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Die „Energiewende“ - Energy Transition in Germany

Dr. Thomas HenzschelHead of Economic Section

German Embassy Stockholm

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• Secure a reliable, economically viable and environmentally sound energy supply, thereby ensuring energy security and climate protection

• Create an energy-efficient and green economy with competitive energy prices and a high level of prosperity

A new Industrial AgeGermany's long-term energy goals up to 2050

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• Secure a reliable, economically viable and environmentally sound energy supply, thereby ensuring energy security and climate protection

• Create an energy-efficient and green economy with competitive energy prices and a high level of prosperity

A new Industrial AgeGermany's long-term energy goals up to 2050

➢ Electricity consumption to be 80 % renewables➢ Cut into half energy consumption (ref. 2008)➢ 2022 nuclear free➢ maintain the existing broad societal consensus,

including industry➢ master the existing and arising challenges

(political, economical, social)

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• Germany already in 2002 decided to phase out nuclear energy – Nuclear Energy Act

• 1998 new “Red-Green” government

• 2000 first Renewable Energy Act

• phase-out deal between government and energy industry “Atomkonsens”

Zick-Zack yes, but no “U-turns”

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2002 Phase-out scenario

Source: Institute for Applied Ecology

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• Germany already in 2002 decided to phase out nuclear energy – Nuclear Energy Act

• 1998 new “Red-Green” government

• 2000 first Renewable Energy Act + phase-out deal between government and energy industry “Atomkonsens”

• 2003 shut down of nuclear power plant in Stade • 2005 shut down of nuclear power plant in Obrigheim

Zick-Zack yes, but no “U-turns”

• 2009 new liberal-conservative government • 2010 → new Energy Concept: “one of the most

energy efficient and environementally friendly economies in the world”

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• Reduction of greenhouse gases (2020: 40 %, 2030: 55 %, 2040: 70 %, 2050: 80-95 %)

• Expansion goals for renewable energy➢ Gross final energy consumption (2020: 18 %, 2030: 30 %, 2040:

45 %, 2050: 60 %)➢ Gross electricity consumption (2020: 35 %, 2030: 50 %, 2040:

65 %. 2050: 80 %)

• Reduction of heating needs (2020: 20 %, 2050: 80 % [primary energy needs] / Doubling of energy-related renovations: from today‘s 1% to 2% p.a.

• Reduction of primary energy consumption by 20 % (2020) and by 50 % (2050)

• Increasing energy productivity by 2.1 % p.a.

• Reduction of electricity consumption 10 % (2020), 25 % (2050)

• E-Mobility: one million e-cars by 2020

Energy concept 2010 - objectives

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2010 Phase-out scenario

Source: Institute for Applied Ecology

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• new comprehensive risk analysis – decision against taking the residual risk

• 8 oldest of Germany’s 17 reactors were disconnected right away

• 6th August 2011 modification of nuclear energy act - phase-out of remaining 9 nuclear plants until 2022

• all major political parties agreed + eminent public support

Fukushima 2011

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German Public Opinion

• Long tradition of civil resistance against huge scale projects like nuclear power plants, nuclear reprocessing plants

• Risk of accidents with potentially uncontrollable consequences (for large areas and extended periods of time)

• No viable solution for long term storage of nuclear waste

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Popular Support for Nuclear Energy - SWE

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Popular Support for Nuclear Energy - GER

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Current Phase-out scenario

Source: Institute for Applied Ecology

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The Renewable Energy Revolution

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201222,8 %

201323,4 %

The Renewable Energy Revolution

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The Renewable Energy Revolution

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• renewable energy legislation (Renewable Energies Act, EEG)

• Off-shore Wind Energy Program with a credit volume of € 5 billion

• new off-shore grid connection plan to improve coordination of expansion in this sector

• enhance the sustainable and efficient use of biomass through a consistent, cross-sectoral strategy

• etc.

The Renewable Energy Revolution

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Economic Effects - Export

• German export-based economy is positioning itself as an innovator in green technologies

• German PV production in 2012 = 60 % export

• wind industry’s current export ratio = 70 %

• in the market for energy efficiency products Germany is at second place (20 % market share)

• midsize firms – the backbone of the German economy benefit most

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Economic Effects - Growth

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Economic Effects – Employment

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201343,0 TWhimports

201377,3 TWhexports

Economic Effects – Energy Trade

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Challenges – Gird Expansion / Modification

link: www.netzausbau.de/english

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• electricity highways + strategic planning for the development of a European smart grid by 2050

• development of national smart grids

Challenges – Gird Expansion / Modification

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Challenges – Gird Expansion / Modification

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• electricity highways + strategic planning for the development of a European smart grid by 2050

• development of national smart grids

• IT use to manage el generation, storage, users, grids

• expansion of energy storage capacity

• unbundling of grid operation / production / sales

• innovative technologies for minimal losses

Challenges – Gird Expansion / Modification

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45,5 %

Challenges – An Unwanted Renaissance

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Challenges – The Power Plant Gap ?

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Challenges – The Power Plant Gap ?

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• government directive of a reserve capacity of power plants (12 June 2013)

• Closing down of power plants has do be announced one year in advance

• German Net Agency can prohibit the closing down of “system relevant” structures (against compensation)

• number of closure applications manageable (41) / till 2018 overall increase of power

• = increase of the problem / commercial poker

• BUT long-term reluctance to invest

• world wide concern for stable energy supply through liberalized markets

Challenges – The Power Plant Gap ?

