Overview of the financing framework for the German Energiewende

Transcription

1 Overview of the financing framework for the German Energiewende Dr. Urban Rid Director General Energy Policy electricity and grids Federal Ministry for Economic Affairs and Energy Berlin, 13 November 2014

2 Rationale of the Energiewende Green agenda: climate change But economic rationale: Driver for Innovation and modernisation of German economy becoming the most energy efficient economy Affordable energy International competitiveness

3 Fundamentals for a successful Energiewende stable framework is key for capital-intensive investments supportive EU framework ensuring international competitiveness during the transition period

4 Long term investments need long term strategy Climate Energy Efficiency Renewable Energies % greenhouse gas reduction (vs. 1990) % primary energy consumption (vs. 2008) energy productivity building renovation % electricity consumption % final energy consumption Achieved % (estimated) -3,3 % +1.1% p.a. ~1% p.a. 25.4% 12.4% (2012) to 45 Ambitious targets in all sectors to % p.a. doubling of renovation rate: 1% 2% to Source: Federal Government 2010, BMU/BMWi 2014, AGEE-Stat

5 Stable framework needs continuous adjustment: the 10-Point Energy Agenda of this Government Reform of the Renewable Energy Sources Act (EEG) Supportive European Climate and Energy Framework 2030 Urgent reform of the European Transmission System (ETS) Development of a new and flexible electricity market design Adopt an ambitious energy efficiency strategy Elaboration of a long-term buildings strategy Improved procedures on the transmission system level Development and expansion on the distribution system level Comprehensive monitoring and progress report Platforms on the energy transition: developing concepts together with stakeholders 5

6 One key driver: the German Renewable Source Act (EEG) 6

7 RES development came at significant costs Renewable energy surcharge amounts to 6.24 ct/kwh or 24 bn. p.a. Main cost driver: financing PV learning curve at former high costs (total installed PV capacity: 35 GW) 7,0 6,0 5,0 EEG-surcharge Liquidity reserve and balanced account of EEG of any other income and expense 5,28 6,24 [ cent per kwh] 4,0 3,0 Photovoltaics Wind energy off-shore Wind energy on-shore Biomass 2,05 3,53 3,59 2,0 1,0 0,25 Hydro energy Avoided grid use charge 0,54 0,36 0,37 0,65 0,78 1,01 1,12 1,32 0, * 2011* 2012* 2013* 2014*

8 But investments of the past start paying off: future RES deployment will be much cheaper PV (ct./kwh) ~7-10 Wind (ct./kwh) ~ 4.5-8

9 Key elements of the EEG reform 2014 Improve cost-efficiency Increase market integration Testing tender procedure Strengthening regional cooperation Adjust exemptions for industry Ensure compatibility with the EU-framework and state aid guidelines

10 Market integration: mandatory market premium Market responsiveness is most important for integrating RES in the internal market So far market premium was optional, good experience made (80% of wind used optional premium) Now: market premium becomes mandatory Sliding premium ensures balanced risks for RES operators 10

11 Cost-efficiency and quantity control Cost-efficiency focussing on most efficient technologies: wind and solar wind tariffs reduced up to 20% Concrete RES corridors in the electricity sector agreed: In 2025: between 40% and 45% RES share in electricity In 2035: between 55% and 60% RES share in electricity Consequence: Onshore wind capacity: 2,5 GW per year Solar energy: 2,5 GW per year Offshore wind capacity: 6.5 GW by 2020 and 15 GW by 2030

12 Measures for quantity and cost control Step I: flexible cap for all technologies Automatic tariff reduction if newly installed capacity is above corridor flexible cap is now extended to wind Step II: tender shift to tender schemes as of 2017 in line with state aid guidelines testing phase until 2017: pilot projects of MW PV (ground mounted) p.a. 3 bidding rounds per year 12

13 Enhancing regional RES cooperation Background Strong interest for increased regional cooperation and coordination State aid guidelines and new EU framework foster regional cooperation EEG 2014 Testing of opening of EEG in the context of PV pilot tender in2015/16 As of 2017: Opening of at least 5 % of newly annually installed RES capacity Requirements for opening Cooperation agreement Principle of Reciprocity physical import or an equivalent effect on the German electricity market Currently developing this concepts 13

