Yves here. This post highlights that the apparent improvement in Germany’s green transition is not quite what it seems. While the share of total energy consumption from renewable sources has increased, it appears that this improvement is largely due to a decline in demand from industry. The year-on-year increase in clean energy production has been relatively modest.
It is amusing that the article acknowledges that rising energy costs are the cause of the decline in manufacturing output, but curiously, it never mentions the destruction of the Nord Stream 2 pipelines and Russian sanctions as the cause. Meanwhile, OilPrice also presents another story today, European dependence on Russian gas persists despite sanctions.
By Tsvetana Paraskova, a writer for Oilprice.com with over a decade of experience writing for outlets such as iNVEZZ and SeeNews. Originally published on Oil Prices
- Germany is making progress in increasing the share of renewable energy sources in its energy supply.
- The sharp reduction in electricity generation from fossil fuels is mainly due to a decline in total electricity generation.
- The electricity grid is becoming greener and emissions from the electricity sector are falling, but these developments are mainly due to anaemic economic growth and weak industry in Europe’s largest economy.
Germany is making progress in increasing the share of renewable energy sources in its energy supply, but this should be welcomed with caution, as much of this progress is due to lower electricity demand amid sluggish industrial activity.
Electricity suppliers have significantly reduced their total electricity generation from fossil fuels since the start of the year. However, this reduction has not been matched by a similar increase in generation from renewable energy sources, suggesting that weak electricity demand is behind the decline in overall electricity generation and the reduction in fossil fuel generation in Europe’s largest economy.
German power producers saw their electricity production from fossil fuels fall by 19% in the first half of this year compared with the same period in 2023, according to LSEG data cited by the Reuters columnist. Gavin Maguire.
However, electricity production from renewable sources increased by only 2.1%.
The sharp reduction in fossil fuel electricity generation is mainly due to a decline in total electricity generation, which fell by 6% year-on-year between January and June 2024, due to lower electricity demand and weak industrial activity.
A rebound in that activity would boost demand for electricity in Germany, and its energy companies could have to rely more on natural gas-fired generation, reversing some of the progress made in bringing clean energy to the grid.
Wind power overtook coal to become Germany’s largest source of electricity last year, according to a clean energy think tank. Ember.
Germany relied on fossil fuels for 46% of its electricity last year; however, the largest source of electricity was wind with a share of 27.2%, ahead of coal with 26.8%.
Since 2015, the decline in nuclear (which is expected to phase out in 2023) and coal generation in Germany has been mainly offset by an increase in wind and solar generation, as well as net electricity imports and gas-fired generation, according to Ember’s European Electricity Report 2024. watch earlier this year.
Germany has installed high record Solar and wind power generation capacity is expected to increase in 2023, but only solar installations have met government targets, while wind installations have missed the targets. New solar capacity is on track to meet the government’s 2030 targets. Wind power has also seen a surge in tenders, which awarded a record total capacity of 6.4 GW last year, according to data from wind energy association BWE. watch end of 2023. Unfortunately, these volumes remained below the annual target of 10 GW.
With the share of renewable energy sources in Germany’s gross electricity production reaching 53% in 2023, up from 44% in 2022, the country needs to accelerate the installation of solar, wind and battery capacity so that renewables account for 80% of its electricity production by 2030.
The electricity grid is becoming greener and emissions from the electricity sector are falling, but these developments are mainly due to anaemic economic growth and weak industry in Europe’s largest economy.
High energy costs are one of the main causes of the weakness in industrial and manufacturing activity in Germany over the past two years. Energy-intensive sectors, particularly chemicals and fertilizers, have been hardest hit.
“No other sector has been hit harder by the ‘new energy world’ (lower absolute gas imports and higher energy prices compared to pre-war levels and compared to the US and China) than the chemicals industry,” Deutsche Bank Research said. said in February this year, saying that the decline in German industrial production “was not yet over”.
The Federation of German Industries (BDI) is also not optimistic in the short term.
German manufacturing output fell by more than 7% in the fourth quarter of 2023, compared with the end of 2019, before the outbreak of the pandemic, the industry body said in a statement. report In May, the BDI expects German industrial production to continue to decline and to contract by a further 1.5 percent in 2024 compared to the previous year. In the previous two years, industrial production had fallen by 0.5 percent per year.
“German industry has lost almost a decade of production growth,” BDI said.
This weak industrial performance, partly due to high energy costs, has contributed to the decline in electricity consumption in Germany. When industrial activity resumes, German power producers may have to run their fossil fuel plants to meet demand.
