Hans Ulrich Zeit, a former German ambassador to Korea, said this about the commonalities between Korea and Germany. War (Korean War, World War II) and division, and the fact that both countries are energy poor. Korea is an energy-poor country that depends on imports for more than 90% of its energy, and Germany is also a country with no clear energy resources other than coal, which is in the order of expulsion. What both countries have in common is that they achieved rapid economic growth overcoming energy poverty.
However, the two countries have taken different paths in terms of energy policy. Germany, which emerged as an early developed country, has already entered the path of a renewable energy powerhouse with the banner of denuclearization from 20 years ago, while Korea, which has leaped from a latecomer to an advanced country, is still in the process of “energy conversion (energy supply system with renewable energy instead of fossil fuels and nuclear power plants”). Changing the ) is not speeding up.
In particular, in terms of renewable energy penetration, Korea ranks lowest in the OECD as well as in the world. The speed of energy conversion, which lags far behind the size of the economy, is the basis for criticism of Korea as a ‘climate villain’. Germany was far ahead, and Korea was looking at it with envy or disrespectfully across the river.
Then, in February, the Russian invasion of Ukraine began. The war changed a lot, especially the energy problem. Europe, especially Germany, which depends on Russia for more than half of its natural gas, has been hit hard as Russia shuts off natural gas pipelines to Europe in response to Western sanctions.
Germany’s crisis as a ‘nuclear and renewable energy powerhouse’ was like bad news for the ‘nuclear supporters’ in Korea. In the domestic public forum, there was a lot of talk that Germany caused an energy crisis with its hasty policy to phase out nuclear power and expand renewable energy. There were even reports that Germany might be abandoning its nuclear-free policy.
■ Korea and other German electricity markets
The lights of the Brandenburg Gate, a landmark in the German capital Berlin, are turned off late at night. Another attraction is the Berlin Cathedral. It is a measure by the government authorities to reduce unnecessary electricity use. The maximum indoor temperature in winter in public institution buildings, excluding hospitals, schools, and social welfare facilities, was also lowered from 22°C to 19°C. A campaign to ‘save energy’ continues throughout the city, including subway stations. These energy-saving measures are being implemented not only in Germany, but throughout Europe.
There are no major changes in the daily life of the private sector. Restaurants, bars and convenience stores in Berlin are open late at night. Public transport, the pride of Berlin, is also operating normally. Both the subway (U-Bahn) and the ground rail (S-Bahn) start operating at 4:30 am and run until 0:30 am and 1:30 am the next day, respectively. It operates 24 hours on weekends and public holidays. The same goes for buses and trams.
German citizens are anxiously preparing for the upcoming energy rate hike. Germany pays electricity bills differently from Korea. The monthly electricity bill is set in advance based on the first month’s usage, etc., and is settled later after signing an annual contract. After one year, if you spend more than that, you pay more, and if you spend less, you get it back. Since the rate is calculated on an annual basis, many people do not yet know exactly how much more they will have to pay in the aftermath of the Ukraine crisis. However, I was able to hear that local power supply companies were sending out notices to consumers about rate hikes one after another.
Contrary to domestic media reports that electricity prices could soar up to 10 times, in Germany, it is predicted that households currently paying an average of 700 euros (about 950,000 won) a year could see their electricity bills rise by more than 3,000 euros (about 4.1 million won). comes out Of course, it is not a small amount of money. In Germany’s world-expensive electricity tariff system, the burden on citizens is bound to increase. We will explain why electricity prices in Germany are expensive later.
To understand Germany’s electricity price problem, you need to know the structure of the electricity market. Germany has a privatized electricity market unlike Korea, which has a monopoly on KEPCO. Several power supply (distribution) companies compete for different rates. Consumers check which products to choose through price comparison sites such as ‘Check24’. It is a scene that is difficult to imagine in Korea.
