Germany’s drive towards a transition to renewable energy is being undermined by its continuing dependency on coal-fired power, according to GlobalData.
Their analysis leads them to believe that despite their best efforts coal will still backbone Germany’s economy for some time to come, despite a greater attempt to develop gas-fired power in order to reduce emissions.
While Germany’s installed renewable energy capacity is forecast to increase from 86.2 GW in 2014 to 147.4 GW by 2025, simultaneous coal-based power additions will undermine the country’s efforts to reduce carbon emissions, the research and consulting firm foresees.
The company’s latest report, Germany Power Market Outlook to 2025, Update 2015 – Market Trends, Regulations, and Competitive Landscape, states that renewables will dominate Germany’s energy mix by 2025, with their share of total installed capacity increasing from 44.7% in 2014 to 59.7% by the end of the forecast period, representing a Compound Annual Growth Rate (CAGR) of 4.6%.
According to Chiradeep Chatterjee, GlobalData’s Senior Analyst covering Power, this growth will be driven primarily by incentives provided under Germany’s Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz). This Act, which came into force in 2009 and was amended in 2014, includes a requirement for grid operators to pay a minimum tariff to renewable energy producers.
Chatterjee says: “The German government has set an ambitious target to reduce its carbon dioxide emissions to 40% of 1990 levels by 2020. The incentives provided to help achieve this target have created attractive investment opportunities in a rapidly-expanding renewable industry.
“Most opportunities will emerge in renewable sectors that have new and upcoming technologies, such as geothermal and offshore wind power, which are expected to grow at impressive CAGRs of 13% and 15%, respectively, between 2014 and 2025.”
However, the analyst warned, “The German government intends to phase out nuclear power by 2022. As renewable energy will be unable to replace fully the subsequent loss in nuclear capacity, due to its intermittent electricity generation, the country will shift its focus to coal-based power generation, meaning a rise in emissions.”
“With more than 3 GW of coal-based capacity expected to be added by 2020, the object of Germany’s renewable energy projects will be defeated. As a result, the government will veer more towards gas-based generation by 2025, although coal will still account for more than 60 per cent of the country’s thermal power capacity by the end of the forecast period.”