The German Energiewende: It is our energy !

Kassel, 20 March 2013, 6pm. The entrance of the town hall is buzzing: the hall is packed to the rafters with 250 people who are here to set up the energy cooperative Bürger Energie Kassel. ‘Each year our region pays 183 million euros to big companies and foreign countries for its energy. By producing energy locally, we not only create local revenue and jobs, but are also mindful of the environmental changes the region needs’, said Harry Völler of the founding group which has helped set up the cooperative. Townspeople can join it by buying shares of 250 euros with a maximum of 400 shares.

People know what the money is for as there is already a concrete project. ‘Here you have the licence!’ said Lars Rotzsche, a ponytailed man with an engineering degree who works with Kassel Stadtwerk, the communal energy company, as he lifts up a sheaf of paper. ‘We have permission to build a set of wind turbines.’

The Kassel cooperative will finance the construction of seven gigantic wind turbines – 140 metres high with wings 60 metres wide - for about 30 million euros. The local people will supply at least 20 percent of that. The rest will be financed with bank loans, as is usual with this kind of project. The Kasseler Sparkasse, or savings bank, and the Kasseler Bank are also at the town hall meeting and will be partners in the project. ‘I’ve bought 10,000 euros worth of stock’, Bertram Hilgen, the Social Democrat Party mayor of Kassel, tells me as we leave the room. ‘I think that a couple of millions of euros have been raised tonight alone.’

People join in for different reasons. ‘I’m not here with idealist motives’, an older man says during the Q&A session. ‘Can you tell me what my return on investment will be?’ The precise return depends on the amount of wind, the Stadtwerk replies, and wind measurements are not yet complete. Whatever it will be, the founders point out that this is a risky investment that doesn’t guarantee any return. Cooperatives don’t usually pay out more than 6 percent. However, even 3 percent is attractive since these days a savings account pays 1.5 percent interest or less. Not everyone has financial interests at heart: ‘I think it’s great to be able to invest my savings in something positive’, a woman says at the entrance of the town hall.

Nature or Climate?

Kassel stands out because its energy cooperative invests in wind energy on a large scale. Most other German energy cooperatives are smaller and have focused on solar panels. In Kassel, the communal energy company supplies the technical knowledge that sometimes holds back civilian cooperatives from switching over to wind energy. ‘We’ve invested 600,0000 euros in preparatory work for the wind turbines’, said Lars Rotzsche. The Stadtwerk and the cooperative will jointly own the wind turbines and the cooperative may provide up to three-quarters of the initial capital.

Fifty kilometres to the South of Kassel, the town of Wolfhagen started its Energiewende in 2008 when the town council decided that it wanted to produce all of its power from local and renewable energy by 2015. Wolfhagen aims to achieve this with the local Stadtwerk for water and energy,  and an energy cooperative working together. In this small town with only 20,000 people, some 600 members of the BürgerEnergieGenossenschaft Wolfhagen cooperative were able to raise 2.3 million euros, which were invested in the Stadtwerk. ‘That gives them a quarter of the shares and two seats on our board. The people from the cooperative are now smirking, saying they’re in charge’, said Martin Rühl, the Stadtwerk’s director. Last year, that fresh capital allowed 18 hectares of solar panels to be set up, producing 10 megawatts. As soon as they get permission, four wind turbines will follow. ‘All of this puts the members of the cooperative in a position of great responsibility. Sure enough, they have a say in the electricity price, but they also have to make sure that the money invested produces a certain return’, Rühl says.

A share in the cooperative costs 500 euros but people can make down payments of 20 euros a time. ‘A study has shown that this model generates value locally of up to 1.7 million euros with income from employment, taxes, credit return, interest from dividends for cooperative members, while external investments would only generate 270,000 euros in our region,’ Rühl explains.

The picture isn’t all sunny. Iris Degenhardt-Meister, who sits on the board of the cooperative, describes how her village of Nothfelden is divided by the construction of the four wind turbines on a wooded hillside. ‘In the beginning, especially those who were opposed to the wind turbines were in the picture. I started a campaign group to make sure that the voice of those who support the project could also be heard. When the council elections came round, three-quarters of Wolfhagen appeared to be in favour of the turbines, while three-quarters of Nothfelden were against. People even founded a Green Party group to campaign against the wind turbines here. The protection of forests is pitted against the fight against climate change, in other words.’

Ambitious

These examples from the state of Hessen are only two out of hundreds of energy cooperatives that have been founded the last couple of years. In 2012 alone, some 150 were set up – almost three a week. German Chancellor Angela Merkel’s government turned that local support for renewable energy into a number of concrete goals in its September 2010 energy plan. In doing so, she set the bar much higher for Germany than for the rest of Europe. By 2020, Germany wants to cut its emission of greenhouse gas by 40 percent, not 20 percent as the rest of Europe, compared to 1990. By 2020, at least 18 percent of Germany’s total energy consumption needs to come from renewable energy. The most ambitious part is Germany’s energy saving plans: by 2020, primary energy consumption should be reduced by 20 percent from 2008 levels, and by 2050, it should be cut by half. The EU only wants to cut consumption by 20 percent when compared to the business-as-usual scenario of doing nothing.

