Financial backing for German green energy projects

A German development bank is to provide significant financial support to the country’s green energy projects.

Energy efficienciency, renewable energy, photovoltaic, Jochen FlasbarthKreditanstalt fur Wiederaufbau (KfW), a state-owned development bank, is to underwrite renewable energy and energy efficiency investments to the value of €100 billion ($137.3 billion). The Frankfurt-headquartered bank will provide the facility over the next five years, according to Germany Trade & Invest, the foreign trade promotion agency.

The news follows German chancellor Angela Merkel’s announcement in May that the country, which has the largest economy in Europe, would close all its nuclear power stations between 2015 and 2022. The 17 nuclear power plants currently produce 28 percent of the nation’s electricity.

Germany possesses the biggest photovoltaic market and is the top wind energy generator in Europe. The development represents and attempt to decrease investment risk and accelerate the country’s move to renewable energy.

Photovoltaic industry expert at Germany Trade & Invest Tobias Homann said of the facility:

“With the decision to abandon nuclear power earlier this year, it was clear that the road ahead would be challenging. But Germany is in a very promising position to be the first industrialized country to rely entirely on renewable energy.”

The financing from KfW will target a range of projects, including energy efficiency, smart grids and wind and solar energy generation. According to Germany Trade & Invest, last year KfW financed 40 percent of photovoltaic installations in Germany.

Joint funding

Through its sixth Energy Research Program, the German government has made around $275 billion available for joint funding initiatives in energy storage research for the next three years. Renewable energy sources are expected to account for 35 percent of the country’s energy output by 2020, and as much as 80 percent by 2050. Germany currently produces 20 percent of its energy from renewable sources; this figure was only 6 percent in 2000.

Germany Trade & Invest CEO Jurgen Friedrich praised the new facility:

“Germany has established the ideal prerequisites for the rapid development of the energy storage industry. The unique combination of renewable energy generation, innovation and implementation through such projects makes Germany an optimal location for companies looking to enter this budding industry,” he said.

Earlier this month KfW said the ongoing European debt crisis represented a “dramatic barrier” to financing for clean-energy projects. Speaking at a conference in Berlin, KfW CEO Ulrich Schroeder said “a healthy banking system” was needed to fund large-scale renewable energy projects.

KfW last year provided €25.3 billion ($35 billion) for renewable energy and energy-efficiency projects throughout the world, according to Schroeder. Last August the lender was nominated the world’s safest bank by Global Finance Magazine.

However, despite the financing boost, Germany faces challenging times: “The positive trend in renewable energies is not a self-starter. The Renewable Energies Act should be revised continuously, with an eye to improving sales of EEG electricity. Moreover, we must expand and redesign the electricity grid sustainably so as to facilitate integration of the growing shares of wind, solar, and similar energies in the electricity mix,” said Jochen Flasbarth, president of the German Federal Environment Agency.

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