the impact of liberalisation on the environmental performance of the electricity sector in germany
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The Impact of Liberalisation on
the Environmental Performance of the Electricity Sector
in Germany
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Aim: to Answer the Following Questions during this Presentation:
• How is the the German Electricity sector administered?
• Why did Germany Liberalise the electricity sector ?
• What options did Germany select within EU Directive?
• What were the results of Liberalisation?
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German Electricity Sector Governance Ministry for Economics &
Technology
Ministry for Environment, Nature Conservation & Nuclear Safety
Responsible for Energy Policy
Responsible for Environmental/ Energy Policy
Ministry for Education, Science, Research & technology
Co-ordinates energy research and development
Federal Cartel Office Controls Fair Competition & mergers
Länder Governments
Länder Ministries of Economics/Environment
Implement law and grant licenses in their Länder
Authorise single buyers, transit tariffs, supply tariffs
Federal Level
Länder Level
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Key Environmental/Electricity Legislation
• 5 laws - restrict emissions
• 4 Key laws that subsidise renewable energy and combined heat and power.
• Tax on Electricity - Eco tax & Tax on Gas
• Subsidies for energy efficiency programs.
• Voluntary agreements - phase out nuclear & reduce GHG emissions
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Liberalisation Objectives in Germany
• Political Objectives - to support EU unification and to promote diversification of energy supply
• Socio-economic Objectives - to reduce costs of electricity and improve efficiency in East.
• Environmental Objectives - to support the introduction of renewable energy and reduce GHG emissions.
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Key milestones in German Liberalisation
Process
• 1989 - Federation Regulation on electricity Tariffs
• 1998 - Energy law
• 1999 - Amendment to the 1958 Act Against Restraints of Competition.
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Extent Germany implemented EU Directive Directive Requirement How Implemented in German-Third Party Access - Negotiated Third Party Access- Competition restrictions noted - Network access restrictions in E. - Regulator - Federal Cartel Office- Transmission System Operator - (TSO)8 transmission operators- Permitted Reason to deny Access - Lack of capacity & Reciprocity- Transmission charges - Point Tariff- Market Opening - Full market opening (1998)- Tender or Authorisation - Authorisation- Unbundling of TSO - Management is unbundled- Supply unbundling - Full unbundling
Source: Adapted from Table by EuroElectric in article ‘Implementation of the
Internal Electricity Market Directive
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Results of German Electricity Sector
liberalisation • Access to the Grid
• Number of Players in the market
• Price of Electricity
• Finance and Risk
• Environmental Performance
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Contribution to Total Electricity Generation (%)
10%
80%
10%
850 Municipal Utilities 6 Supra regional companies
80 Regional companies
No. of Players in the Market
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No. of Players in the Market (cont)
6 Largest co. % of 80% of market
37%
34%
13%
9%4%3%
E.on (VIAG &VEBA)
REW AG (RWE &VEW)
EnBW/EdF
VEAG
HEW
BEWAG
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The Price of Electricity
4
5
6
7
8
9
10
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Year
€/10
0 kW
h D
F
UK
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Finance and Risk
Finance and Risk has:
1. made it less attractive to invest in coal, nuclear, hydro and
2. changed Behaviour of players in the market:
• Expansion within the usual segment of business
• Growth by investing in non-electric utilities
• International Expansion
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Environmental Performance in the German Electricity Sector
• Reduced Emissions CO2
• Reduced emission SO2 and Nox
• Increase No. of Renewable Energy
• Constant Energy Efficiency
• Reduced Costs to German Government
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Emissions of CO2
Reductions in CO2 Emissions from the German Electricity Sector
0
100
200
300
400
500
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Years
Mt
of
Ca
rbo
n D
iox
ide
Ministry for Economy & Technology 2001
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SO2 and Nox Emissions from the electricity Sector
Emissions of SO2 and NOx from the German Electricity Sector
0
500
1.000
1.500
2.000
2.500
3.000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Kilo
To
ns
SO2
Nox
Ministry for Economy & Technology 2001
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Environmental Performance in the German Electricity Sector
• Reduced Emissions CO2
• Reduced emission SO2 and Nox
• Increase No. of Renewable Energy
• Constant Energy Efficiency
• Reduced Costs to German Government
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1990 Damage Costs: NOX, SO2, NMVOC,NH3
0
2
4
6
8
10
12
14
Dam
ages
Co
sts
[bil
lio
n E
CU
/a]
Pu
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ow
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Inst
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esid
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om
bu
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Ind
ust
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Co
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(No
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om
bu
stio
n)
Pro
du
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roce
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Ext
ract
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Dis
trib
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on
of
Fu
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Ro
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Oth
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So
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Mac
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Ag
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12.8
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N.A.
1.1
Damages OutsideGermany
[European Commission 1998].
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Conclusions
• Environmental Performance
• Transparency
• Access to Grid
• Ownership
• Price of Electricity
• Finance and Risk
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.DOSE
IMPA
CT
Dose-
Response
Function
impact(e.g., cases of asthma due to ambient
concentration of particulates)
DOSE-RESPONSE FUNCTION(or exposure-response function)
cost(e.g., willingness-to-pay to avoid a
case of asthma)
ECONOMIC VALUATION
DISPERSION(e.g. atmospheric dispersion model)
emission(e.g., kg/yr of particulates)
increase in concentrationat receptor sites
(e.g., µg/m3 of particulatesin all affected regions)
SOURCE(specification of site and technology)
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The key aspects of liberalisation, if any, that have affected the environmental impact of
electricity systems?
Due to Germany‘s strong environmental regulation, Liberalisation has had a limited impact on the environmental performance of the electricity sector.
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What are environmental/energy/technological policies implemented to control environmental
impact?
• Strong emission controls
• Support to E.Germany to improve technology
• Subsidies to support renewable energy, CHP, and energy efficiency.
• Taxes
• Voluntary Agreements with Business
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Why are these Policies Successful?
• Effective enforcement
• Increasing environmental awareness leading to public support for strong governement actions
• Culture where high level of State/Gov. intervention is considered good .