What are renewable energies?

Renewable energies have become an integral part of today’s energy landscape. While until the beginning of this century they were still models of power generation that could never completely shed their experimental character, renewable technologies gained increasing importance in the 00s.

At the latest with the reactor catastrophe in Fukushima, a fundamental social change has occurred. On the one hand, this is reflected in Germany’s nuclear phase-out and the 2012 amendment to the Renewable Energy Sources Act (EEG), but it can also be seen in broader social discussions and global changes such as the 2015 World Climate Summit.

However, this change also has consequences for the German electricity landscape: In the last 20 years, the Drastically increasing the share of renewable energies. In 2020, the share of renewable energies in gross electricity consumption reached 45.4 percent, according to the Federal Environment Agency, compared to 7.7 percent in 2002 and 3.4 percent in 1990. Whereas in the past large coal and nuclear power plants took over a large part of the electricity supply, this responsibility is now spread over many small shoulders.

The output of conventional renewable energy plants ranges from a few kilowatts to several megawatts. However, they all have in common that they autonomously produce electricity. This is one of the major challenges of the energy transition: Coordinating many decentralized electricity producers. This is where technological developments such as virtual power plants come into play, which have now been actively helping to integrate the electricity production of even many small plants securely into the German energy landscape since the 2012 Renewable Energy Sources Act (EEG). In the course of this, short-term electricity trading has also become much more important, as electricity production has become much more volatile than it used to be, when only a handful of power plants produced almost all the electricity needed. With the growing responsibility of short-term electricity trading, the role of electricity and stock market forecasts became far more important.

Renewable energies not only shoulder almost half of the electricity production today. They also make an important contribution to system stability by providing system services such as balancing power.

History of Renewable Energies


The first photovoltaic cells were used on the U.S. Vanguard satellite mission in 1958. However, it was to take almost 20 years before terrestrial plants were installed. In 1976, the Australian government decided to equip the telecommunications network in the outback with solar cells to charge the batteries installed there. Installations on oil rigs or the US Coast Guard in the 1980s were the first, more widespread projects. In the mid-1980s, Markus Real, a Swiss engineer, was persuaded to install small decentralized PV systems on house roofs as a demonstration of private implementation. Subsequently, numerous large-scale solar projects such as the 1.000 roofs program in Germany (1990) or the 70.000 roofs program in Japan (1994). In Germany, primarily small-scale systems were initially installed, which also explains why the total nominal PV capacity in 2005 was only one gigawatt. In 2010, the ten gigawatt mark was exceeded in Germany, and by 2012, 25 gigawatts had already been reached. By the end of 2020, more than 53.8 GW had been installed in Germany.

Wind power

As part of the windmill technology, wind turbines were already in use in pre-industrial times – of course not as electricity-producing plants. The first attempts to generate electricity with wind turbines were already made at the end of the 19th century. At the beginning of the 20th century. In the 30s and 40s of the 20. At the beginning of the 21st century, the first successful trials of wind turbines were carried out in both the U.S. and Germany, but without regular deployment. The first plant to successfully feed electricity into the grid over a longer period of time was the Gedser wind turbine in Denmark. In 1987, Germany’s first wind farm was built on the Growian site near Marne, Germany. About 19 million kWh of electricity were produced there annually. In the wake of the Electricity Feed Act, the general addition of wind power plants in Germany also grew during the 1990s. The boom was so great that in the first half of the 00s, two-thirds of European wind turbines were installed in Germany. In 2020, the installed capacity of wind power (on& off-shore) in Germany will be 62.71 GW.


At the beginning of the 20. At the beginning of the 20th century, the first biogas plants came into operation, for example in the Ruhr area. However, these were wastewater treatment plants with digesters. At that time, the gas produced there was not yet used for electricity production, but was fed into the gas grid. In the 1930s and 1950s, initial attempts were made to generate electricity from biogas, but this proved uneconomical due to the high production costs. With the oil crisis, the perception of biogas in public discourse increased. Nevertheless, biogas played a minor role until the end of the 1990s. Only just under 700 plants were currently in operation. In the ’00s, biogas became increasingly important in the wake of the first renewable energy laws, and as of the 2012 Renewable Energy Act, it was even able to assume system responsibility. In 2012, the installed capacity of biomass plants reached 3000 MW. However, with the subsequent amendment in the EEG 2014, biogas was again assigned a lesser role in the energy mix, so that the number of new installations almost stagnated. Other sources of energy from biomass, such as wood or waste-fired power plants, play a rather minor role in Germany. 2020 are 10.385 megawatts of biomass installed in Germany.


