Germany 2016: Expanding renewables, stagnating decarbonisation, increasing power prices

2015 was a landmark year for Germany’s power sector, with renewables generating more power than ever before. Overall, clean energy accounted for 32.5% of demand, of which wind comprised 12% (2014: 8.9%), solar PV, 5.9% (2014: 5.8%) and biomass 7.7% (2014: 7.9%). This dominance is set to continue in 2016, said Agora Energiewende, which assessed Germany’s 2015 power market, and laid out its predictions for the coming year.

"The increase of renewable energies in the power mix by more than five percentage points is the strongest ever recorded," stated Agora. "2015 goes down on record as the year in which renewables dominated the power system for the first time ever, becoming by far the most important energy source," it added.

Despite the great green progress, hard coal production remained largely consistent on 2014, and still accounts for 18.2% (2014: 18.9%) of the country’s power mix, just behind lignite at 24% (2014: 24.8%) and ahead of nuclear at 14.1% (2014: 15.5%).

Power oversupply, stagnating decarbonisation

Overall, Germany generated a record 647 TWh of power in 2015, up 3% on 2014, of which 60.9 TWh, or 10%, was exported abroad (up around 50% on 2014), primarily to Austria and the Netherlands. While renewables comprise the majority of Germany’s domestic power supply, increasing amounts of coal are being exported abroad.

"The climate impact of Germany’s power system therefore hardly improved last year, and overall greenhouse gas emissions even rose slightly," commented Agora.

Due to this oversupply of power, with CO2 emissions remaining at around 2014’s levels, combined with a slight increase in greenhouse gas emissions due to cold weather conditions and "minimal" advances in climate protection measures in power, heat and transport, decarbonisation in Germany is "stagnating," said Agora. As a result, the country’s climate protection goals announced in Paris at COP 21 will be missed, unless a "consistent" decarbonisation strategy is implemented.

"Power savings and building renovation must receive high priority at the political level. Otherwise, the federal government will fail to achieve its 2020 efficiency targets," Patrick Graichen, director of Agora Energiewende continued.

A report released in November by the the International Renewable Energy Agency (IRENA) also said that Germany will miss its 2030 renewable energy targets if current policies do not change.

Increasing prices

Last year saw wholesale prices decline, with market power prices falling roughly 10% to €0.0136/kWh, their lowest in the last 10 years. This ranked Germany only behind Scandinavia in terms of European power prices. Despite this decline, household power prices are expected to rise slightly in 2016 – €0.295/kWh – due to an increase in levies and fees, and will reach again the level of 2014 – €0.291/kWh.

Power deliveries for the trading years 2017 to 2019, meanwhile, sold for as little as €0.003/kWh, while in 2015, the number of hours with negative prices nearly doubled, from 64 hours in 2014, to 126 hours in 2015, but the average negative price declined, from €-65.03/MWh in 2014, to €-79.94 last year.

Strong solar support

Looking to the future, public sentiment for renewables in Germany, particularly for solar and wind, is very positive, with opinion stating the latter will account for 85% of energy supply in 20 to 30 years and the latter, 77%. Coal, meanwhile, will comprise just 5%, they say.

Overall, 90% of the German population is said to support the country’s energy transition in 2015, similar to the levels seen between 2012 and 2014.