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German coalition plans for 480-540 TWh renewables by 2030 to exit coal

Highlights

EEG 2021 law set pathway towards 377 TWh by 2030

Wind, solar groups call for fast implementation

EEG levy to end 2023 amid price rally, CO2 tax

Germany's incoming coalition government plans to add at least 100 TWh/year of renewable energy by 2030, lifting the target share of renewables in the power mix to 80%, according to the coalition treaty published Nov. 24.

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Under the current law (EEG 2021), additions of 377 TWh were planned to 2030, targeting share of renewables of 65%.

Electricity demand projections have also been lifted to a 680-750 TWh range for 2030, resulting in a 480-540 TWh range for wind, solar and other types of renewable energy.

For 2022, the EEG 2021 set a 269 TWh target after renewables covered a record 46% of German power demand in 2020.

Utility association BDEW said the 80% target was "very ambitious", but saw "grounds for optimism for a faster energy transition in Germany".

The association estimated a need for 130 GW onshore wind capacity by 2030 for the higher range of the demand projection, equating to weekly additions of 25-38 wind turbines.

In 2020, eight turbines were installed on average each week.

Fast implementation key

Onshore wind is already Germany's biggest single source of electricity with 56 GW currently installed, generating around 100 TWh/year.

Wind association BWE called for a fast implementation of the plans with measures on spatial planning reforms essential before the 2022 parliamentary summer break.

"Secure development plots and faster permitting are the priority for onshore wind," BWE president Hermann Albers said.

The coalition treaty plans to implement a call by BWE to make 2% of Germany's land area available for wind development, while external project teams are envisaged to help speed up the permitting process at local authorities, with the federal government requiring close cooperation from state governments to reform spatial planning.

70 GW offshore wind by 2045

For offshore wind, the coalition treaty set a 30 GW target for 2030, double the pre-coronavirus target with the previous government already boosting the 2030 target to 20 GW with a new offshore wind law in 2020.

Germany currently has 7.8 GW offshore wind capacity with another 4 GW of projects tendered, of which 2.7 GW are without subsidies.

Offshore lobby BWO said the new targets were a "historic political framework decision to achieve climate targets" with the volumes an enormous task.

The treaty proposed new 40 GW by 2035 and 70 GW by 2045 targets and pointed at cross-border offshore wind cooperation and hybrid interconnectors as additional tools to boost capacities.

200 GW solar booster

The coalition also plans to double the 2030 solar capacity target to 200 GW, from a current 58 GW installed capacity.

Solar is the fastest growing sector and generated a record 55 TWh in 2021, led by roof-top panels amid growing offtake of home storage batteries.

Utility-scale ground-mounted solar projects are the most competitive with over 1 GW of projects now outside the EEG support system.

Tenders for support contracts are limited to projects up to 20 MW.

The latest solar tender was oversubscribed with projects awarded at an average Eur50/MWh ($56/MWh).

For onshore wind, the last tender awarded the full 1.5 GW at Eur57.90/MWh in September, after most tenders since 2019 were undersubscribed.

Record power prices

For 2022, the current coalition has already doubled tender volumes to 10 GW for solar and onshore wind, but failed to adjust the EEG 2021 to the higher climate targets, now the priority for the incoming coalition.

The treaty hinted at a dynamic annual adjustment of tender volumes towards the 2030 targets.

The coalition parties also plan to end the EEG levy in 2023. The levy has financed German renewables over the past 20 years covering the gap between feed-in-tariffs and wholesale prices.

The levy boosted German electricity bills already before the 2021 rally to levels above Eur300/MWh.

For 2022, record market income from renewables in 2021 and a new CO2 tax for non-ETS sectors helped cut the levy by 43% on year to a 10-year-low, helping to offset the impact of record wholesale power prices for households.

German year-ahead baseload power doubled since June trading Nov. 25 above Eur137/MWh.

S&P Global Platts Analytics sees annual power prices drop sharply from a record 2022 over the coming years with record wind and solar additions of 46 GW for the four years to 2025 a key reason alongside falling gas prices.

The coalition treaty energy section also mentioned subsidy-free projects, easier access to PPAs and trading of guarantees of origins (GOs) to help support the expansion with details to be implemented over the coming four years with a faster exit from coal by 2030 the priority to achieve the 2030 emissions cutting target.

Platts assessed EU wind 2025 GO at Eur1.935/MWh and EU solar 2023 at Eur1.820/MWh.

GERMAN COALITION GREEN ENERGY PLANS

New 2030 target
Currently
Notes
Renewables target
80% of power demand
65%
Annual tender volumes adjusted
Demand
680-750 TWh/year
580 TWh
480-540 TWh renewables required
Solar capacity
200 GW
100 GW
mandatory roof-top for new C&I buildings
Onshore wind
no set target (~100 GW)
~75 GW
2% of space to be made available
Offshore wind
30 GW
20 GW
new 40 GW 2035, 70 GW 2045
Electrolyzer
10 GW
5 GW
Imports via H2Global, fast IPCEI implementation

MEASURES TO ACHIEVE FASTER EXPANSION

Tender volumes adjusted annually
Permitting authorities to be helped by external project teams
Renewables in public interest, security of supply
Speed up power grid expansion
Mentions subsidy-free projects, PPAs, GOs
Support new H2-ready gas plants at existing locations
Gas indispensable for transition to net zero 2045
End EEG levy 2023, financing gap via EKF

Source: German Coalition Treaty Nov. 24, 2021