From the national unilateralism to the European project. The German energy market will only be successful if it cooperates with its European neighbors.
The origin of the German Energiewende is purely national. Indeed, when the German federal government decided to embark on the restructuring of Germany’s energy system, it did so without regard for the impact the transition would have on its European neighbors. As a result, the German Energiewende is not always appreciated in Europe to the extent that German policy-makers would like it to be.
Europe provides the German Energiewende with flexibility
As renewables now make up 32 percent of total electricity generation, the German Energiewende is entering a decisive second phase. In an energy system in which volatile and not always readily available renewable energies comprise the largest share of production, the challenge is increasingly that of efficiently reconciling supply and demand.
In recent years, Germany has benefited significantly from the integrated European power grid. For example, it has fed surplus wind power from northern Germany into the power grids of its neighbors, or has used their grids to transport electricity from northern Germany to industry hubs in the south of Germany. Whenever Germany was at a low point in its own power generation, it was able to obtain conventional electricity from its neighbors. However, these practices and actions have resulted in considerable unpredictability in the national power grids of the other European countries. Poland, in particular, has objected time and again that this situation is forcing its energy suppliers to adapt their net transmission capacities accordingly.
For Germany, this state of affairs was and is convenient for two main reasons. Firstly, it has allowed Germany to export its surplus electricity—at present about 8 percent of its annual electricity consumption—to other European countries. Secondly, it has spared Germany of the costly task of having to build its own flexible electricity infrastructure with large storage capacities and new transmission lines.
Germany’s neighbors, however, unhappy with these parallel and loop flows, have reciprocated by gradually increasing the use of so-called phase-shifters along the borders to Germany to minimize the exploitation of their national power grids. For Germany’s Energiewende, this represents a crucial loss, insofar as the former modus operandi not only allowed for flexibility but also kept the cost of the Energiewende lower than it would otherwise have been without access to the power lines and power markets of its neighbors.
The German Energiewende will only succeed if adopted across Europe
According to the European Commission’s energy vision for 2030, Europe is to meet 27 percent of its total energy demand with renewable energy, and increase its energy efficiency by 30 percent. In addition, certain capacity mechanisms are to favor the construction of new conventional power plants.
These objectives show above all that the European member states currently are not united in following a greater shared energy vision. Instead, each country continues to pursue purely national energy interests—from coal in Poland to nuclear in France. In light of these differences, it is not surprising that the European Commission does not propose any more ambitious legislation. A change here will only come about if Energiewende pioneers, such as Germany, convince their European neighbors of the economic and security benefits that a restructuring of the energy system entails.
To be clear, this would be in Germany’s own interest, namely because Germany needs Europe to drive its own Energiewende forward. The European Commission has the power to considerably slow down Germany’s Energiewende in the years to come. For example, the Commission is threatening an end to Germany’s priority access to the grid rule for renewables. A European Energiewende is likewise needed to achieve the climate goals, which Germany and the European Union signed up to as part of the Paris Climate Agreement at the end of 2015. Last but not least, the German Energiewende alone—provided that it finally leads to the much needed GHG emissions reductions—still cannot bring about the necessary turnaround in global climate change.
Europe in a crisis needs an energy vision
Europe is currently facing a serious identity crisis. Following Brexit and given the numerous anti-European movements in many EU member states, Europe needs a unifying growth and innovation vision able to attract major investments in an overarching European project.
A European Energiewende could be this vision for Europe. It would not only foster and strengthen a culture of innovation and digitization but also serve to highlight Europe’s role as a global pioneer in sustainable energy policy and increase the international competitiveness of both Germany and Europe.
Finally, a European Energiewende would benefit the energy security of Germany and the entire European Union, because locally produced electricity combined with increasing energy efficiency decreases dependency on imports and international price developments. In recent years, the alarming impact of energy insecurity for Europe was distinctly felt with the Russia-Ukraine gas disputes, which served as a painful reminder that the European Union today imports around one third of its natural gas from Russia. If the European Union is serious about its Energy Union mission, it should directly tie this in with discussions about a European Energiewende. Such a vision would turn the crisis into a chance for Europe to improve both its negotiating power vis-à-vis Russia, and its status as an international leader in modern and sustainable energy infrastructure.
Therefore, if Germany is to make a meaningful contribution to the energy policy debate in Europe over the next two years, Berlin should not limit itself to petty disputes over the priority grid access for renewables or capacity mechanisms. Rather, Germany should, together with its European neighbors, develop a new narrative about a common European Energiewende – one that addresses the concerns of other European member states as well. This dialogue should focus on Europe’s advantages of economic modernization and international competition. Only then can the Energiewende succeed in both Germany and Europe.