Scheer’s Law and Its Impact on Renewable Energy in Germany
Tags: Scheerlaw, Renewable Energy, Hermanscheer, Solar Power Plant, Green Energy

The fall of the Berlin Wall and the reunification of Germany in 1990 heralded a new era in the country. As a newly unified nation, Germany had its task cut out for itself — re-building the country, kick-starting the economy and initiating large-scale industrialization. After a string of massive investments in capacity building and establishing global industries, Germany became a highly developed country with one of the largest economies in the world.

This rapid rise of Germany was nothing short of a miracle, considering that just a few years back the country was deeply divided. But now, with a large industrial base and powerful economy, Germany became the powerhouse of Europe. This miracle was largely achieved by the enactment of progressive policies by successive governments that created a free-market economy and enabled a thriving, competitive business culture.

The rise of Germany, although inspiring, was not without its drawbacks. Rapid industrialization was powered mostly by coal and gas-based power plants, thereby emitting huge amounts of greenhouse gases and contributing significantly to environmental pollution. As the effects of pollution became more apparent, the people of Germany became increasingly vocal for action to reduce environmental pollution and step up environmental protection. This led to a growing clamor for the enactment of policies to limit greenhouse emissions and reduce carbon footprint.

Taking note of these demands, the German government entrusted two of its ministers, Hermann Scheer and Hans-Josef Fell, with the task of drafting a new law to lead the nation’s fight against environmental pollution.

This was the beginning of the revolutionary Scheer’s law.

A Law That Was the First of its Kind

Scheer’s law, also known as the Feed-in Tariff (FIT) law, was enacted as a part of the German National Renewable Energy Act (Erneuerbare-Energien-Gesetz or EEG) to accelerate Germany’s adoption of renewable sources of energy and end the usage of coal and gas.

The law aimed to encourage the common people to generate electricity from renewable sources like rooftop solar panels and get major power companies to purchase electricity from the people at three times the market rate.

To ensure the smooth implementation of this Act, the government created a new class of people called agent-aggregators to supervise and help people in setting up rooftop solar panels.

The agent-aggregators were tasked with the installation and regular maintenance of the solar panels on the roof of houses, as well as the monitoring of bidirectional power exchange through the installed meters. The meters calculate the total sum of electricity supplied to the power grid by the house as well as the quantity of electricity that was withdrawn from the grid by the house.

The net amount of power would then be paid for by the consumer or the state, depending on who was in deficit.

This model ensured that the consumer was not inconvenienced at any stage during the implementation of the Act and also provided a guaranteed payment to the agent depending upon the rate set for the solar energy. And while the state incurred a loss due to the higher rate paid for solar in the beginning, it was eventually offset by the reduction in the costs of dealing with pollution.

Revolutionizing Germany’s Power Sector

Hermann Scheer’s law kick-started the adoption of renewable sources in Germany and led to a drastic fall in the prices of solar panels and wind power generation equipment, making them one of the cheapest energy sources in the world in the period from 1990 to 2020.

The implementation of Scheer’s law led to the accomplishment of some successful policy innovations such as -

The full implementation of 100,000 photovoltaic solar panels on the rooftop in Germany

The EEG made Germany the leader in the installation of renewable energy, with a strong focus on the decentralized, privately-owned renewable energy capacity of not more than 5 MW per installation

Full tax exemption for all biofuels, which lowered the prices of renewable fuel compared to fossil fuels

The massive impact of Scheer’s law can be gauged by the major boost the renewable energy sector in Germany received which enabled it to generate more than 1,50,000 new jobs and set off an annual renewable energy growth rate of 30 percent.

These achievements had disruptive consequences on the power industry across the world. However, its biggest and most immediate impact was felt in Germany where the production of electricity from renewable sources, which was only 6.2 percent in 2000, increased to 23.7 percent by 2012 and up to about 28 percent in 2014.

The law accomplished what its makers set out to do. The costs of solar panels in Germany dropped significantly and within 8 years, the solar energy industry expanded to having a higher employee count than other large industries like engineering and automobiles.

The success of Scheer’s law made Germany the leader among the industrialized countries in the use of renewable energy sources, standing at the first position in terms of installed wind energy, and second in solar photovoltaics.

The Global Community Takes Note

This achievement stunned the world and completely changed its views on the ability of renewable sources to replace fossil fuels. Many countries began to see renewables as a viable alternative to coal and started studying the path-breaking Scheer’s law in the hopes of implementing a country-specific version of it. By 2009, similar FIT policies were enacted in about 63 jurisdictions around the world spread across both developed and developing regions like Australia, Western and Central Europe, Iran, Ireland, Israel, South Korea, South Africa, Thailand, Turkey, in many states of the US, and is also arousing interest in China, Mongolia and India.

What Lies Ahead

In the month of September 2020, the German government introduced new amendments to Scheer’s law that would lead to increasing the share of renewables in the power sector to 65 percent from the current 50 percent. The amendment also entails making the electricity sector greenhouse-gas neutral before 2050.

This new amendment, while ambitious, isn’t without its critics. Many have criticized it for not being ambitious enough, claiming that the target for renewable market share must be at 75 percent.

Additionally, some industry groups and parliamentarians said that some of the changes proposed in the amendment are counterproductive. In particular, they warned that many older wind turbines should stop operating as they would be unable to run profitably. However, the German government has assured that mechanisms to ensure continued operation of the wind turbines in the future would be drafted soon.

Scheer’s Law — A Beacon of Hope For The World

With the global community’s fight against the climate crises falling woefully inadequate and most of the largest greenhouse emitters set to miss the climate targets necessary to keep the global temperature below the ²⁰ C threshold, there is a growing call in many countries for stricter environmental policies and better enforcement of these policies to ensure the targets are met. In such a situation, Germany’s Scheer’s law stands out as a beacon of hope for many countries which have implemented or are in the process of implementing policies to reduce their greenhouse emissions and accelerate the transition to renewable sources.

Whether Scheer’s law or its variation will be as successful in other countries remains to be seen. But for now, its future sure looks promising.