Solar Energy Remains Popular For Private Homeowners

Dirk Ketelsen is a farmer but these days most of his income comes from harvesting the wind. On Germany’s North Sea coast, where a fierce sea breeze blasts in across the polders, the generous financial support the government has poured into renewable energy has reared a crop of wind turbines as far as the eye can see.

Mr Ketelsen began using wind to generate electricity on his organic farm in 1990. The next year, Germany adopted legislation that set guaranteed tariffs for power generated from renewables as part of an effort to encourage less polluting forms of energy.

Such policies have unleashed a boom for wind, sun and other sources of renewable energy, which now account for 23 per cent of the electricity consumption of Europe’s biggest economy.

They have also proved highly lucrative for farmers like Mr Ketelsen. The tariffs set by the Renewable Energy Act, known as the EEG, not only give renewables priority access to the electricity grid – ahead of the electricity produced by traditional power plants – they ensure their owners a guaranteed return over 20 years.

“Before the EEG, we said we’ll do this for ecological reasons. Even if there’s just a little bit of profit. Then came the EEG, and it worked out very well financially,” Mr Ketelsen said.

Whether that continues remains to be seen. A growing chorus of critics complain that an earnest attempt to nurture green energy has spun out of control, creating a welfare system for farmers and landowners while saddling Germany with some of the highest household electricity bills in Europe.

Utilities, which have been forced to mothball gas-powered plants because they are no longer profitable, are also crying foul. “We are feeding a giant with baby nutrition, missing the point that this giant can and needs to walk on its own feet now,” Johannes Teyssen, the head of Eon, Germany’s largest utility, told the Financial Times recently.

Amid the outcry, Germany’s new coalition government has announced plans to rein in the subsidies. But doing so will put them on a collision course with citizens in places like Reussenköge, where renewables have transformed a way of life.

The 120 households in the village are supported by 70 wind turbines in a communally owned park. The return on the villagers’ investment depends on their share of ownership.

One of Mr Ketelsen’s neighbours, Johannes Rabe, said: “Let’s put it this way, a large part of the community is now in the top income tax bracket – and more than half of their income is from renewable energy.”

Farming, by contrast, employs ever-fewer people, Mr Rabe said. “Seventy years ago, each farmer around here would have eight people to help him. Now, just one in four of the farmers is still in business, and they work alone.”

The trappings of success are evident. Mr Ketelsen’s imposing farmhouse sports a four-wheel-drive with his company’s Dirkshof logo parked outside. The farm still grows carrots and peas for a well-known brand of organic baby food, but 95 per cent of his income now comes from renewable energy.

He sold off his cows and sheep to concentrate on running a consultancy advising on the development of wind farms across Germany. The barns where his cattle were once stalled have been converted to offices for the consultancy’s 14 employees, while the corn granary in the farmhouse’s spacious attic is now a meeting room.

T

he benefits of the EEG, including the guaranteed price paid to renewables operators, are funded through a surcharge to household energy bills that are among the highest in Europe. The annual cost of supporting the so-called “feed-in” tariffs across Germany is set to rise to €23.6bn next year.

Schleswig-Holstein, the federal state that includes Reussenköge, is one of the biggest EEG beneficiaries. The state received €1.5bn in renewable energy compensation in 2012. After payments by its consumers and businesses are deducted, it still made a net gain of €400m.

It has even bigger ambitions: by the end of this decade, the state aims to produce up to four times as much renewable energy as it consumes. The plan is to export the excess to other states and Scandinavia – although new transmission lines will first need to be built.

Critics of Germany’s renewable policies say that the big winnings for Schleswig-Holstein’s landowners come at the expense of the country’s poorest citizens, who lose a bigger slice of their income to high power bills.

“In terms of political economy, it’s brilliant: Greens who live in the city and worry about the environment tend to be wealthier and willing to pay,” says Mark Hallerberg, professor of public management and political science at the Hertie School of Governance in Berlin. “Then there are the conservative Bavarian farmers – if you drive around the south of Germany, it seems like every other farm has solar panels on its roof. Then in Schleswig-Holstein all these farmers have wind farms. Usually farmers and Greens aren't on the same side.”

He added. “From an economic perspective I think this is terrible.”

Germany’s freshly unveiled coalition agreement proposes sweeping reforms by next summer, with the aim of reducing costs. This includes a scaling back of feed-in tariffs and a review of the special exemptions that shield heavy industry from their full cost.

Mr Ketelsen and the farmers of Reussenköge are already on guard. Last weekend, they joined renewable energy producers and environmentalists from across the country in a protest at the chancellery in Berlin.

The event was billed as a ‘rescue’ of Germany’s switch to renewable energy, known as the Energiewende. “In our view, the Energiewende is not to be stopped,” Mr Ketelsen said. “And if any politicians think otherwise we will brief them, and demonstrate.”

Get alerts on Renewable energy when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article