State must support domestic production to fulfill Germany's renewables expansion aims – agency

The expansion targets for renewable power in Germany can only be achieved if the state vigorously supports domestic production of solar panels and wind turbines to reduce the reliance on hardware supplier countries like China, the German Energy Agency (dena) said in a strategy paper for the economy and climate ministry (BMWK) seen by newspaper Handelsblatt. The paper on an industrial policy strategy for renewables and the power grid calls for a much greater involvement of the state to ensure that production capacities within Germany and Europe are increased. This could be achieved through state guarantees to purchase renewable power installations that give manufacturers planning security, an option that economy and climate minister Robert Habeck already signalled he is ready to consider. Other options include a subsidy scheme akin to the U.S. government’s Inflation Reduction Act (IRA), capital provision to the solar power industry accompanied by an industry power price that makes the energy-intensive production of solar power components economically viable for manufacturers. Industry companies could pay into a fund for solar power projects and then secure low prices through long-term contracts, the dena paper said. Another option for improving domestic production could be the introduction of qualitative factors in renewable power auctions, for example by rewarding more sustainable production procedures. “The focus on prices as the only criterion for awarding projects puts European technology producers under great pressure,” dena argued, adding that competitors from other regions were often able to undercut European competitors thanks to government support.

The government aims to bring the share of renewable power in its electricity mix to 80 percent by 2030, from about 45 percent in 2022. Industry representatives have warned that a reliance on importing raw materials and hardware components from abroad could thwart this goal, as competition for energy transition resources is expected to intensify in the next years. Government representatives already said options like state guarantees for renewable power companies and a special industry power price are being considered as options to improve planning security in the sector and announced that the state will also play a more active role in securing access to raw materials for European companies.