When it comes to CO2 emissions, the goals are even higher with the June 2011 announcement to shut down the last of the country’s nuclear plants in 2022, a decision which followed the nuclear disaster in Fukushima, Japan. On the German highways you can litteraly see that Germany is gripped by a major project, with the frequent sight of lorries carrying gigantic wind turbine parts. There are herds of wind turbines, arrays of solar panels and, to a lesser extent, biogas installations everywhere. But does that mean that the country is on schedule?

‘The first monitoring report shows that we are indeed on schedule’, said Professor Diethard Mager of the economy and technology ministry. The data seem to confirm that. Still, Mager is careful to commit himself: ‘In a couple of years we will need to see whether we are on target for energy saving thanks to our efforts – or thanks to the economic crisis,’ he says.

Professor Claudia Kemfert of the German Institute for Economic Research is more critical. ‘As far as the share of renewable energy in electricity production is concerned, we are ahead of schedule. Out of the planned 35 percent by 2020, 25 percent was already achieved in 2012. But energy saving is not doing well. There is next to no money for that’, she said

The capitalists of Kalkar

We will have to see whether Germany can meet its goals; reducing emissions and energy saving will be major challenges. When it comes to renewable energy, Germany is on target. Yet this is not mainly due to the wave of cooperatives, which is still too new to make much difference so far. ‘The cooperatives are responsible for less than 1 percent of all renewable energy’, said Benjamin Dannemann of the Agency for Renewable Energy.

Before the cooperative wave, there was an earlier wave which was also bottom-up. ‘Many of the big developers of wind and solar parks come from the social movements,’ says Lars Rotzsche of Stadtwerk Kassel.

Johannes Lackmann is the perfect example. ‘Many of us come from the movement against nuclear energy’ and from working on campaigns against nuclear plants in Kalkar and Brockdorf, he says ‘We thought nuclear energy was too dangerous but we were laughed at because we had no alternative. Being an engineer in electrotechnology, that wasn’t easy to accept’.

Former German chancellor Helmut Kohl’s conservative government unintentionally paved the way for renewable energy in 1990. It introduced the “feed-in tariff” to help a few small hydroelectric power stations to survive by requiring power distribution networks to purchase hydroelectric power at a guaranteed price. ‘When the first wind turbines arrived from the Netherlands and Denmark, we made use of that’, Lackmann said. This unexpectedly triggered the initial boom in wind energy and, despite the relatively low feed-in tariff, wind turbines became profitable in windy regions.

In 2012, 150 local energy cooperatives were founded: three a week. That says a lot about the German people’s commitment to renewable energy.

In 1997, the Kohl government wanted to end the tariff – lobbying from the four major power companies was then a force to be reckoned with, according to Lackmann – but the genie was already out of the bottle. ‘At one memorable manifestation technology companies, environmentalists, trade unions, churches and developers protested together to keep the law!’ Lackman said. ‘The government could not back out.’ The sector learned to organise itself politically. Lackmann founded both an association of wind energy producers and an umbrella group for renewable energy and headed them from 1999 to 2008. He was an advisor to four members of parliament – two Greens and two Social Democrats – who came to power in the red-green coalition Schröder government and drafted a 2000 renewable energy law that made a large hike in the price of feed-in tariffs. Solar technology and biogas also became cost-effective,and the Energiewende really got going.

Germany’s emergence as the frontrunner of renewable energy owes a lot to these activists-entrepreneurs and their conviction, shared by so many Germans, that the country needs to do without nuclear power – or Atomkraft, Nein Danke according to the famous 1980s slogan. One consequence is that the four major conventional power companies, often called the Big Four, have next to no part in renewable energy yet. ‘That was arrogant. For too long they’ve thought the sector would remain a small niche’, Lackmann states.

When the Wind Blows

Some 380,000 Germans now work in the renewable energy sector. In some regions of former East Germany with high unemployment the Energiewende is a source of much-needed work and income, even though people don’t have the funds to invest in cooperatives. In the village of Schlalach, 50 kilometres southwest of Berlin, people have found an original way to share the profit from sixteen large wind turbines. ‘We are much poorer than you are in Belgium’, Peter Hahn tells. ‘We cannot buy shares in the wind turbines but we have tried to distribute the income that comes from the turbines fairly.’

He explains in great detail how they handled things. ‘The state allotted an area for wind turbines and135 different owners each owned a piece of that area. To prevent one farmer getting all the profit from a turbine on his section while the others got nothing, we asked everyone not to negotiate any individuals contracts with the developers’, Hahn said. Then came a long process to find a fair method to share with all the owners the 500,000 euros of rent that Schlalach collects yearly from the wind turbines. Those with more land and those with turbines on their land get more but the other land owners get something as well. ‘Half of our 320 inhabitants get direct income from the turbines, which fluctuates between 1,000 and 30,000 euros a year’, Hahn says. ‘On top of that, we use the revenue from the turbines for a fund that finances things for the common good like a village festival or a football field. Or, when a family is in need, the fund can help as well.’

