand from German experts on what really has occurred and how it can be applied in the U.S., the Solar Electric Power Association (SEPA) and its partner ScottMadden, Inc., led a fact-finding mission for a group of U.S. utility executives, solar developers, and other key stakeholders to Düsseldorf, Germany. The group facilitated discussions with German utilities, government officials, and solar developers to shed new light for American executives on the why's and how's behind Energiewende. They laid a foundation for how these lessons learned could be applied proactively at utilities back home. Four specific impact areas were identified and highlighted in the various discussions held among the participants: Utility Business Models; Operations; Customers and Pricing; and Policy and Regulation.

Utility Business Models

Figure 1 - Current and Future Goals

EES North America
The utility business model changed rapidly with the energy transformation in Germany, and the incumbent utilities didn't react nimbly enough to weather this change. The eight largest utility companies in Europe have lost a combined €300 billion of market capitalization since the end of 2007. A majority of these losses are tied directly to holdings in fossil-fired and nuclear central station generation. Nevertheless, other utility operations generally remained healthy (see Sidebar, Germany's Energy Delivery Market ). Very few, if any, of the original utilities or policymakers predicted the rapid decrease in the overall cost of solar, which led to the explosion of the distributed solar marketplace. Also, with no restrictions on system size and a healthy Feed-in Tariff (FiT), a proliferation of solar systems surged onto the German system. Currently, there is nearly four times as much interconnected solar capacity in Germany as there is in the U.S., although Germany is a country roughly the size of the state of Montana in land mass and has a population of approximately two times that of California. The solar resource potential in Germany is also far less than that of the majority of