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RR RUEHAST RUEHDA RUEHDBU RUEHDF RUEHDH RUEHFL RUEHHM RUEHIK RUEHKW
RUEHLA RUEHLN RUEHLZ RUEHMA RUEHNP RUEHPB RUEHPOD RUEHROV RUEHSK
RUEHSR RUEHTM RUEHTRO RUEHVK RUEHYG
DE RUEHAG #0015/01 1631718
ZNR UUUUU ZZH
R 121718Z JUN 09
FM AMCONSUL HAMBURG
TO RUEHC/SECSTATE WASHDC 0270
INFO RUCNFRG/FRG COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEAEPA/EPA WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEHAG/AMCONSUL HAMBURG 0311

UNCLAS SECTION 01 OF 03 HAMBURG 000015 
 
SIPDIS 
 
STATE FOR EEB/ESC, OES, AND EUR/CE. 
 
E.O. 12958: N/A 
TAGS: ENRG EINV ECON SENV GM
SUBJECT: NORTHERN GERMAN POWER - BRIDGING THE GAP WITH WIND, COAL, 
AND GAS 
 
REF: BERLIN 434 
 
HAMBURG 00000015  001.2 OF 003 
 
 
¶1. (U) Summary:  Energy security is a top priority for German 
politicians.  Northern Germany has developed plans intended to 
make the region an energy exporter over the next several years 
of a mix of renewable and fossil-based energy sources.  However, 
construction of the required new power plants faces various 
challenges.  Public opposition to new coal-based power plants 
and some wind farms is high and the current financial crisis has 
limited credit for offshore wind farm development for small and 
medium sized companies.  Most importantly, the electrical grid 
is not capable of handling larger inputs without significant 
upgrades.  End Summary. 
 
FOSSIL FUELS CONTINUE AS BASIS FOR THE ENERGY MIX 
--------------------------------------------- -------------- 
----------------------- 
 
¶2. (U) In 2002, Germany's Social Democrat (SPD)/Green Party 
federal coalition amended the Nuclear Energy Law to phase out 
the use of nuclear energy by about 2020.  In the past two years, 
two nuclear power plants near Hamburg have gone off-line due to 
technical difficulties.  Several of the region's nine brown or 
hard coal power plants will soon be closed due to age. 
Approximately two-thirds of the 28 power plants that produce 
each 100 Megawatts (Mw) or more in northern Germany will be out 
of use by 2020.  In response, state governments in the region 
have developed plans to construct 13 new hard coal power plants 
over the next decade and to expand the region's wind energy and 
biomass capabilities.  The region is well situated 
geographically for coal-based power plants due to its proximity 
to ports.  The states of Schleswig-Holstein (S-H), Lower Saxony 
(LS), and Mecklenburg-Vorpommern (M-V) have been expanding 
onshore wind farms since the mid-1980s and hope to develop 
extensively offshore farms in the North and Baltic Seas. 
 
¶3. (SBU) Due to public disapproval, construction of several 
power facilities -particularly coal powered plants - has been 
delayed.  Whether to approve continued construction of a 1,600 
Mw hard-coal plant in Moorburg by Vattenfall was a very 
controversial issue in Hamburg this past fall.  This case 
typifies the challenge facing local governments, which must 
provide sufficient energy while addressing environmental 
concerns. 
 
¶4. (SBU) Mecklenburg-Vorpommern plans to establish an energy hub 
in Lubmin on the Baltic Sea near the Polish border.  The Nord 
Stream pipeline will come ashore in Lubmin in 2011.  The 
pipeline is designed to handle initially 27.5 billion cubic 
meters of Russian gas annually.  Plans by the Danish energy 
company, Dong, to construct a 1,600 Mw hard-coal power plant in 
Lubmin have run into significant public opposition due to the 
plant's proposed location directly next to popular beach resorts 
and concerns that its coolant water will impact Baltic Sea 
bacteria and fish populations.  While Chancellor Merkel (CDU) 
has spoken out strongly in favor of the plant, her party's 
senior coalition partner in M-V, the SPD, has recently begun to 
waiver. 
 
EEG: AN INCENTIVE FOR WIND DEVELOPMENT 
--------------------------------------------- -------------- 
------- 
 
¶5. (U) Following the Kyoto proceedings in 2000, the German 
parliament passed the Renewable Energy Act (EEG) that promotes 
research, development, and construction of water, wind, solar, 
geothermal, and biomass alternative energy.  The EEG contains a 
"minimum price system" that regulates financial compensation for 
renewable power.  According to the EEG, electric grid operators 
must pay investors fixed prices per Kilowatt-hour (kWh) for any 
regenerative energy fed into their networks.  The EEG 
established price scheme is adjusted annually to encourage 
immediate investment and is revisable every four years to 
compensate for market fluctuations and improvements in 
technology.  In turn, the government is able to strengthen the 
nation's ratio of renewable energies faster, while financers 
benefit from higher, "locked-in" compensation rates that are 
paid by electricity operators. 
 
¶6. (U) Conventional energy providers dispute the view of the 
German Wind Energy Association (BWE) that the EEG "places almost 
no extra burden on the consumer."  The association argues that 
green energy adds only one Euro to the average monthly power 
bill, but saves the environment from 5.40 Euros worth of damage. 
 The Federal Ministry for the Environment, Nature Conservation 
and Nuclear Safety estimates that in 2007 wind energy deployment 
in Germany prevented the production of 34 million tons of CO2. 
 
