Germany offers cash windfall to lure wind and solar providers

Disappointing renewable growth in 2022 came despite Russian energy crunch

Germany has had to turn to fossil fuels to plug gaps left by Russia. AP
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Germany has offered a jackpot to wind and solar energy producers to lure more power into a squeezed market.

A key price ceiling has been raised by a quarter so that wind and solar providers can earn more revenue.

It comes after rising costs and interest rates led to disappointing renewable growth this year.

The volume of solar energy offered in a recent bidding round fell by almost half, despite Germany’s eager search for alternatives to Russian gas.

Only 16 bids went in to provide new onshore wind power, despite many more sites having received planning permission.

As a result, MPs voted shortly before Christmas to let Germany’s energy regulator hike the market rate.

The higher costs that wind and solar providers can now demand will be reflected in greater government subsidies.

“The new price ceiling enables those who take part in next year’s auctions to earn sufficient revenue,” said the regulator’s boss Klaus Mueller.

“I hope this will lead to the much reduced number of bids rising again and that competition can develop again.”

Chancellor Olaf Scholz recently opened a new North Sea gas terminal. Bloomberg

Chancellor Olaf Scholz’s government has set a target of using 2 per cent of Germany’s land area for wind power.

Another guideline is that the roof of any new building should in principle be available for solar power.

Those energy goals took on additional significance once Russia invaded Ukraine and cut off gas supplies to Germany.

As renewable growth flagged and imports from France dried up, Germany was forced to turn to fossil fuels to make ends meet.

The nuclear power switch-off long planned for December 31 has been pushed into next year, and a new gas terminal was built in the North Sea.

While coal power generation in the third quarter of 2022 was up by 13 per cent on a year earlier, wind rose by only one per cent.

Ministers say the use of extra coal, gas and nuclear power are temporary measures to plug the gap.

But activists say much more needs to be done for Germany’s ambitious goals to be met.

An energy package passed by MPs in June set a target of a 100 per cent clean power grid by 2035.

In the third quarter of this year renewable sources provided 43 per cent of Germany’s electricity, down slightly from 2021.

Updated: December 28, 2022, 2:22 PM