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• EU Commission investigation of energy rebates to companies with high energy consumption

• Potential additional costs of billions of EUR to German businesses

• Social question of rising energy prices

“Payments for renewable energy will cost each household on average about 1 euro per month –

that’s as much as one scoop of ice cream.” Jürgen Trittin, former Federal Environment Minister, Green Party, in July 2004

when Germany’s renewable energy Feed-In Act) was enacted

Challenges – Money Issues

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“Now it costs as much as all items on the entire ice cream menu” Peter Altmaier, fr. Federal Minister of Environment, September 2013

Index of the electricity price development for households in Germany from 1998 – 2013 (1998 = 100). Source: statista

Challenges – Falling Prices / Rising Costs

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Challenges – Falling Prices / Rising Costs

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Challenges – The Renewable Surcharge

34Source: http://theenergycollective.com/schalk-cloete/326791/dissecting-germanys-eeg-surcharge

Challenges – The Renewable Surcharge

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Challenges – The Curve of Success

36Source: www.germanenergyblog.de

Challenges – The “Curse” of Success

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A Must - Energy Efficiency

• enable companies and private consumers to tap unexploited potential for energy efficiency

• new legal obligation to make energy efficiency a criterion when awarding public contracts

• transparent national and European energy consumption labeling of products

• greater market transparency

• export initiative “Efficiency – Made in Germany”

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• world leader in “passive houses”

• building stock to be almost climate-neutral by 2050

• Long-term road map for building renovation: cut primary energy consumption by 20 % by 2020 and 80 % by 2050 - remaining energy demand to be supplied from renewable sources

• doubling of the current rate of building renovation

• tax relief for energy-saving upgrades

A Must - Building-Efficiency(40 % of German energy consumption

= 1/3 CO2 emissions)

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• Increased funding for research and development (R&D)

• New comprehensive Energy Research Program for the period up to 2020 and core priorities for the period thereafter

• Under the 6th Energy Research Programme, the Federal Government has allocated approximately € 3.5 billion for funding the research and development of energy technologies between 2011 and 2014.

• Research platform “Forschungsforum Energiewende”

• National coordination group on energy research

• Support for German applicants participating in the EU’s Strategic Energy Technology Plan

Energy Research

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Energiewende - Marketing Slogan or Coherent Policy ?

➢ stability of electricity provision➢ political coordination failures / role of the 16 Federal

States➢ intense battles of influential lobbying groups pro and

contra Energiewende➢ citizen support vs. NIMBY-attitudes➢ raising the consciousness for energy efficiency➢ International context / European market / effects on

neighbours➢ etc.

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➢ even the skeptics like the idea➢ driven by citizens and communities➢ “first mover advantage”➢ combination of regulation and open markets provide

investment certainty and allows small businesses to compete with large corporations

➢ expensive, but costs are not hidden and passed on to future generations, but transparent and intermediate

➢ it will get cheaper for others to follow (solar!)➢ disagreement about strategies BUT very unlikely that

Germany will reverse its course

Energiewende - Here To Stay

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The “Energiewende” - Next Steps

• new “super-”Minister for Economic Affairs and Energy• new proposal for reforming the promotion and subsidy of

renewables on the table

➢ expansion of solar and on-shore wind will be capped to 2.500 MW each

➢ off-shore should reach 6,5 GW in 2020

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• 2.000 windmills / 10 Gw (= 5 nuclear plants) till 2020

• Today: Baltic and North Sea = 0,3 GW installed / 2,7 GW under construction

• many more windpark have construction permit – but investors hesitate because of unclear future of the feed-in system

• on-shore wind - planned expansion rate of 2,5 GW/year was only met in 2003 and last year again

Next Steps - Wind

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• solar boom years (2010 – 2012 alone more than 7 GW installations) are over

• public subsidies into the solar industry had been heavily cut in the last years / guaranteed feed-in price fell to under 10 cents last October

Next Steps - Solar

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• new “super-”Minister for Economic Affairs and Energy• new proposal for reforming the promotion and subsidy of

renewables on the table

➢ expansion of solar and on-shore wind will be capped to 2.500 MW each / off-shore should reach 6,5 GW in 2020

➢ Feed-in guarantees to fall in average from 17 cent to 12 cent in 2015 (on-shore wind 9 cents)

Next Steps – Shrinking Feed-in

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• new “super-”Minister for Economic Affairs and Energy• new proposal for reforming the promotion and subsidy of

renewables on the table

➢ expansion of solar and on-shore wind will be capped to 2.500 MW each / off-shore should reach 6,5 GW in 2020

➢ compensation to fall in average from 17 cent to 12 cent in 2015 (on-shore wind 9 cents)

➢ 2015 obligatory direct marketing for 500 KW-installations, 2017 for 100-KW / companies that produce their own electricity will have to pay the fee

Next Steps – More Direct Marketing

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• new “super-”Minister for Economic Affairs and Energy• new proposal for reforming the promotion and subsidy of

renewables on the table

➢ expansion of solar and on-shore wind will be capped to 2.500 MW each / off-shore should reach 6,5 GW in 2020

➢ compensation to fall in average from 17 cent to 12 cent in 2015 (on-shore wind 9 cents)

➢ 2015 obligatory direct marketing for 500 KW-installations, 2017 for 100-KW / companies that produce their own electricity will have to pay the fee

➢ new renewable legislation: 1st August 2014

Next Steps – New Renewable Legislation

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Thank you for your attention!

Dr. Thomas HenzschelHead of Economic Section

German Embassy Stockholm

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