CURRENTS: Energy Efficiency, Renewables, and Zero Net Energy Lessons from Germany

by Kate Meis (and Jordan Decker), Local Government Commission

Looking internationally, Germany is a well-recognized leader in forward-thinking energy policies and clean energy. Germany tripled its renewable energy supply in one decade, and committed to switching off its 17 nuclear plants by 2022 following the Fukushima Daiichi meltdown in 2011 (to date, 9 are off). LGC’s Executive Director Kate Meis was selected to travel to Germany through the Ecologic Institute’s POCACITO program to explore first hand how German cities are transitioning to become post-carbon cities. Below, Meis shares some findings – and lessons we can learn from Germany’s experience.

Q: What policies has Germany put in place to spur this national growth in clean energy?

KM: Germany has had a number of progressive environmental policies that have set the stage for their transition to renewable energy: Building efficiency standards and a green certification program in the late 1970s; financing for building retrofits, solar roofs and the first feed-in tariff program in the late 1990s; and an “eco-tax” on gasoline and fossil–based electricity in 2000.

All of these policy actions have helped to establish Germany’s leadership in the global green economy but arguably the biggest driver of their energy transition has been the Renewable Energy Act adopted in 2000, which includes an updated Feed-in Tariff guaranteeing full-cost compensation to cover the actual cost of a specific renewable energy investment.

Utilities are required to purchase renewable energy first, and rates offered are guaranteed for 20 years starting in the year of installation to protect investments – providing investment security for all investors. The rates drop for newly installed systems each year to put price pressure on manufacturers to lower costs as the market increases for renewable energy.

The results have been an exponential increase in renewable energy from Germany has gone from 3% renewable power at the beginning of the 1990s to more than 27% in 2014 and 32% in 2015 – from wind power, biomass and photovoltaic in particular.

Q: Is there anything Germany is doing that is particularly unique, or distinct from California’s approach?

KM: Unlike caps – such as California’s ambitious Renewable Portfolio Standard, which regulates large utilities to reach a certain level of renewable energy and incentivizes utilities to meet the cap through the most affordable technologies available – Germany’s Renewable Energy Act stipulated that the little guy’s power has priority over corporations.

German feed-in tariffs have helped produce community ownership, thereby simultaneously reducing NIMBYism and increasing acceptance levels for renewables, according to a Heinrich Böll Foundation report.

A major motivating factor for citizen investment in renewable energy is financial. The feed-in tariff guarantees that costs are recovered and a certain price will be paid (one expert estimates that consumers are getting a 5% return on their renewable investment).

This democratization isn’t just for wealthy individual building and landowners. Germany has seen a rapid increase in energy cooperatives where a share can be purchased for less than 500 euros in two-thirds of the cooperatives – with the minimum amount less than 100 euros in some cases.

Overall, it is estimated that “energy cooperatives” – community-owned renewables projects – had leveraged more than 1.2 billion euros in investments from more than 130,000 private citizens in 2013.

Citizen ownership also has helped to increase and embed political support for renewable energy.

A lot of Germany’s policies are driven at the national level. What best practices from German cities can you share with California’s cities?

KM: The City of Bottrop, in west central Germany, is notable for it’s proactive efforts to be a model for the energy transition. Located in the Ruhr industrial area, Bottrop has been a mining center dating back to the 1860s. With the adoption of the Renewable Energy Act and the phase-out of coal (the last coal mine will close in 2018), it was clear that Bottrop’s economic base and future prosperity, and that of similar communities across the region, was at risk. In response the city started a community-focused campaign to refocus on clean energy and successfully bid for the InnovationCity award beating out 14 other cities to become a local model for energy transition in the Ruhr region. Bottrop has reduced greenhouse gas emissions by 38% since 2010 and seen 291 million euros in public and private investment as a result of its commitment to a more sustainable future. The city’s unemployment rate is now lower than the national average.

Building energy upgrades has been an instrumental part of Bottrop’s strategy. The City started a retrofit program to pay for up to 25% of the cost of an energy retrofit if they reduce greenhouse gas emissions by 25% (the average rebate is 14%) through a very simple program that only requires the homeowner to get a quote from an approved contractor and submit a receipt for the work.

The City has also developed a website where residents enter in their address and get a list of personalized energy-reduction measures based on 21 housing types in the city (which accounts for such factors as size, year built, detached/attached) with average costs associated with the measures.

As a result of these efforts, 3% of the city’s buildings have been upgraded (compared to .8% nationwide) primarily through private investment. For every 1 euro in public investment and subsidy, they have seen 7 euros of private investment.

Model projects, including net-energy buildings, have helped to show both residents and companies that, if it can work in the pilot, it can work all over the region and around the world.

For more from Kate Meis on best practices and lessons from Germany, see LGC’s Livable Places Update.