THE GERMAN ENERGY TRANSITION BUSINESS OPPORTUNITIES FOR THE POWER AND ENERGY INDUSTRIES

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1 THE GERMAN ENERGY TRANSITION BUSINESS OPPORTUNITIES FOR THE POWER AND ENERGY INDUSTRIES FEBRUARY 2018 Claus Habermeier Germany Trade & Invest

2 Who we are Foreign trade and inward investment agency of the Federal Republic of Germany Shareholder Germany Trade & Invest 2

3 GTAI the Agency A three-fold mandate: Marktbeobachtung Support export-oriented companies based in Germany with comprehensive foreign market information. Investor Aquisition Consult potential foreign investors in terms of their expansion plans and execute the required project management support in Germany. Promote the economic development of the new federal states. (Aufbau Ost) Location Promotion Promote Germany abroad as a leading economy and technology location in order to attract investors who infuse equity and/or create (or secure) jobs in Germany. Germany Trade & Invest 3

4 GTAI Investor Acquisition Germany Trade & Invest is a one-stop agency supporting the investor closely and facilitating every stage of the decision-making process Strategy Evaluation Decision & Investment Project Management Assistance Business opportunity analysis and market research Market entry strategy support Project partner identification and contact Joint project management with regional development agency Coordination and support of negotiations with local authorities Location Consulting/Site Evaluation Identification of projectspecific location factors Cost factor analysis Site preselection Site visit organization Final site decision support Support Services Identification of relevant tax and legal issues Project-related financing and incentives consultancy Organization of meetings with legal advisors and financial partners Administrative affairs support Accompanying incentives application and establishment formalities Germany Trade & Invest 4

5 Development of Renewable Energy Systems Feed-in-Tariff created dynamic growth Total capacity of renewables (End 2000) 2005) 2010) 2015) > ~ , ,000 30,000 installations Wind energy PV Biomass The circle diameter is proportional to the electrical capacity Germany Trade & Invest 5 Sources: 50HertzT, TenneT, Amprion, TransnetBW, internal data

6 The German Electricity Market Off-shore Wind Recognized for High Potential Energy Source Share of Installed Capacity (2015) Full Load Hours of Power Plant Types (2016*) Wind Power (Offshore) 1.4% Photovoltaic 19.5% Nuclear Power 5.4% Lignite 13.6% Year: 8,760 h Wind Power (Onshore) 19.3% Hard Coal 10.5% Hydropower 2.8% Total: 200 GW Biomass and Waste 3.9% Oil, Pump Hydro and Others 9.3% Annual peak load: app. 80 GW Wind & PV: 80 GW Natural Gas 14.3% Sources: Bundesnetzagentur 2016, *BDEW 2014 Germany Trade & Invest *Preliminary values (State ), BDEW 6 Nuclear Power Lignite Biomass Hydropower Hard Coal Wind Power (offshore) Natural Gas Wind Power (onshore) Oil Pumped Storage Photovoltaics

7 Goals of Renewable Electricity Consumption Developments on target Renewable s share on Germany s gross electricity consumption vs. goals of German Energiewende 90% 80% 70% Renewable s share on Germany s gross electricity consumption Goals of German Energy Concept (as of 2011) 65% until % until % 50% 40% 32% in % until % until % 20% 10% 00% Sources: BMWi, 2017 Germany Trade & Invest 7

8 More renewables demand more digitalization Germany Trade & Invest 8

9 Smart Meter Roll-Out Smart metering systems to be rolled out in Germany from 2017 New draft law Digitizing the Energy Transition : Smart Metering System (SMS) = Electronic Meter + Secure Communication Gateway Electronic meters new standard in 16-year meter replacement cycle for all users Mandatory roll-out of full SMS starts 2017 with large users > 10,000 kwh/a and producers with installed capacity between 7 and 100 kw From 2020 possibility to require other consumers and producers to install SMS Price ceilings apply when equipment is installed Source: Landis + Gyr SMS can always be fitted on a voluntary basis Germany Trade & Invest 9

10 The German Smart Meter Roll-Out just started Potential for 3 million new smart meters starting in From 2020 further 47 million. Thereof only ~150k installed today. Smart Meters to be rolled out until 2032 (Number of units) 60,000,000 Producers (CHP & Renewable Energy plants >7 kw) Consumers > 10 MWh/a Consumers < 10 MWh/a 50,000,000 40,000,000 30,000,000 20,000,000 10,000, Source: BMWI 2016 Germany Trade & Invest 10

