Germany's Carbon Emissions Fall as Renewable Energy Takes the Lead

2014 may have marked an inflection point in the transition to clean, renewable energy in Germany, Europe's largest economy and the fifth largest in the world. Collectively, renewable energy resources supplied more electricity in Germany than any other category last year, surpassing lignite coal for the first time, according to Agora Energiewende's 2014 annual report.

Renewable energy resources, including wind, hydro, solar and biomass, accounted for 27.3 percent of German electricity generation in 2014, according to Agora's The Energiewende in the Power Sector: State of Affairs 2014. Significantly, greenhouse gas emissions and electric power consumption both declined, and wholesale power prices fell to a record-low while Germany's economy expanded 1.4 percent.

Commenting on the confluence of positive developments, Agora Energiewende Director Dr. Patrick Graichen said: “In 2013, we could still see an increase in the undesirable emission of carbon dioxide, parallel to the rise in renewables. At the time, we called this the Energiewende Paradox. Today we can say that this trend has been broken – energy from renewables continues to grow and greenhouse gas emissions are decreasing again.”

A turning point in Germany's renewable energy transition?

A tapering off in wind power production in October and November was followed by a record amount of wind power generation in December. Overall, a mild winter resulted in a low amount – 60-70 gigawatts – of power demand, Agora Energiewende highlights in its 2014 annual report.

A sunny summer led to lots in the way of solar energy production in Q3 2014, while both wind and solar power production levels were high in the spring second quarter. Renewable energy resources met 28.5 percent of Germany's overall electricity demand through the first half of 2014.

A troubling uptick in coal combustion, and hence carbon dioxide (CO2) emissions, had been recorded in recent years as Germany carried out the process of decommissioning its fleet of 22 nuclear power plants. Utilities opted to burn more hard and lignite coal to make up for the shortfall as opposed to natural gas, which is much more expensive in Germany.

That changed in 2014. Germany's annual greenhouse gas emissions fell substantially, to their second-lowest level since 1990, last year. Lower coal prices, and a mild winter, were the main contributors. Furthermore, Graichen of Agora Energiewende explains:

“The main reason for lower CO2 emissions, according to the analysis, is that after pushing gas-fired power plants out of the market, renewables are now crowding out climate-damaging hard-coal power plants. 'Hard coal and gas are the losers in the power mix. Lignite-fired power plants, on the other hand, are still producing at a high level."

Falling prices, falling greenhouse gas emissions and a growing economy

What's more, the upward trend in wholesale electricity prices also reversed course. Wholesale electricity prices on the Leipzig power market fell to a record-low 33 euros per megawatt-hour in 2014 as compared to 38 euros in 2013, according to Agora Energiewende's report.

Declining German power prices prompted its European neighbors to import more electricity from Germany, a record amount as it turns out. On a net basis, neighboring countries imported 34.1 terawatt-hours of German electrical energy – 5.6 percent of Germany's total electricity generation in 2014 -- which was a slight uptick from 2013.

“We appear to have reached the maximum possible in electricity exports,” Graichen commented.

Looking forward, Agora Energiewende foresees further declines in German electricity prices in 2015. Two factors will be the main drivers, Agora elaborates: “Forward contracts for 2015 purchases of electricity on the power exchange as well as the renewable energy surcharge are lower than in 2014. Many electricity distributors will pass these advantages on to their customers.”

Moreover, Agora points out, the number of hours where electricity prices were negative in Germany in 2014 increased to 64, “the same number as in 2013, although the share of wind and solar power had increased significantly.

“That this was successful is perhaps the best news for the power system,” Graichen said. “It shows that even a system with a lot of wind and solar power is technologically manageable.”

*Images credit: Agora Energiewende