A Spark of Thought on German Production
The electricity sector is an important component of the German social market economy. In 2021, electrical energy accounted for 0.48% of Germany’s gross exports (Atlas of Economic Complexity) and was the nation’s 18th most exported product.
In 2021, Germany exported 52.4 terawatt hours of electricity valued at USD$9.88 billion (Statista, Observatory of Economic Complexity), making it the world’s largest exporter of electrical energy. Besides Italy, which constituted 20% of the country’s electricity market in 2021 (OEC), Germany’s main export destinations were neighboring nations: Switzerland and Austria to the south, the Netherlands to the west, and Poland to the east. In the same year, Germany became the second-largest energy importer worldwide after Italy, with 71.6 TWh of electricity imports worth $5.98 billion (Italy’s imports were valued at $7.44 billion for the year). Its main import origins were France, the Czech Republic, and Denmark; note that these countries also border Germany.
Germany’s electricity sector was functional prior to reunification, but only since the 1990s has the nation emerged as a global leader in renewable energy production, especially in light of growing anti-nuclear sentiments and environmental concerns. The Energiewende, or “energy transition,” has facilitated an increase in electricity generation from renewables such as wind and solar: in 2022, onshore and offshore wind, solar PV, biomass, and hydropower comprised 46% of Germany’s energy mix. With further reductions in nuclear, coal- and lignite-fired generation (as of April of last year, Germany no longer produces nuclear energy and is on track to phase out coal use by 2038), the proportion of electricity generation from renewables is anticipated to rise upward of 60% (International Trade Administration).
Alongside integrating renewables into the electricity sector, regulated by the Renewable Energy Sources Act (EEG), Germany seeks to achieve substantial reductions in carbon emissions and overall energy consumption levels. But despite the increasing prominence of green technologies on the producer side, the country is still reliant on imports of fossil fuels; importers and end users are therefore heavily impacted by market price changes for oil and gas (e.g., the recent increase in crude oil prices due to the Russia-Ukraine War). Further, France, which sourced the largest percentage of Germany’s electricity imports in 2021, generates most of its electrical energy from nuclear power plants — perhaps offsetting the impact of Germany’s ban on nuclear energy production. Questions remain regarding Germany’s capacity to store renewable energies and its ability to meet electricity demand in the case of an economic recession. I hope to gain insights into such matters when we visit the Nordex in Hamburg. ☺
