Germany's Energiewende under the Spotlight
Germany's energy market transformation (Energiewende) was under the spotlight again this week.
The country’s Constitutional Court in Karlsruhe held oral hearings on March 15-16 into demands by E.On, RWE and Vattenfall for billions of euros in compensation from the government, contending that its abrupt 2011 decision to accelerate the phase-out of nuclear power in Germany was unlawful.
Chancellor Angela Merkel’s CDU-CSU alliance went into elections in 2009 calling for nuclear plant life extensions. However after Japan’s 2011 tsunami which killed 18,000, and the Fukushima nuclear plant meltdown, Merkel’s government reversed its policy.
The three nuclear generators claim the forced closure by 2022 of all reactors amounts to expropriation of their assets.
Germany’s third-largest generator EnBW, also a major nuclear generator, is not part of the suit against the government. The state of Baden-Wurttemberg, which controls EnBW, has been run by a Greens-led coalition in 2011 and the party became the largest in this weekend’s state elections.
A ruling by the Constitutional Court is not expected for several months.
The reduction in German nuclear capacity in 2011-16 favoured coal and renewable-fired generation, rather than new gas-fired plants, as the US shale gas boom pushed more cheap coal onto the world markets, especially Europe, causing Germany’s carbon emissions briefly to climb.
In a research note on March 16, French bank Societe Generale analysts said about 10 GW of German nuclear capacity was closed down within months of the 2011 government decision. Since 2011 it says that renewables’ share in German power production has risen at a compound annual growth rate of 25%, which led German wholesale power prices to fall to around €23/MWh in 2015.
Meanwhile, ahead of a debate on a new Electricity Market Bill in the lower house of parliament (Bundestag) on March 16, German gas and water utility association BDEW the previous day called on government ‘not to obstruct development of Battery, Pumped Storage and Power-to-Gas projects’. It also said government was increasing regulatory burdens on conventional power generation, claiming these were ‘emergency measures’ whereas in BDEW’s view they were nothing of the sort.