by Hans Chen | June 8th 2011
Mark the date: May 30th, 2011, when Germany became the first ever developed industrialized country to eliminate nuclear power for good. Norbert Röttgen, Environment Minister of the country, announced that the decision will not be changed regardless of any situation in the future.
Germany did shut down seven of its 17 nuclear power plants right after the nuclear crisis occurred in Fukushima, Japan. Since then, speculation about the country having some sort of resolution on nuclear power has been flying around. But very few people expected this: timetable of a total elimination proposed by a conservative administration led by Angela Merkel, the current Chancellor, who recently “changed her mind” on nuclear power because of what happened in Japan.
In other words, Germany, the fifth-largest economy and one of the most technologically advanced countries in the world, will take out more than a fifth of its current power generation (nuclear power accounts for 22% of Germany’s total power generated) in 10 years. Really?
So, here at the Cleantech Group, we have to ask: Is cleantech the solution?
Renewable energy currently accounts for 20% of Germany’s total power generation. The country is indeed one of the global leaders in renewable energy technology, but is renewable energy really able to fill the void?
According to the government’s plan, €3 billion will be invested every year in renewable energy projects, plants or facilities. There isn’t any doubt that German renewable energy companies will benefit from the government’s resolution, especially segments like wind power and biogas, which already accounts for more than 10% of the country’s total energy generation combined (5.9% wind, 4.6% biogas).
Solar companies will likely become beneficiaries, too. Listed solar companies in Europe all enjoyed rising stock price after Germany’s decision was announced. Moreover, the government is discussing about reducing subsidy of residential rooftop solar installation by 6%, an implication of the country’s determination of establishing grid-scale (rather than individual) solar power. It also shows the country’s intention of concentrating its resource in cultivating small to mid-size cleantech companies by promoting free market competition (i.e. less incentives). Ultimately, Germany expects that when the calendar hits 2022, its energy industry will be driven by small energy companies rather than gigantic energy corporations.
Things are looking bright for cleantech, but maybe brighter for traditional energy generation.
France, the smallest emitter of carbon dioxide among the seven most industrialized countries in the world due to its heavy investment in nuclear power, criticized Germany’s decision. Éric Besson, Minister of Industry, Energy and the Digital economy of France, said that Germany’s decision will only result in more reliance on fossil fuel and imported electricity. German citizens will be charged more for dirtier energy.
Although widely considered as a leader in renewable energy, Germany still relies heavily on coal-fire power, where 42% of its electricity comes from. Anne Lauvergeon, CEO of the French state-owned nuclear power company AREVA, also expressed her concern. “I am not sure whether coal from Poland is sufficient, not to mention there’s a problem with carbon emission,” said Lauvergeon. “Alternate energy is still an unstable source. I think Germany will eventually follow Austria’s path—importing electricity from neighboring countries.”
Either way, it will be a big challenge for Germany. The showdown between traditional energy and renewable energy is about to begin. From now on, Germany will be under our spotlight.
