IHS Markit analyzes how German targets for renewables-generated electricity strengthen long-term wind energy prospects locally and for Europe.
Under Germany’s energy transition policy, known as Energiewende, renewables play a growing role in the country’s long-term energy mix. Wind and solar are expected to lead the transition after the government ordered all remaining 12 GW nuclear plants to be shut down by 2022. The successful phaseout of nuclear power generation depends largely on Germany’s ability to deploy and integrate sufficient renewables capacity into the power system. In total, IHS Markit expects that Germany will be the largest European market in terms of renewables capacity additions to 2020. The outlook is dominated by onshore wind and solar photovoltaics, with offshore wind power in Germany scaling up over the period. Offshore wind capacity in Germany is targeted to reach 6.5 GW by 2020, while a proposed tender mechanism is designed to drive 2.6 GW of annual net additions for onshore wind.
In the short run, the wind energy sector faces several challenges. Recent wind and solar tenders in Germany signaled strong investment interest around the expansion of renewables. However, the lack of country-specific power targets from the European Commission, a rising captured price discount and tradeoffs between curtailments versus grid expansion strategies present additional questions.
Nevertheless, German offshore wind continues to attract growing support for a variety of reasons. Continuing advances in wind technology ultimately could contribute to a decline in wind energy costs. Changes in global supply chains have enabled wind equipment manufacturers to scale rotor sizes, while lowering the capex needed. Coupled with significant decreases in costs for battery storage, the investment to manage higher levels of renewables penetration in the German energy mix is decreasing beyond earlier expectations, even without government subsidies or agreement on coal supply issues.
Anyone involved in the European energy market would do well to consider the broader impact and key topics. Learn more about prospects for German wind energy.