It sounds like you’ll always pick the cheapest product, but that’s not all. Each is marked with the ‘raw material’ of the product. For example, one company offers a product consisting of 10% nuclear power, 20% petroleum thermal power, 20% gas-fired power, and 50% renewable energy, while another company is offering a product composed of 10% nuclear power, 10% coal-fired power, 20% gas-fired power, and 60% renewable energy. It is a way of presenting a structured product. It also displays how much carbon dioxide was emitted during the power generation process for each product. You can also choose a company by selecting options such as ‘green’ and ‘sustainable’. Green Planet Energy, run by the environmental group Greenpeace, is one of these companies.
What kind of energy you use also affects your electricity bill. Dr. Yeom Kwang-hee, a senior researcher in charge of Korea at Agora Energivende (hereinafter Agora), a think tank on energy issues in Germany, lives in Berlin. He says the surge in electricity prices will be relatively less affected.
Because his house uses 100% renewable energy products. Due to the nature of renewable energy that does not require a separate fuel cost, it is not affected by fluctuations in international energy prices (in the industry, the variable cost of renewable energy is expressed as ‘0 won’). On the other hand, consumers who choose products that are not 100% renewable energy have no choice but to increase their rates.
Surprisingly, the renewable electricity used in Dr. Yeom’s house comes from the village of Sonow, far south on the French border. In this village, residents voluntarily formed an energy cooperative after the Chernobyl nuclear accident, and based on this, the Sonow Citizens Electricity Company (EWS) was established. EWS has now grown into an important renewable energy supplier in Germany.
Some of these electrical products are made by importing hydroelectric renewable energy from Norway. This is possible because the power grid is densely connected across borders in Europe. Since electricity can be exported and imported between countries, it is possible to overcome the weakness of renewable energy, which is intermittent (the problem of power generation falling on bad weather days). These conditions have made it easy for local small renewable energy generators to jump into electricity sales.
According to the German Federal Statistical Office, as of 2021, renewable energy 40.9%, lignite 18.7%, natural gas 15.4%, and nuclear 11.9% are in the order of renewable energy. On the other hand, in Korea, coal 34.3%, natural gas 29.2%, nuclear 27.4%, and renewable energy 7.5% (2021
Since the enactment of the Renewable Energy Act (EEG), which became the guiding force for Germany’s energy policy in 2000, the share of nuclear power in Germany’s total power generation has decreased significantly. On the other hand, the share of natural gas has steadily increased. After the Chernobyl accident in 1986, natural gas took the place of nuclear power in Germany, where antipathy towards nuclear power plants is exceptionally high.
As of September, Germany’s gas storage rate is about 80% of normal. There is no possibility of an immediate gas supply cutoff. The problem is the energy used by the industrial sector along with the rise in heating and electricity costs that individuals have to bear. Since gas prices have quadrupled since the Ukraine crisis, there are concerns that this could lead to an economic crisis.
The German government is pouring out measures for people’s livelihood along with diversification of gas import sources and measures to save energy to resolve the energy crisis. The 9 euro (about 12,000 won) ticket, which is well known in Korea, is a representative example. Last summer, it gained explosive popularity when it introduced a policy that allows unlimited use of short-distance public transportation nationwide for only 9 euros for a month. Recently, they paid 300 euros (about 410,000 won) to citizens in the name of ‘energy subsidy’.
■ Efforts of German citizens towards ‘free energy’
2022 was the year when Germany’s nuclear phase-out policy came to an end. In 2011, when the Fukushima nuclear accident occurred, the Merkel government decided to shut down all nuclear power plants by 2022 after deliberation. This plan, which the world took notice of, was progressing in stages without major setbacks. However, after the war in Ukraine, public opinion was shaken. According to a poll conducted by the German weekly magazine Der Spiegel in August, three-quarters of respondents said they were in favor of extending the lifespan of nuclear power plants. “With Oktoberfest, the anti-nuclear movement that was part of the German identity,” Spiegel wrote, “is quelling.”
