Solar power is driving the global clean energy revolution, and the latest news and data emphasize one thing: Germany is buying in.
As a source of electricity, solar has experienced the fastest growth in its generation capacity compared to other technologies. According to GlobalData’s forecast, German solar PV will see a compound annual growth rate (CAGR) of 25.7% from 2000 to 2035, more than double the 11.2% CAGR for wind. The reasoning behind supporting solar is logical, but does the far right in Germany agree?
The popularity of solar energy is due to technological developments. This makes the production and maintenance costs low. It is therefore probably the most cost-effective and scalable energy source due to the modular nature of solar panels.
Germany’s current power mix
Germany has benefited from the growth of solar PV. According to GlobalData, in 2014, solar PV made up 20% of the energy mix, with fossil fuels (coal, oil and gas) dominating at 43% and wind at 21%. In 2023, solar PV surpassed fossil fuels, accounting for 33% of energy capacity, compared to 30% for the latter and 28% for wind. From 2024, solar PV will account for 38%, compared to 28% for wind and 26% for fossil fuels, reflecting the sector’s steady growth and momentum over the past decade.
GlobalData’s contracts and tender information confirms this: in the past two years, 55 deals have been signed in Germany, mostly power purchase agreements (PPAs), a notable increase from 15 projects a decade ago. In addition to the sheer number, the average size and length of these deals are also increasing, with many contracts lasting decades. This can be seen in EDP Renewables signing a 20-year PPA with a major US technology company to supply clean energy from the 87 MWp/58 MWac Ketzin solar project in Germany.
This increase in the average duration of agreements underscores the increasingly long-term commitment of companies to renewable energy, with some PPAs set to transcend changes in leadership and corporate strategy as companies place reducing scope 1 emissions and reducing dependence on volatile fossil fuel markets at the heart of their long-term goals.
GlobalData’s power capacity forecast highlights the long-term importance Germany places on solar PV as a key to meeting energy demand. This chart, which covers the period 2024-2035, shows that gross solar PV capacity additions will far outpace all other alternative energy sources, particularly by 2035, reaching 35 GW, more than double the next largest, onshore wind at 16 GW. While this will be partially mitigated by the loss of older solar infrastructure due to the 25-30 year lifespan of solar panels and solar repowering, this still represents an aggressive installation pace.
How geopolitics is shaping the future of solar energy in Germany
The consequences of Russia’s invasion of Ukraine are significant, but in this context it has reshaped the energy market in Germany. Since the conflict began in 2022, Russian exports of fossil fuels to Germany have fallen significantly.
The German government has since announced numerous pieces of legislation to accelerate the expansion of solar power as part of Germany’s goal of meeting 80% of its energy needs from renewable sources by 2030 and achieving climate neutrality by 2045. The main law supporting solar power in Germany is the Renewable Energy Sources Act (EEG). This came into effect in 2000, but the latest revision sets a solar PV target of 215 GW by 2030 and 400 GW by 2040.
So far, Germany is on track and has already met its target of installing 88 GW of solar capacity by 2024. Statistics agency Destatis stated that 3.4 million solar panel installations were connected to the grid in April 2024. This represented a 30% increase in installations and a 20% increase in installed capacity in 2023. However, this does not appear to have slowed down the competition for ground-mounted solar PV, as Germany’s Bundesnetzagentur (BNetzA) announced that “the auction was almost two times oversubscribed”. Ultimately, 495 bids were submitted for a total volume of 4,206 MW, of which 268 were won for a total volume of 2,152 MW.
Germany is certainly not going half-heartedly into this solar revolution, but is this strategy perhaps ingenious or will it lead to division?
It’s not all sunshine and rainbows
German investment and belief in renewable energy, especially solar energy, also faces challenges and opposition.
At the current rate of expansion, energy companies are concerned that the current grid infrastructure will increasingly risk grid instability if growth is not kept under control. Maik Render, head of energy supplier N-ERGIE, explained that “the solar panels installed in N-ERGIE’s operating area sometimes produce twice as much electricity as is required”. This creates a real risk of blackouts, a situation that will become more of a reality in southern Germany, where solar PV expansion is well above the national average.
Renewable intermittency limits the grid’s ability to respond to fluctuations in supply and demand. To counteract this, the German Ministry of Economic Affairs has made smart management systems a requirement for new and large PV installations. The only caveat is that it will take years to implement this technology on a large scale, while solar installations continue to rapidly meet their renewable energy consumption targets.
An anti-renewable mood is building, particularly in the northern and eastern regions of Germany. Germany is facing a €450 billion grid expansion bill, which will inevitably be passed on to consumers via their energy bills. Residents in the north are already facing higher electricity prices due to the costs of connecting wind turbines to the grid, which are then shared among fewer consumers due to low population density. A similar sentiment is felt in eastern Germany, where acceptance of renewable expansion is stagnating, as prices are already 22% higher than in the west.
The far-right AfD party won its first state election victory in eastern Thuringia and finished second in Saxony. In the run-up to these elections, the AfD had made heavy use of the anti-renewables discourse, proposing stricter planning restrictions for turbine construction, increasing energy storage requirements for renewable projects, and removing regulations that stipulate certain amounts of land be used for wind projects. Despite this success, mainstream parties have ruled out a coalition with the AfD, but with its increasing vote share, it is now able to influence the discourse on renewable energy.
This could lead to a coalition between mainstream parties and the new nationalist left-wing party BSW. Both options seem unwelcome news for the energy transition. Both oppose the climate and energy transition policy of the current government and agree with the resumption of energy trade with Russia.
Keeping calm can be the key to stable expansion
Despite the challenges, there are many positives to Germany’s energy transition and the predicted growth of solar PV. Given the nature of the contract duration and the investments agreed, it seems the country is ready for its solar revolution. However, grid upgrades are vital to ensure that consumers’ energy bills are not too badly affected. Otherwise, Germany risks becoming an increasingly green, yet politically divided state.
“Is the German Solar Revolution Under Threat?” was originally created and published by Energy monitora brand of GlobalData.
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