Sigmar Gabriel

Reform of Germany’s renewable energy sector is to take place after Angela Merkel’s government passed legislation on the subject.

The reform is necessary to curb a rise in the cost of electricity driven by the rapid expansion of green power under the country’s Energiewende policy.

The reform will slow the expansion of green energy, which accounts for 25 percent of Germany‘s electricity and force new investors in green power to take some risk.

According to Reuters, although industry will have to pay more for power in future, the sector has managed to hold on to a good share of the benefits it says it needs to stay competitive.
Sigmar Gabriel

As a result of the reform, householders are likely to see power bills rise at a slower pace.

Economy and Energy Minister Sigmar Gabriel (pictured) has had to resolve the complexity of maintaining growth in renewables with the requirement to keep heavy industry happy with affordable power.

In addition the interests of the European Commission and Germany’s 16 states, which have differing energy priorities, had to be accommodated.

The government plans to increase the share of renewable sources to 40-45 percent of total electricity production by 2025 and to 55-60 percent by 2035. This is needed to offset the elimination of nuclear power by 2022.

Under the reform, new upper limits will be placed on onshore wind power expansion (at 2.5 GW in capacity per year), photovoltaic (2.5 GW per year) and offshore wind plants (6.5 GW to 2020).

Gabriel has also negotiated exemptions in Brussels that will continue to protect some heavy industrial users of power from a renewable energy surcharge, worth about $7bn a year but which adds 6.3 cents per kilowatt-hour to the power bills of ordinary consumers.

The European Commission – the EU’s executive arm – was looking into whether such discounts on surcharges were giving Germany’s industry an unfair advantage over rival companies in other countries within the bloc.

Germany’s industrial sector, which accounts for more than a quarter of the economy, warned that around 800,000 jobs could be at risk due to the government’s energy policies.

Ulrich Grillo, head of the BDI industry association, told German radio that he was worried by creeping capital flows out of Germany, but also said he knew “compromises have to be made”. But he added that the BDI welcomed the agreement between Brussels and Berlin.

He said: “The future regulations secure the chances of keeping industrial jobs permanently in Germany.”

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