Yves here. This post highlights the fact that Germany’s apparent progress in its green transition is not what it seems. Although the share of total energy consumption provided by renewable sources has increased, it appears that the improvement is largely due to a decrease in demand from industry. The increase in clean energy production year over year has been relatively small.
Sadly, the article admits that high energy costs are the reason for flagging production, but surprisingly it never mentions the destruction of the Nord Stream 2 pipeline and Russian sanctions as a reason. In the meantime, OilPrice today is reporting another story, Europe’s Reliance on Russian Gas Continues Despite Sanctions.
By Tsvetana Paraskova, an Oilprice.com writer with over ten years of experience writing for news outlets such as iNVEZZ and SeeNews. Originally published at OilPrice
- Germany is making progress in increasing the share of renewable energy sources in its electricity supply.
- The major reduction in fuel efficiency was due to a decrease in power output.
- The grid is becoming greener and carbon emissions from the electricity sector are falling, but these developments have been largely driven by lackluster economic growth and weak industries in Europe’s largest economies.
Germany is making progress in increasing the share of renewable energy sources in its electricity supply, but it should be applauded with caution because much of that progress is due to sluggish electricity demand amid sluggish industrial activity.
Energy suppliers have significantly reduced their fossil fuel emissions so far this year. However, this reduction has not been offset by a similar jump in production from renewable energy sources, suggesting that weak energy demand is the driver of lower energy output and reduced fossil fuel production in Europe’s largest economy.
Germany’s electricity producers saw fossil power production fall 19% in the first half of this year compared to the same period in 2023, according to LSEG data cited by Reuters correspondent Gavin Maguire.
However, renewable energy production increased by only 2.1%.
The sharp reduction in fossil fuel generation was largely due to a decline in power output, which fell by 6% year-on-year between January and June 2024 amid lower electricity demand due to weaker industries.
The increase in said activity will increase demand for electricity in Germany, and its power firms may have to turn to more natural gas production, undoing some of the progress of supplying clean energy to the grid.
Last year, wind power overtook coal to become the biggest source of electricity in Germany, according to clean energy agency Ember.
Germany relied on fossil fuels for 46% of its electricity last year; however, the single largest source of electricity was wind with a 27.2% share, ahead of coal at 26.8%.
Since 2015, Germany’s fall from nuclear weapons – completed in 2023 – and coal production has been largely met with high wind and solar production and total electricity purchases and gas production, Ember’s European Electricity Review 2024 showed earlier this year.
Germany installed a record-high amount of energy from solar and wind by 2023, but only solar additions met government targets, while wind power installations fell short of the targets. The new solar capacity is on track to meet the government’s 2030 targets. Wind energy also saw an increase in wind energy tenders, which provided a record high of 6.4 GW of energy last year, data from the wind energy association BWE showed by the end of 2023. .
While the share of renewable energy sources in total electricity generation in Germany reached 53% in 2023, up from 44% in 2022, the country needs to accelerate the installation of solar, wind, and batteries in order for renewables to account for 80% of electricity production this one. 2030.
The grid is becoming greener and carbon emissions from the electricity sector are falling, but these developments have been largely driven by lackluster economic growth and weak industries in Europe’s largest economies.
High energy costs have been a key reason for weak manufacturing and industrial activity in Germany over the past two years. Energy-intensive industries, especially chemicals and fertilizers, were the hardest hit.
“No other sector has been more affected by the “new energy world” (low absolute gas and high electricity prices compared to pre-war levels and compared to the US and China) than the chemical industry,” said Deutsche Bank Research in February. this year, they say the decline in industrial production in Germany is “not over yet.”
The Federation of German Industries, BDI, is not optimistic in the near term, either.
German production fell by more than 7 percent in the fourth quarter of 2023, compared to the end of 2019, before the outbreak of the pandemic, the industry association said in a May report. The BDI expects industrial production in Germany to continue to decline and contract by another 1.5% in 2024 year-on-year. Over the past two years, industrial production has declined by 0.5% annually.
“German industry has almost lost a decade’s worth of growth in manufacturing,” the BDI said.
This industrial inefficiency, partly due to high energy costs, has contributed to the decline in electricity consumption in Germany. When industrial activity recovers, German energy producers may have to increase fossil fuel power plants to meet demand.
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