As countries and states look to increase their renewable energy production, they can look to the experience of places that have already seen impressive growth. Like Germany, for instance. As a result of its Energiewende (or energy transition), it now generates at least 28% of its power from solar and wind, despite having far fewer natural resources than other countries.
A new report from Stanford’s Steyer-Taylor Center for Energy Policy and Finance compares the experience of Germany with that of California and Texas, and overturns some myths about the costs involved in moving from fossil fuels to cleaner energy.
Germany gets roughly half as much sunshine as California or Texas. But it’s able to generate electricity at similar prices to those in Texas and California. The secret is what’s called “soft costs”–including financing, permitting, installation, and grid access–which are lower in parts of Europe than they are here. For example, the average cost of financing a German solar project is 4.4% to 4.8% against an average rate in the U.S. of 9.6%.
The Energiewende is often criticized because consumer prices for electricity are at least twice as high in Germany compared to the U.S. The argument goes that Germans pay excessive prices because the government has artificially subsidized solar and wind.
But the report says the reason for that isn’t necessarily that Germany has renewables. It finds that subsidies are only the fourth most important factor. The most important is that natural gas costs far more in Europe than it does here, because Europe hasn’t fracked to nearly the same extent. And, in fact, the average bill for German households is still lower than in Texas, and only slightly higher than in California, because homes tend to be smaller and a good deal more energy-efficient.
Also, critics of renewables say adding solar and wind will lead to grid instability. But, again, Germany’s experience disproves the point. Between 2006 to 2013, Germany tripled its solar and wind capacity, and outages actually fell, from 22 minutes a year to 15 minutes. “There’s a perception that if we go to higher renewables the grid might collapse. The German grid shows that’s not the case,” the report says.
The authors don’t say Germany has done everything right. It should have reduced subsidies quicker to reflect falling hardware costs, for example. But it nonetheless offers a blueprint for others to follow. Without the Energiewende, people might still be wondering if a transition was even possible.