14 Energy Efficiency 14

15 Germany has decoupled growth from energy consumption Energy productivity increased by 46% since 1990 primary energy consumption reduced by 3.3 (cp. To 2008) while economy has grown by 50% (since 1990) Decoupling of economic growth and energy consumption achieved 15

16 Germany counts on sector-specific measures for energy efficiency Germany counts on a balance of incentives and regulations, consultation and information. Buildings Energy Saving Ordinance (building codes) and on-site consultations Low-interest loans for renovations Heat Metering Ordinance Energy performance certificates Products (appliances and lighting) Electricity tax Guidance on energy: Eco Top Ten EU-Eco Design Directive and Energy Efficiency Labelling Ordinance Industry and business Grants for cross-cutting technologies On-site consultations European emission trading system Efficiency classification (Ecodesign Directive) Transport Motor vehicle taxation Fuel taxes Federal fuel strategy EU emission reduction targets for vehicles 16

17 Energy Efficiency first progress but additional measures needed Concrete measures adopted, e.g. Energy efficiency standards for new buildings Low interest rates and grants for energy efficient new buildings above standard (Program KfW 40, 55, 70) Energy efficiency fund: Subsidies for refurbishing buildings: 1.5 bn /a in the period But efficiency is lacking behind Renewables due to several barriers Coalition agreement: concrete Efficiency Action Plan agreed 17

18 National Efficiency Action Plan (NAPE) Adoption of the National Efficiency Action Plan by end of 2014 Some elements: Buildings: step-up of KFW-funding and new tax rebate for retrofitting Energy efficiency fund: Public tendering of energy efficiency project Initiative for Contracting as well as industry networks for energy savings Initiative for better information, benchmarks and advisory services Ambitious standards for products on EU-Level

19 Grid reinforcement and smart grids: the backbone of the Energiewende 19

20 Transmission grid reinforcement and market coupling are key for market integration Challenge within Germany: transport from North to South Key: High Voltage DCtransmission lines Until 2024 investment of approx bn needed Planning and authorisation procedure has been accelerated Next steps: 2015: Grid Development Plan for the next 10 years 2016: legal implementation 20

21 Distribution grids need significant investment in next 10 years investments needed for next ten years: approx bn costs for grid reinforcement can be reduced by up to 20% through: Smart technical solutions balanced RES curtailment could reduce Next steps: Adjustment of regulated incentives for grid operators for grid reinforcement ( incentive regulation ) with a view to incentives smart technologies 21

22 New flexible market design needed 22

23 Security of supply is not only a national but European task Currently: sufficient generation capacity in Germany despite shut down of 8.6 GW nuclear (~ 102 GW firm capacity cover 82 GW peak load) Local bootlenecks in South Germany due to insufficient grid connection temporary measures adopted until 2017 ( grid stabilisation reserve ) Generation adequacy needs to be assessed in the EU-context 23

24 Diversified RES deployment and market coupling reduces balancing costs Diversified RES deployment at many sides in Europe is less volatile Large balancing area halves need for back-up capacity Less steep ramps Higher minimum Lower extremes Lower volatility 24

25 Green Paper Electricity Market Green Paper has identified a set of no-regret measures, e.g.: Generation and demand side management EU-wide grid reinforcment and market coupling strengthening of balancing group responsibility and balancing markets Two alternative solutions identified for a new market design optimized electricity market (Electricity Market 2.0) (+ reserve) Capacity market (+reserve) Next steps: comprehensive public consultation also with EU neighbours Decision and white paper with measures next year 25

26 EU framework 26

27 Need for a supportive EU-framework decision on 2030 Climate and Energy framework, particularly With a view to give the EU a strong mandate for Paris With a view to the 3 targets: important investment signals Strong signal for an ETS-Reform while ensuring competitiveness for industry Implementation of 2030 package Early introduction of MSR needed Beyond: - reliable framework for RES and EE needed post Current RES and EE framework until 2020 should not be questioned Energiewende needs to be integrated in the EU-internal market: coordination regional cooperation 27

28 Thank you. 28