Germany does not waste money
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Germany’s ambitious RES construction program is in trouble. Investors are refusing to build 5 GW of onshore wind farms (WPPs) due to a sharp increase in equipment prices. Offshore wind farm projects of 6 GW have also slowed down. As a result, Germany, which closed all its nuclear power plants this year, will be forced to further reduce consumption or increase imports of cheap electricity from French nuclear power plants in winter.
The German Economy Ministry will allow investors in the construction of onshore wind farms to refuse contracts due to rising costs, the agency reports. Bloomberg. Projects with a total capacity of about 5 GW, which received subsidies in the past two years, have not been built, the ministry said. Against the backdrop of a surge in inflation and rising prices for equipment, projects become unprofitable.
Investors who have abandoned their obligations to build wind farms are likely to be able to conclude contracts at higher prices again. The German Ministry of Economy explained that a sharp rise in the cost of equipment could not be foreseen at the time of the conclusion of contracts, and now prices look more realistic. The ministry is headed by Deputy Prime Minister Robert Habeck, a member of the Greens faction, who has been a strong supporter of new renewable energy in Germany and has been a leading advocate for the early closure of German nuclear power plants and the withdrawal of Russian gas.
Germany ranks first in the EU in terms of electricity production. In 2022, the country’s power plants produced 509 billion kWh (1.9% less than in 2021). The share of output of coal-fired TPPs was 33.3%, gas-fired TPPs – 11.4%. The volume of wind farms in the energy balance reached 24.1%, and solar generation – 10.6%.
Projects for the construction of 6 GW offshore wind farms in Germany and solar power plants are also experiencing problems, Bloomberg points out. “The inability of developers to bring their plans to life has given rise to doubts about the feasibility of the German program for the explosive growth of renewable energy capacity,” the agency writes. By 2030, the German authorities want to increase the share of renewable energy generation to at least 80%. For comparison: in 2022, the share of production of all renewable energy sources, including hydroelectric power plants, reached 46% in the energy balance of Germany. The total installed capacity of wind farms in the country is approximately 60 GW, said Vladimir Sidorovich, director of the New Energy Information Center.
80 percent
should reach the share of renewable energy in the energy balance of Germany by 2030 according to the plans of the authorities
The volume of unfinished subsidized onshore wind farms roughly corresponds to the capacity of nuclear power units closed in Germany in the spring of 2023. Three shutdown reactors of 4 GW, according to the estimates of the Center for Economic Forecasting of Gazprombank, accounted for about 2% of the country’s total energy capacity. Nuclear power plants generated about 63 GWh per day, or 5–6% of the total production volume. Due to the protracted construction of wind farms in the country, it is unlikely that there will be an energy shortage, but Germany will probably have to increase imports of cheaper electricity from nuclear power plants from France and other countries, or further reduce domestic demand.
A sharp increase in prices for equipment, components and materials for the construction of wind farms has been observed since the end of 2021 almost all over the world, says Alexei Zhikharev, director of the Russian Association for the Development of Renewable Energy. “For individual components, for example, for neodymium for permanent magnets, the increase in prices in certain periods exceeded 100%,” he says. “On average, CAPEX of wind farm projects, depending on the region, increased by 20–25%: for example, Russian projects increased by more than 22%.
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