There is something to evoke here. The essence of Germany’s energy crisis is the ‘Russian gas crisis’. Although it is true that nuclear power has emerged as a short-term substitute for gas, it is not in an atmosphere that defines it as a failure of nuclear power generation and renewable energy policies, as some public opinion in Korea does. The German government’s announcement that it will not shut down two of the three remaining nuclear power plants until April next year also means that it will remain as a reserve power in case of an emergency, not extending the operation of the nuclear power plant.
The government ministries, energy cooperatives, NGO officials, and citizens who met in Germany agreed that the energy crisis was an energy crisis, but no one said that the principle of denuclearization and renewable energy policies should be changed. Rather, the majority pointed out that renewable energy should have been expanded earlier in order to break out of the ‘energy trap’ set by the ‘natural gas demon’ Putin. This is why German citizens refer to renewable energy as ‘free energy’.
Above all, there is no wavering in the coordinates of the German government. Currently, Germany is a coalition government of the Social Democrats, Greens and Liberal Democrats. It is called ‘traffic light government’ by comparing the colors of red, green, and yellow that symbolize each party. The traffic light government, which was launched at the end of last year, declared its will to accelerate the expansion of renewable energy for ‘energy security’. It also announced an ambitious plan to raise the target of the share of renewable energy generation from 65% to 80% by 2030. This is almost twice the target of the current power generation ratio. It is a more radical policy than the days of Merkel, who was called the ‘climate prime minister’.
Even after the Ukraine crisis, the target was not lowered. In April, through the so-called ‘Easter package’, it was decided to further speed up the supply of renewable energy by easing regulations on wind power and solar power generation facilities. In particular, the federal government has decided to turn 2% of the total land into wind farms by 2032, allocating it to each state. This is a powerful measure that is hard to find in Germany, which has a decentralized system.
’50Hz’ is a power transmission company that has jurisdiction over the northeastern region of Germany, including Berlin. Distribution companies that go directly to consumers are competitive, but the transmission companies that manage the grid infrastructure are managed by four operators throughout Germany. The role of these transmission companies is very important in order for electricity generated by renewable energy power plants distributed in each region to be delivered to the whole country.
“Renewables accounted for 25% of our electricity distribution 10 years ago, now it’s 70%,” said Paul Namarker, who is in charge of business development at 50Hz. (Apart from the federal government’s goal) we are aiming for 100% renewable energy by 2032. “There is a realization that renewable energy is far more competitive not only at home but also in industrial settings,” he said.
How should we understand that the power grid company has set a target for renewable energy that is one step ahead of the government? The key is cost. The popular image of renewable energy in Korea is ‘I know it’s good, but it’s too expensive’. In Germany, however, the perception is completely different.
There is a term called ‘Grid Parity’. It is the point at which the cost of generating electricity from renewable energy and fossil fuels is equal. In Korea, it was recently argued that the equalized power generation cost of solar power (the sum of investment cost, operating cost, social cost, etc.) is cheaper than coal and gas power generation.
The problem is nuclear power. The cost of nuclear power plants varies depending on how the accident risk cost and waste cost are estimated. In a TV debate in the presidential election in February, controversy also arose over what then-candidate Lee Jae-myung said, “The unit cost of nuclear power generation will become more expensive than renewable energy within 10 years.” Experts point out that the controversy will continue unless the construction cost and accident risk cost of a domestic nuclear power plant are transparently disclosed.
Germany has already achieved grid parity. Moreover, renewable energy is cheaper than nuclear power. According to Agora data, the equalized power generation cost in Germany in 2020 is 5.4 to 7 euros per kW (kilowatt-hour) for solar and onshore wind power (about 76 to 98 won), which is cheaper than nuclear power plants (7 to 11 euros). Dimitri Pecia, Senior Researcher at Agora, said, “With the development of renewable energy technology, electricity can be produced at less than 2 euros per kWh in places where resources are abundant. It is significantly cheaper than a new nuclear power plant,” he said.
