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Germany is standing at the crossroads of a new energy future. Whichever route the country takes, finding a suitable and rapid replacement for nuclear power will not be easy. An early commitment to clean coal technology might be the most rational approach, given that it could ease the growing gas import burden. However, there have already been setbacks. Germany is currently a leader in renewables, but scaling up various technologies to replace nuclear power will prove a real challenge.

The deployment of new solar photovoltaic (PV) panels is forecast to generate a minimum of 4 gigawatts (GW) in Germany in H112, reports Reuters citing government and industry sources. The sources added that 2GW of the capacity was deployed in March 2012, with the government scheduled to reduce solar incentives by 37% from April 1 2012. The country's solar capacity increased by nearly 7.4GW and 7.5GW in 2010 and 2011 respectively. This growth was beyond the country's targeted annual increase of 2.5-3.5GW. Approximately 1GW of solar panels were installed during January-February 2012.

Key trends and recent developments in the German electricity market include:

- Between 2012 and 2021, Germany's overall power generation is expected to decrease by an annual average of 0.93%, ending the period at 631 terawatt hours (TWh). German is forecast to register an average annual decline of 8.9% in nuclear energy generation, offset partly by a 5.5% rise in the use of gas-fired power and 7.4% growth in renewables-based generation. Coal-fired generation should fall steadily during the forecast period, although this trend is uncertain given the nuclear closure programme.

- Following an estimated 3.0% increase in 2011 real GDP, BMI forecasts average annual growth of 1.8% between 2012 and 2021. The population is expected to fall from the current level of 82.2mn to 80.9mn over the same period, and net power consumption looks set to increase from 542TWh to 592TWh by 2021. During the 2012-2021 period, the average annual growth rate for electricity demand is forecast at 0.89%.

- Thanks partly to a modest rise in net generation, the growth of which only slightly exceeds underlying demand, Germany's is set to record a modest near-term shortfall in generation due to the nuclear closure programme. A gradual decline in the percentage of transmission and distribution (T&D) losses from around 5.1% will help support the market. The theoretical net import requirement by 2016 is put at 3.3TWh, which could increase to 3.7TWh by 2021 if nonnuclear capacity expansion accelerates as planned. There is considerable doubt over Germany's ability to balance its power market and compensate for nuclear losses. It may be that substantially higher net imports are required over the medium term.

Click for Report details:Germany Power Report Q2 2012