Germany’s Wind Energy: The Potential for Fossil Capacity Replacement and Cost Saving

Wind energy has become the major renewable energy source in Germany with an installed capacity of more than 20 GW and an annual output of about 40 TWh in 2007. In this paper we analyze the extent to which wind energy can replace fossil capacities based on wind injection and demand data for 2006 through June 2008. The results indicate that the wind potential in Germany will not allow a significant reduction of fossil capacities. We also assess the potential savings due to wind energy. The German market is modeled with and without wind input to estimate the net savings of fossil fuels in the observation period. We find that the cost-saving potential for electricity production is quite significant in the study period and exceeds the subsidies.