Hydropower is certainly one of the oldest energy source and was already in use 5000 years ago – although not for electricity production but for the operation of mills, for example. During the Industrial Revolution, hydropower was one of the mainstays of power generation; the first electricity-generating turbines were built in the middle of the 19th century. Developed at the beginning of the twentieth century. In 1890, the first German hydroelectric power plant, which was also the first alternating current power plant, was connected to the grid in Bad Reichenhall. Hydropower plays a rather minor role in Germany. The installed capacity of hydropower in Germany has been changing only minimally for years. In 2020, the installed capacity of hydropower will be 5.606 MW.

Predecessor of the EEG is the Electricity Feed Act of 1991, which obliged grid operators to allow decentralized operators to feed electricity into the grid. The law required grid operators to purchase electricity from producers at a minimum rate equal to the average price that electricity had fetched two years earlier.

The first EEG came into force in 2000. Central to this was the idea that Renewable energies were given feed-in priority over other energy sources. In addition, the compensation rates for photovoltaics were significantly increased. While the rate in the Electricity Feed Act was still around 9 cents/kWh, it was between 48 and 50 cents/kWh in the EEG 2000. A subsidy cap of 300 MWp, which in the so-called 100.000 Roofs Program (1999 – effectively the successor to the 1000 Roofs Programa), threatened to provoke a collapse in the solar industry in 2004, as this had already been exceeded in 2003 with 350 MWp. The 2004 amendment, which was passed for this reason, consisted primarily of an alignment of subsidy rates and a reduction in subsidies for wind turbines.

The main goal of the EEG 2009 was to increase the share of renewable energies in the electricity mix to 30 percent by 2020. In addition, in the EEG 2009, the option appeared for the first time that decentralized generation plants could be regulated by the grid operator in order to minimize grid fluctuations.

The EEG 2012 is the basis for many elements of today’s energy transition. With this law, both direct marketing according to the market premium model and the flexibility premium were introduced. The first virtual power plants for bundling and marketing electricity from decentralized plants were created.

The EEG 2014 focused more on the targeted development of renewable energies and defined fixed expansion paths for the individual energy sources; biogas plants disappeared from the legislators’ field of vision with this amendment. In addition, the idea of a tendering process for the level of subsidies had its beginnings here. In addition, the EEG 2014 introduced mandatory direct marketing for new plants above 100 kW. Up to now, this only applied from 750 kW.

With the EEG 2017, the legislature completed a fundamental System change. Whereas the feed-in tariff model had previously applied, the German government now relied on tendering procedures, as had already been tested as a pilot project in the area of ground-mounted photovoltaic systems under the 2014 EEG.

To the 1. January 2021, the EEG 2021, the last amendment of the EEG for the time being, came into force. This improved the conditions for plants that would have been excluded from EEG subsidies at the turn of the year and defined expansion paths for individual technologies. In addition, the rules for self-consumption and the loss of remuneration in the event of negative electricity prices changed, which was tightened once again.

Production costs

The prime costs of renewable energies decrease continuously in Europe. If the cost of large photovoltaic systems in 2009 was still 32 cents per kilowatt hour, the value in 2018 was between 3.71-8.46 cents/kWh. A similar trend can be observed for wind energy Here, the price for onshore turbines fell from 9.3 cents/kWh in 2009 to 3.99-8.23 cents/kWh. In a study, the Fraunhofer Institute predicts that production costs will continue to fall in the future. Solar energy is expected to drop to 2-4 cents/kWh by 2034, and onshore wind is also expected to be in a range between 3.5 and 7 cents/kWh. On the other hand, the prices for the prime costs of biomass remain stable and have hardly changed since 2012. The reason for this is partly the lack of support for this energy source, as there have been few incentives in recent years to make electricity production from biomass more efficient and fewer new plants have been built as a result. Without these steps, rates would inevitably stagnate.

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