Energy Policy in Germany: Energiewende

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1 Energy Policy in Germany: Energiewende

2 Content 1. The German energy transition Overall aims and ambitious targets 2. Renewable energies 3. Power Grids 4. Power Plants, Electricity markets of the future 5. Energy efficiency 6. Conclusions / Challenges 2

3 1. The German energy transition Overall aims and ambitious targets Long term strategy up to 2050 Long-term strategy towards a higher share of renewables and higher energy efficiency Overall aims: Reduction of import dependency Facing an increasing global energy demand Climate protection as an international goal Reduction of greenhouse gas emissions Development of new technologies and markets Renewable and efficiency technologies Phase-out of nuclear energy generation (broad political and social consensus in Germany) 3

4 1. The German energy transition Overall aims and ambitious targets Ambitious targets until 2050 in different sectors Climate Renewable Energies Energy Efficiency % greenhouse gas reduction (vs. 1990) % electricity consumption % final energy consumption % primary energy consumption (vs. 2008) energy productivity building renovation Achieved % (estimated) 25.4% 12.4% (2012) -3,3 % +1.1% p.a. ~1% p.a to to to % p.a. doubling of renovation rate: 1% 2% Source: Federal Government 2010, BMU/BMWi 2014, AGEE-Stat 2014

5 Trends in German gross electricity production total: TWh renewables share: 45.6 TWh Source: Statistisches Bundesamt, BDEW /AGEB 2014 Renewables share in electricity production tripled within ten years Speaker 5

6 Implementing Energiewende: Fields of action

7 2. Renewable energies Share of Renewables in Electricity Production RES have become main source

8 2. Renewable energies Cornerstones of the Renewable Energy Sources Act Guaranteed grid access; priority transmission and distribution Fixed price (tariff or premium) for every kwh produced Tariffs are set for each type of technology and with regard to further provisions (e.g. site and size) Additional costs for renewable energy production are offset through the EEG levy (2014: ~ 6,24 ct/kwh), with reductions for energy-intensive industries Additional costs are offset via grid operators and independent of the public budget Regular monitoring and evaluation; accompanying research

9 2. Renewable energies ct/kwh Entwicklung Trends in the der Renewable EEG-Umlage energy surcharge (EEG-Umlage) Quelle: Bundesministerium für Wirtschaft und Energie 2014 Reform of Renewable Energy Sources Act will weaken cost dynamics

10 2. Renewable energies German household electricity prices EEG surcharge has been one of the drivers of increases in household energy prices Source: BMWi

11 2. Renewable energies Reform of the Renewable Energy Sources Act 2014 More planning security binding development corridor More coordination and precision technology-specific regulatory instruments More cost-efficiency focus on cost-efficient technologies (PV, Onshore-Wind) avoid excessive support, implement degression mechanisms affordability environmentally friendly energy supply security of supply More market-orientation compulsory direct marketing tendering model (2017) Germany keeps ambitious goals, but optimises mechanisms and increases market integration. 11

12 3. Power Grids The challenge: connecting supply and demand solar wind (installed) wind (planned) bottleneck transmission grid distribution grid high-demand areas New power lines need to transport excess supply in northern Germany to southern Germany in order to prevent shortages. Source: DUH

13 3. Power Grids Priority projects in the First Federal Requirement Plan 36 projects 5,700 km of priority lines by ,800 km new construction 2,900 km optimisation Source: Federal Network Agency expansion projects were identified as vital for security of supply. 13

14 3. Power Grids Distribution grids Rahmenbedingungen für intelligente Netze und Zähler.

15 4. Power Plants, Electricity markets of the future German electricity-system volatility today GW 100 beginning of January 2013 week no. 2 GW 100 mid-june 2013 week no GW conventional 72.4 GW conventional (90% of demand) (90% of demand) electricity demand photovoltaic residual load hydro (fossil plants) 41.6 GW conventional (56% of demand) Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun onshore / offshore wind biomass Source: Agora Energiewende 2013 Conventional power plants need to adapt to higher flexibility needs. 15

16 4. Power Plants, Electricity markets of the future German electricity-system volatility in 2022 GW end of November 2022 week no. 47 GW mid-august 2022 week no Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun electricity demand photovoltaic residual load hydro (fossil plants) onshore / offshore wind biomass Source: Agora Energiewende 2012 Renewables will partially cover 100% of demand by as early as

17 4. Power Plants, Electricity markets of the future Flexibility measures depending on renewables share Flexibility needs can mainly be covered by market mechanisms. New storage capacities are only needed for high renewables shares. Source: BMU

18 4. Power Plants, Electricity markets of the future Electricity Market of the Future: Challenges massive need for synchronization and close coordination of generation of electricity from renewable and conventional sources At present: adequate conventional power-plant capacity (nation wide); tense regional supply situation in transmission grid addressed by grid reserve grid stability Nevertheless: conventional power generation experiences significant structural change overcapacities, low prices on wholesale Electricity market gas-fired power plants have growing problems with economic viability

19 4. Power Plants, Electricity markets of the future Electricity Market of the Future: The Green Paper Discussion Process BMWi Discussion Paper An Electricity Market for Germany s Energy Transition presents measures to optimize deployment of available capacities ( in any case measures) esp. improvements in use of balancing group management, grid expansion, further development of balancing energy markets) Discusses whether electricity market will incentivize sufficient investment in the necessary capacities Fundamental decision: optimization of electricity market vs. setting up a second market for maintaining of reserve capacity White Paper in 2015, which will propose specific measures European Solution necessary, close discussion with our neighbors and EU Commission

20 5. Energy efficiency Energy efficiency: economic growth decoupled from energy consumption Source: Federal Ministry for Economic Affairs and Energy 20

21 5. Energy efficiency Trends in Primary Energy Consumption Additional Measures necessary in order to meet goals

22 5. Energy efficiency Energy efficiency measures: Broad mix of instruments Buildings Energy Saving Ordinance (building codes) on-site consultations Low-interest loans for renovations Heat Metering Ordinance Energy performance certificates Appliances and consumer products Electricity tax Energy Efficiency Labelling Ordinance Energy-using Products Act (EBPG), ecodesign directive Energy advice in consumer advice centres Industry and business Grants for cross-cutting technologies On-site consultations European emissions trading Efficiency classification (Ecodesign Directive) Voluntary agreements in some sectors Transport Motor vehicle taxation Fuel taxes Federal fuel strategy A balance of incentives, regulations, consultation and information Speaker 23

23 6. Conclusions / Challenges Further steps are necessary Further steps Further steps Further steps Further steps Further steps cost and quantity control, market and system integration thorough assessment of energy security issues, incl. flexibility of generation and demand transmission system level: new planning process; distribution system level: smart grids, review of system of grid fees implementation of EED, Energy Efficiency Action Plan Continuation and expansion of energy research programme

24 6. Conclusions / Challenges Conclusion The energy transition is a big challenge but also offers opportunities for companies and consumers. Environmental and economic aspects need to be considered together. Germany must remain a competitive base for industry. Cost efficiency as well as market and system integration are the key European integration and cooperation with neighbours is needed long-run perspective, further steps are necessary for successful implementation 25