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Germany mulls state guarantees for solar and wind energy

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Germany is considering introducing state guarantees for investments in renewable energy to increase the country’s industrial potential, Economy Minister Robert Habeck has said, as Berlin seeks to become more independent in scaling up renewables capacity.

As Europe's biggest economy, Germany aims to produce 80% of electricity from renewable sources by 2030 but it is heavily-dependent on imported components, mainly from Asia.

To scale up renewable power capacity, the state support could include production or purchase guarantees, Habeck said, adding that these guarantees could partially offset uncertainties regarding project permits.

"It might make sense for the state to step in with a guarantee and say 'you can order before the approval is there,' then the ramp-up of the industry will be correspondingly faster," Habeck said following a summit with renewable energy representatives on the topic.

In addition to financial guarantees, the country as well as the whole EU needs structural reforms to accelerate planning approval, Habeck added.

Berlin is also considering a so-called hybrid equity instrument for financing energy transformation investments, he said.

At the European level, Germany is also discussing introducing sustainability criteria, such as CO2 footprint of renewable energy components to support local and decentralized power production, and means “wind turbines or solar panels would not have to be transported halfway around the world,” Habeck said.

Berlin plans to present more concrete proposals in the coming weeks, he added.

After the United States introduced its Inflation Reduction Act which aims to ramp up green electricity but ties subsidies to quotas for using products made in North America, supporting renewable energy production in Europe has become even more urgent, the minister said.

The law provides a tax credit of 30% of the cost of new or upgraded factories that build renewable energy components and gives tax credit for each eligible component produced in a U.S. factory and then sold.

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