Can investors trust Germany on distance laws?

The German wind industry goes to a doctor. It’s been feeling gradually worse over the last couple of years and wants to find out what’s happening.

After a check-up the doctor comes out with the results of the examination.

“I’m afraid I have some bad news. The government has given states the power to opt to use minimum distances of 1km between new wind farms and nearby communities. This could inflame local tensions and do you serious damage.”

“Oh no, that’s terrible,” the industry says. “Is there any good news?”

“Well,” she says. “At least the government’s not doing more damage itself.”

The crisis that has engulfed the German wind industry in the last two years is – like that 'joke' – no laughing matter. So it’s with a sense of bemusement that we have watched the news from Germany about green policies this week.

On Monday, the ruling coalition of Christian Democrats and Social Democrats agreed to drop the idea of a national 1km distance rule for onshore wind. It’s a move that would have caused more devastation for wind businesses in a nation already struggling with the impact of auctions on activity and profit levels.

The government has also committed to a target of 65% renewables in its electricity mix by 2030; and is set to lift a cap on giving subsidies when solar reaches 52GW installed capacity, which is due to happen soon.

The news was welcomed by German wind associations and WindEurope. Giles Dickson, CEO at WindEurope, says that “if the government can now simplify their permitting rules, the massive German wind industry can start supporting jobs and growth again – and helping economic recovery”.

Separately, the government also agreed with coastal states this week to raise the country’s offshore wind target to 20GW by 2030, up 5GW compared to its previous targets. It could have gone further but, after so many steps back for companies in Germany, it’s good to see a few going forwards.

These are bright spots in a country where 38,000 wind jobs have been lost in four years, even before the Covid-19 pandemic. This may help wind companies to better re-gear themselves for a green recovery.

That was the good news.

However, letting individual states opt in to 1km distance rules themselves feels like a heavy blow. It’s the metal weight in the velvet glove!

In good times, this is the sort of policy that would get short shrift from the industry and investors. Companies would be up in arms about giving control of vital infrastructure to local governments. But it now feels like the industry in Germany has faced so much bad news that this feels like a win.

It might well be. But relying on local decisions can go either way.

In the US, individual states have been vital to keep wind growing despite the hostility to wind from the Trump administration.

But, in the UK, the government’s localism agenda of the early 2010s handed planning control to local authorities. This gave opponents more power and ultimately paved the way for a ban on onshore wind subsidies.

We hope Germany goes down the US route – but we can’t be confident it will. Wind investors in Germany are already battling with an onerous planning and permitting system. Why should we trust states to do better on the 1km rule?

Currently, Bavaria is the only German state with a distance rule. This stipulates that wind farms need to be built away from communities, at a distance of ten times the tip height of the turbines used in the project.

But now the government has made the distance law an ‘opt in’ process for all states, and our concern is that this will encourage more states to take a tough line on wind to appease local objectors. The power is now in their hands.

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