Harvesting Renewable Energy
My home state of Schleswig-Holstein, in the rural northern part of Germany, counts thousands of farmers like me: self-made businessmen who joined forces with residents to build local, sustainable businesses that produce energy, create jobs, and add value to the economy. We have transformed the way our home state produces energy from the bottom-up. Currently, more than 40 percent of electricity consumed in our state is generated from sources such as wind, biomass and the sun, and by 2020 we could supply 100 percent of electricity demand from renewable energy sources.
How did we do this? It required local community leadership as well as smart energy planning and policies. As early starters in 1989, friends and I were fascinated by the opportunity to harvest renewable energy. At the same time, we were challenged by the complexity of energy economics and market rules, planning requirements for siting and grid connection, and unpredictable rates of return on energy project investments. Investing in renewable energy was very risky. Then in 1990, the German government introduced so-called Clean Contracts (aka feed-in tariffs), which enabled small investors like us to succeed. Clean Contracts basically did three things. First, they required utilities to connect our wind turbines to the grid. Second, they fixed a price for every kWh of electricity produced by our wind turbine, eliminating the high transaction costs associated with lengthy negotiations. Third, they guaranteed that our power purchase agreement would last for 20 years. This was the breakthrough. We were now able to calculate the rate of return for many years to come, which provided an investment security no German farmer had dared to dream of before.
Where are we now? With the investment security provided by Clean Contracts, the country is able to produce 16.8 percent of its power from renewable energy and has created more than 370,000 green jobs. Most interesting, however, is the extent of participation from private and local investors in renewable projects. While four big utility companies dominate the German energy market, investments by family farmers, local residents, rural cooperatives and municipal utilities count for 96 percent of investments in renewable energy projects. Most likely, this share will rise even further, as the German government recently decided to fully phase out nuclear energy by 2022. As energy farmers, we welcome this development and actively work with state authorities to further the transition by supporting, for example, needed expansions of the electricity grid.
Only in Germany? Absolutely not. As a German energy farmer, I am proud to have contributed to the country’s growth in renewable energy, rural development and jobs. At the same time, I wonder where I will see my American friends in a couple of years, if only policies like Clean Contracts allowed them to fully explore the opportunities of their country’s rich natural resources in biomass, sun and wind. Whoever doubts this should come to Germany to experience first-hand how a country has turned solar intensity comparable to the state of Alaska into an economic success story.
Dirk Ketelsen is an organic farmer and executive director of Dirkshof, a renewable energy producer and consultancy in Schleswig-Holstein, in the North of Germany. Dirk will be a speaker at the Midwest Renewable Energy Tour 2011, organized by the National Farmers Union and the Heinrich Böll Foundation.
For more information on the tour go to www.nfu.org, visit www.theclimatenetwork.org, or email Mr. Till Kötter, Project Coordinator The Climate Network-Transatlantic Solutions for a Low Carbon Economy at till@böll.org or Mr. Jan Ahlen, Climate and Energy Coordinator National Farmers union at email@example.com.