Germany’s achievement of grid parity, of course, did not come lightly. There has been large-scale investment and support from the government level. The opposition from the nuclear power plant and fossil fuel camps, and the installation of solar and wind power facilities, suffered quite a bit of social conflict as in Korea.
Above all, it was possible because German citizens were willing to share the ‘energy conversion cost’. The figure above shows the trend and composition of household electricity prices in Germany. Here, green is the ‘renewable energy levy (EEG Umlage)’. This is the money used for the overall policy to expand the supply of renewable energy. In Korea, climate and environmental charges are included in electricity prices, but the burden is not as high as in Germany.
Since 2010, the share of renewable energy contributions has gradually increased, and in 2017, it accounted for more than 20% of electricity bills. If the electricity bill for a year is 700 euros (about 950,000 won), 140 euros is the charge. This can be seen as a result of Germany’s more aggressive policy of expanding renewable energy after the Fukushima disaster in 2011. The proportion of levies remained at a similar level, but declined in 2022.
The German government has decided to abolish the renewable energy levy from the second half of this year. Dr. Yeom Kwang-hee explains that it is because grid parity has been achieved and the budget accumulated through carbon credit trading is sufficient. It is said that energy conversion farming, which began in earnest 20 years ago, is bearing fruit. If international energy prices stabilize next year, German households’ electricity prices may fall due to the abolition of the renewable energy levy.
■ Traffic light The symbol of the government, ‘Ministry of Economy and Climate Protection’
While covering Germany, a powerhouse of renewable energy, there was a curious point. He found it difficult to find the usual solar power plant in downtown Berlin. The reason was this. This is because 80% of Berlin’s citizens are tenants, and the local government interferes with the color of the roof of the house, and in Germany’s society, which values ’urban aesthetics’, solar facilities have been treated as an abomination. As a result, in Berlin, like Seoul, wind and solar power facilities had no choice but to go outside the city.
It will be different from next year. According to the ‘Solarcity Master Plan’, the city of Berlin has decided to make it mandatory for all new buildings, including commercial and residential, to install solar panels after January 2023. Social discussions are also underway to help tenants install solar power. A domestic company, Hanwha Solutions Q CELLS (Hanwha Q CELLS), is participating in the Berlin city solar power project.
The German traffic light symbolizes the ambitious goal of the government’s ‘Ministry of Economic and Climate Protection’. The Ministry of Environment was created by merging two agendas that did not seem to fit together: the economy and response to the climate crisis. The name of the previous German economic ministry was ‘Ministry of Economics and Energy’. On the wall of the Ministry of Economy and Climate Protection building in downtown Berlin, the words “climate protection” (klimaschutz) were placed instead of “energie”.
The establishment of the Ministry of Economy and Climate Protection represents the government’s will to expand renewable energy, achieve sustainable economic growth, and catch two rabbits. The Green Party’s co-chairman, Robert Havek, will serve as both the Minister of Economy and Climate Protection and the Deputy Prime Minister. The Ministry of Economy and Climate Protection is promoting a policy of investing more than 3.5% of GDP in R&D in related fields, preparing administrative regulations for the expansion of renewable energy. This country, which has been ahead for the past 20 years, is accelerating even more in the midst of an energy crisis.
On September 15, while I was staying in Berlin, I heard important news. It was news that Samsung Electronics, the company that uses the most electricity in Korea, has finally declared ‘RE100’. The surprise was short-lived, and a question mark arose as to how to supply 100% of the electricity used by Samsung Electronics with renewable energy. The Yun Seok-yeol government is pushing for the reduction of renewable energy and the expansion of nuclear power plants. RE100 does not recognize nuclear power as carbon-neutral energy.
September in Berlin was cold and often cloudy. In Germany, the amount of sunshine per year is only 60-70% of that of Korea. Such a country has grown into a renewable energy powerhouse. Now that carbon neutrality has become an urgent and important task for all countries across borders, we are in a position to ‘compressed growth’ in response to the climate crisis. This means that the social controversies that Germany has experienced for decades should pass in a short time. The remaining time is getting shorter.
© EPN