A Helping Hand from the Financial Crisis

The recent financial crisis has spurred support for the Energiewende, as the explosion of local cooperatives shows. ‘The financial crisis has helped us because it has reduced people’s profit expectations’, said Anita Erpel of Potsdam’s energy cooperative Neue Energiegenossenschaft. ‘It used to be impossible to convince people with a return of 4 percent. Not anymore.’

This matters since people used to count on a high return from financial investments, even though some of these came from an unsustainable boom. The collapse of the financial industry’s house of cards now gives people the chance to invest their money in the real economy of the Energiewende.

The cooperatives may be small but they can have a big effect on society, according to Benjamin Dannemann. ‘Their impact is large because they show that there is more than individualism in our society. The Energiewende creates opportunities for people to achieve things together’, he said. ‘For me, the crucial question is whether they can move into wind energy. If that happens, they will be a major force. In order to achieve that, they need to become more professional and be more than tea-party companies.’ As we saw earlier, in Kassel and Wolfhagen this is happening already.

Anita Erpel said expansion isn’t an obvious next step. ‘We are now thinking about a third installation’, she said. ‘But it’s not easy. You need to grow to be able to pay people. But to grow you need good people who invest a lot of time and energy in the development of the cooperative.’ This kind of bottleneck is an obstacle for many cooperatives. Collaborating with local public companies, as we saw earlier in this article, makes that step easier. Working with companies that are open to cooperatives’ real participation also offers good opportunities. Johannes Lackmann’s company Westfalen GmbH is setting up local people’s own wind turbines, which means that people can invest large amounts via GmbH’s (limited partnerships) and small amounts via cooperatives. Lackmann: ‘The Energiewende is just plain impossible if it isn’t embraced by the people. It seems only logical to me that the cooperatives have a say in things, even if that means that making decisions gets more complex, and even if you need to do much more explaining. On the other hand, there needs to be a balance between participation and expertise. Some of the participants in the cooperatives don’t even know the difference between kilowatts and kilowatt-hours.’

And the Policy?

The way the Energiewende will evolve, also depends on the government’s policy. According to polls, most Germans still support the Energiewende but there has been more and more talk about its cost

‘Do you know I pay 60 euros for my power every day?’ says a hotel manager in Göttingen.

‘Mind you, I am all for the Energiewende and against nuclear energy, but power is just too expensive.’ Professor Kemfert said that the Big Four have started a real campaign against the Energiewende. ‘This government is also against it, although they do not openly say so’, she says. ‘Fortunately the German people support it: one million people have committed to it. Germany’s biggest paper, Bild, published an image of a single mother sitting in the dark because of the Energiewende. Pure disinformation for the public. That kind of thing is not an energy issue but a social problem.’ This is the point where social politics in Germany – with its growing group of poor workers and increasing poverty – intersects with the Energiewende, which supposedly costs an average family more than 10 euros a month.

The feed-in tariff gets charged to the consumer, who currently pays an electricity surcharge of 5.3 cents per kilowatt-hour. For the whole of Germany, that amounted to 16 billion euros last year. Peter Altmaier, the environment minister, wants to introduce a Strompreisbremse, or electricity price freeze, by fixing the surcharge at 5.3 cents. Altmaier warns that the total cost of the Energiewende, including expanding the power distribution network, could rise to 1,000 billion euros by 2030 if he doesn’t keep things in check.

Such a brake on the electricity price would mean that the feed-in tariffs need to go down and/or that more companies would have to pay the surcharge. Today, energy-intensive companies that are vulnerable to international competition are exempt from paying it, but this rule is interpreted very liberally. The German railroad company, tram companies or abattoirs don’t pay it. This will almost certainly change.

In any case, Germany is affected by developments elsewhere. The US shale gas boom has reduced global demand for coal, causing its price to fall. The Big Four have built 13 gigawatts of new coal plants.CO2 emissions rose again in 2012 for the first time in years. There is general disappointment about the fact that the price of EU trading permits to emit CO2 is only 3 euros a ton. The European emissions trading system seems to have misfired since the low CO2 price is not stimulating investments towards low carbon production methods.

Exactly how much the feed-in tariffs will be changed is uncertain. That decision will not be made until after the September elections. ‘We need to talk with the industry and see what is necessary to keep investments at their current level’, said Jürgen Trittin, the head of the Green Party in the Bundestag, the German parliament. ‘If you change the current system too abrupt, it’ll have immediate consequences.’ Johannes Lackmann sees room for adjustments. The man who has led the renewable energy sector’s lobby for years, finds that some people in the business want too much profit. ‘We need to control our lobbying power. If the feed-in tariff can go down, then that has to happen’, he says. ‘For instance, for a long time too much money was paid for solar panels – costs we will carry with us for the next 15 years. So the system needs to be managed in a very flexible way.’ Lackmann worries that excessively high costs will not only jeopardise the German changeover, but will also make the German model less attractive abroad. If it’s up to him, the Energiewende should become a German export product as well.