Germany's ambitious plan to move away from nuclear and toward renewable energy by 2022 at an estimated cost of around E90bn has received the backing of the European Investment Bank, which has agreed to fund 15% of the required investment. However, Datamonitor is less confident, and believes Germany will be an important global test case for the rapid transition to a non-nuclear low-carbon economy.
The plan to quit nuclear will involve 20GW of Germany's nuclear capacity being shut down over the next 10 years, with renewables and gas-fired plants filling the gap. The country's strong solar industry is expected to play a big role, as is its offshore wind industry, which is projected to form nearly half of the new capacity. However, wind will not be without its problems, as environmental regulations protect most of Germany's coastline.
According to Datamonitor's Power Generation Analyzer, in 2010 around 16% of electricity generated in Germany came from non-hydro renewable sources. However, the country will have to increase this to 38% over the next 10 years in order to meet its goals. While Datamonitor's "EU 2020 Targets and Energy Efficiency Opportunities in Germany" report shows that the country is already well on its way to achieving its 2020 targets of generating 27% of electricity from renewables, in order to be successful in its current green energy ambitions, it will need to far surpass them.
Although this might seem like a tall order, Germany's plan has a number of strong factors. The country has developed a robust manufacturing base through a strong regime of subsidies, feed-in tariffs, and other incentives. Indeed, global leaders in renewable energy such as Enercon, Siemens, Bosch, Q-cells, and Schott Solar are based out of Germany, and a number of foreign manufacturers also have a presence in the country.
Nevertheless, in order to successfully leave nuclear behind by 2022, the German government has a number of problems to overcome, the most important of which will be managing higher costs. Although wind and solar costs have been falling in recent years, renewable power is still more expensive than conventional sources. The country also needs to upgrade its grid in order to keep up with the intermittent nature of renewable power, providing enough storage options and more efficient transmission mechanisms.
Germany's rapid transformation of its electricity mix will be a showcase for the world: its success or failure could persuade or dissuade more governments to focus on renewables as a viable alternative to conventional sources of power. Furthermore, increased investment in renewables can only improve the learning curve. However, the eventual lesson may be that rapidly transforming a large industrialized nation to a non-nuclear low-carbon economy is too costly and fraught with problems.