ANALYSIS: Germany's bitter pill

A joint plan presented by German environment minister Peter Altmaier and economics minister Philipp Rösler to cut support for renewables would be a heavy blow for the industry in its current form.

Germany’s renewable energy association (BEE) warns new investments could collapse and the country’s transition away from nuclear power would come to a standstill.

The plan contains a series of harsh measures: among them a five-month moratorium before feed-in tariffs (FITs) would be paid for new renewable plants in all technologies apart from PV, and an additional 1.5%-cut in FITs to already-producing plants.

The ministers also suggest a cut in FITs for new onshore wind plants to €0.08 per kWh, from about €0.09 per kWh now.

That could stop the build-up of wind power in southern Germany, where moderate or light winds prevail and the need for higher towers pushes up investment costs.

Without building more wind capacity inland, it will be harder to reach the country’s target for 35% of green electricity in 2020, and 80% in 2050. Harvesting onshore only in windy northern Germany would also put a further strain on already-bottlenecked North-South power transmission lines.

The Social Democrat and Green opposition will likely try to delay passage of Altmaier and Rösler’s proposal in Germany’s upper house, the Bundesrat, which represents states.

It is so far unclear how the Christian Social Union (CSU), the Bavarian sister party of  Altmaier’s Christian Democratic Union (CDU), will react to the proposal that could endanger the state’s own renewables targets. The CSU is part of the federal government coalition.

Southern German Bavaria, a wind energy laggard, plans to meet up to 10% of the state’s electricity demand with wind power by 2021.

Both the opposition and the CSU need to be careful to avoid being labelled as insensitive to the needs of poorer Germans, who have been hit by soaring electricity bills due to rising costs for renewables.

So while much of the opposition has barked at the proposal, some Social Democrat and Green state ministers have signalled their willingness to at least discuss the plan. The Greens, in their own proposal, have adopted some of the less harsh measures demanded by Altmaier.

It is also possible that Rösler and Altmaier have overloaded their proposal with drastic measures to leave some room to bargain in horse-trading with German states.

Germany is prone to heated political debates, but in the end tends to keep a steady course and find intelligent solutions, the CEO of a German wind power company told Recharge recently.

Some of the more cruel parts of the ministers’ proposal may be scrapped in the political process. But one thing is clear – the renewables industry needs to prepare itself for some hardship to come.