SIGN UP for our newsletter ✉️ :

Get the latest stories delivered straight to you

Germany's renewable energy incentives and regulations attracting Australian companies

An Australian company which invented a renewable energy electricity generator says it was forced to move its operation to Germany because of a lack of opportunities in Australia.

Ceramic Fuel Cells, a Melbourne-based CSIRO spin-off company, said its generator could cut electricity bills by up to 50 per cent for households and small businesses.

But the company moved its operations to Germany two years ago to benefit from generous German government subsidies not on offer in Australia.

"This is what we need right now," the company's Germany-based managing director, Frank Obertnitz said.

"We are at an early stage. We need to commercialise the product and the incentives in Europe are much better for that."

Germany is in the middle of an energy transition it calls Energiewende, which aims to shut down nuclear plants, reduce carbon emissions and increase electricity produced from renewable sources.

"After Chernobyl, and then Fukushima, the German population said no to nuclear," said Dr Patrick Graichen of the influential think-tank, Agora Energiewende.

The program was accelerated after the Fukushima nuclear disaster in 2011. Before then, Germany was heavily reliant on nuclear and fossil fuels.

Germany embracing renewable energy

Power production from renewables has tripled in Germany within the past decade, mostly from wind and solar.

Last year, renewables accounted for 24 per cent of the country's electricity.

The German government introduced generous subsidies to kick-start the sector, amounting to 16 billion euros last year.

But the government claims the program has already saved billions in fuel costs for the heavily import-reliant country.

"We have created new businesses worth 40 billion euros per year," Ecologic Institute analyst Andreas Kraemer said.

"We have created additional employment for up to 400,000 people. They all pay taxes, they all pay social security charges."

German households and small business pay the largest share for the renewable turnaround.

They pay around 29 euro cents per kilowatt hour and much of that goes towards a renewable energy surcharge.

Big industrial users are exempt from the surcharge and pay just 3.5 cents per kilowatt hour.

Most of the subsidies are spent on first-generation solar and wind parks that are locked in high feed-in tariffs of over 40 cents per kilowatt hour for the next 20 years.

But there are calls to phase them out all together.

"In order to get new technology on to the market we do need some support mechanisms," policy analyst Annika Hedberg said.

"However, we have seen subsidies and support schemes that have distorted the market.

"One controversial example is solar panels supported where the sun doesn't shine."

A new-look energy market

The energy turnaround has clouded the future for the dominant utility companies in Germany.

Germany's big four, Vattenfall, E.on, RWE and EnBW, have enjoyed an oligopoly driven by nuclear power and fossil fuels.

Dr Jan Grundmann, from Vattenfall, said it is a depressing time for most utility workers.

"They see the business model no longer working and the market breaking down," he said.

"We have to reduce costs dramatically ... we cannot say the future of German utilities is safe."

Income has been slashed as subsidised competitors flood into the market and the big utilities have been slow to invest in renewables.

Between them, the big four own just around 10 per cent share in the industry, mostly in big offshore wind projects

"Whether they will be able to turn around quickly enough to survive, I don't know," Mr Kraemer said.

Investors look for exposure to renewables market

The makeup of the German energy market already looks very different, with hundreds of companies and cooperatives being formed in a decentralised industry.

While banks, industry, and project developers own 40 per cent of renewable installations, farmers and private investors own half.

A number of new investment vehicles have formed to take advantage of the new industry.

Crowd funding start up Bettervest has financed 14 projects since its inception a year ago.

Company spokesman Julien Schroder-Gianoncelli said investors are attracted by the projects and the returns.

"We are offering 5-10 per cent in interest, which is pretty good at the moment," he said.

Ceramic Fuel Cells believes Germany's regulations, incentives and market make it the place to be.

Mr Obernitz said that, for the time being at least, there are no incentives available in Australia.

"I'm not sure if that is going to change," he said.

"We would favour that because we have invented the technology in Australia, and it's something that will change the world."