HAMBURG 00000015  002.3 OF 003 
 
 
 
LAND-BASED WIND OPPORTUNITIES 
--------------------------------------------- ------ 
 
¶7. (U) The northern German states lead the country in harnessing 
wind energy.  As of 2007, Germany had approximately 19,000 
land-based turbines with a capacity of 22,247 Mw.  According to 
the German Wind Energy Institute (DEWI), 29 percent of S-H's 
power is generated by wind.  M-V produced 30 percent of its 
power through wind in 2007.  Northern German firms, such as 
Nordex, Enercon, REpower, and Prokon Nord, are leading producers 
of wind turbines employing over 82,000.  The Lower Saxony town 
of Emden relies completely on renewable power to provide 
approximately 99.5 percent of its power supply.  The Emden 
region currently has 56 modern wind mills that alone reduce 
190,000 tons of carbon dioxide emissions per year. 
 
¶8. (SBU) In a recent meeting with Pol/Econ Officer, BWE 
representatives stated that the German wind energy sector has 
been dominated during the last 15 to 20 years by small and 
medium sized companies.  Although the energy company E.on has 
attempted to develop onshore wind parks, due to their smaller 
size they are generally not profitable for large energy 
companies.  The market for new onshore wind parks is saturated 
and the best locations have been developed.  Germany's 
population density makes it possible to construct only small 
projects that have no more than 20 turbines.  This has forced 
companies to focus on replacing old turbines with newer, more 
efficient models, often increasing blade size and tower heights. 
 However, legal restrictions on land use and local public 
opposition can inhibit construction.  According to Karsten 
Benecke from the Hamburg turbine producer REpower, despite 
Germany's investment in wind power, the German market does not 
support the necessary research and development. 
 
WINDY START TO OFFSHORE DEVELOPMENT 
--------------------------------------------- ------------------- 
 
¶9. (U) Offshore wind farms have had a slow start in Germany. 
Unlike most offshore wind farms along the Danish and Dutch North 
Sea coasts that are close to shore, Germany is required to 
locate it offshore farms further out to sea in 30-40 meter deep 
water in order to avoid development in the Wattenmeer National 
Park.  Construction on Germany's first offshore wind farm, Alpha 
Ventus is already a year behind schedule due to technical 
challenges posed by the deep water and shore distance.  Three 
offshore wind farms are to be completed by 2009 with a combined 
output of approximately 512 Mw.  The federal government has 
approved 16 North Sea wind farm projects and three Baltic Sea 
projects. 
 
CREDIT CRUNCH FOR SMALLER COMPANIES 
--------------------------------------------- ------------------ 
 
¶10. (SBU) In a recent meeting with Pol/Econ Officer, Tobias 
Kempermann, Berlin Office Head of EWE energy company, stated 
that while financing for Alpha Ventus is secure, the economic 
crisis has made financing smaller wind park projects more 
difficult.  Under current credit conditions only large energy 
companies can afford to finance major offshore projects. 
Reportedly banks are requiring borrowers to put down 30 percent 
of the costs compared to only 15 percent prior to the financial 
crisis. 
 
GRID UPGRADES CRITICAL TO FURTHER DEVELOPMENT 
--------------------------------------------- -------------- 
--------------------- 
 
¶11.  (SBU) Electric grid limits also pose a problem.  Only five 
percent of land in Schleswig-Holstein, which has favorable wind 
conditions, can be used for wind farms because of grid limits. 
The Infrastructure Planning Acceleration Act of 2006 requires 
system operators to provide grid connections for offshore wind 
farms, but laying the cable connection can take 24 to 30 months 
and grid providers have no incentive to lay offshore cable. 
Costs for integrating wind parks into the grid which are 
currently borne by the system operator or transferred into 
higher electricity costs.  The Upper Chamber of Parliament, 
however, is expected to approve the Law to Accelerate Expansion 
of the High Tension Grid on June 12.  The Law was drafted in 
recognition of the need to connect offshore wind power from the 
north German coast to industrial centers in the west and south 
and aims to reduce the time needed (currently often over 10 
years) for planning and construction of power lines.  A major 
feature of the new legislation is the reduction of legal 
objection rights to planned links.  Whether all such links will 
 
HAMBURG 00000015  003.2 OF 003 
 
 
be laid underground is still an issue.  Environmentalists have 
been successful in Lower Saxony, which has passed legislation 
that to a large extent forces new power lines underground but 
pushes up costs. 
 
COMMENT 
--------------- 
 
¶12. (SBU) Comment: If energy projects move forward in the five 
northern German states as planned, energy production will double 
by 2020 compared to 2005 rates, but CO2 emissions will also 
double if states only focus on constructing coal power plants. 
Without major infrastructure upgrades, the current electric grid 
is only able to handle non-fluctuating energy from sources such 
as coal or nuclear power plants.  For Germany to continue 
pursuing CO2 emissions reductions, energy independence, and 
increased renewable energy generation, particularly wind along 
its coastline, politicians will need to take measures to improve 
the grid's capabilities.  As S-H Minister President Peter Harry 
Carstensen (CDU) has stated, "When you mention wind, you also 
have to talk about electric grids."  While financing for wind 
projects is currently a problem, interlocutors in the field 
believe it is only temporary, and that offshore wind energy 
development will continue.  By diversifying energy resources 
among gas, coal, and wind, northern Germany is establishing 
itself as a reliable energy provider for the rest of the country 
but is unlikely to succeed without an upgraded grid.  End 
Comment. 
 
¶13. (U) This cable has been coordinated with Embassy Berlin. 
JOHNSON