11 The Smart Grid Market Overview New power structures will lead to bottle necks in Germany as the new generation centers will be far from load centers [MW] [MW] [MW] Power balance 2014 Power balance 2024 Source: Bundesnetzagentur 2016 Germany Trade & Invest 11

12 European Grid Extension projects Ten-Year Network Development Plan 2016 TYNDP 2016 investment portfolio breakdown per year of commissioning Pan-European Significance investments mid- and long-term horizon 150 billion grid expansion proposed by the TYNDP 2016 Enhanced market integration will reduce bulk power prices by 1.5 to 5 /MWh Source: TYNDP 2016 Ten-year network development plan ENTSO-E Source: ENTSO-E 2016 Germany Trade & Invest 12

13 More renewables require more energy storage Germany Trade & Invest 13

14 Energy Storage: many use cases in Germany Providing grid services, helping industry reduce grid fees, and households increase their own-consumption of cheap PV energy. Utility Industry Private Control Power Redispatch Black-start capability Reduction of grid fees by reducing or shifting P max Increased ownconsumption from PV Increased ownconsumption from PV Special electricity rates for battery swarms Courtesy: Younicos GmbH/Wemag AG, Tesvolt GmbH, Sonnen GmbH Germany Trade & Invest 14

15 Base and Peak Price Development EEX Spot Market Former business model for energy storage Source: European Power Exchange, bricklebrit.de Germany Trade & Invest 15

16 Installed Primary Control Power Capacity Growing market with increasing fluctuating renewables Total large-scale batteries in Germany Power capacity [MW] *preliminary figures; Note: no claim for completeness * (announced)? Germany Trade & Invest Li-Ion Hybrid: Li-Ion + X Li-Ion second life Lead-acid 15 battery capacity in MW

17 Market explosion for stationary batteries Strong growth for private PV-batteries and large-scale grid batteries Battery capacity for Primary Control Power (MWh**) Installed capacity of PV-battery systems (MWh*) k PV-battery systems expected by end of Further 123 MW already in pipeline for Note: * average system size: 6.8 kwh; ** anticipating 1C (1 MW = 1 MWh) Source: RWTH 2017, BSW 2017 Germany Trade & Invest 17

18 Development of Renewable Energy Curtailment Long term energy storage technologies are needed % 5% GWh Mio. 87% wind energy biomass solar energy Source: German Federal Network Agency, Monitoring report Source: German Federal Network Agency, Monitoring report 2016 Germany Trade & Invest 18

19 Example: Audi e-gas plant in Werlte Plant prequalified for secondary control power Key Parameters Project name: Audi e-gas Projekt Input power: 6 MWel Hydrogen production: m³/h Start of operation: Owner: Audi AG Carbon dioxide source: a biogas plant Goals Partner Demonstration of the process chain Optimize operational concept (fluctuating power from wind vs. changing gas feed) Gain experience in technology, costs and consenting Source: Audi AG SolarFuel GmbH Zentrum für Sonnenenergie und Wasserstoff- Forschung Frauenhofer Institut für Windenergie und Energiesystemtechnik EWE Energie AG Germany Trade & Invest 19

20 H2 Mobility action plan until 2023 Construction of a Hydrogen Refueling Network in Germany until 2023 TARGETS: 400 HRS until 2023 ( 100 HRS until 2017) 350 mio. investment Max. 90 km distance between two HRS at the motorway 10 HRS in each metropolitan area Partner: Associated Partner: Source: NOW Germany Trade & Invest 20

21 National Innovation Program II (NIP II) With NIP II, the German government continues to facilitate R&D and market launch activities in the area of fuel cells and hydrogen Governmental funds: up to 1.4 bn between 2016 and % of funds for market activation activities 40% of funds for activities in the field of R&D, demonstration and market entry preparation Funding for the following fields of activity: Infrastructure for emission-free transport Stationary applications: combined heat and power units Support of supplier industry Fundamental research for the next generation of fuel cells and hydrogen technologies The use of fuel cells for securing critical infrastructure Note: For more detailed insight and whether your company is eligible for funding, please ask your GTAI expert. Source: Federal Ministry of Transport and Digital Infrastructure Germany Trade & Invest 21

22 More renewables offer cheaper electricity for heat & vehicles Germany Trade & Invest 22

23 Sector coupling: strong growth for Electric Vehicles Only 0.73% of newly registered vehicles were Plug-in Hybrids or Battery Electric Vehicles in 2016 Electric Vehicles (PHEV + BEV) in Germany (Number of vehicles, ) 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Sources: IEA 2017, BDEW 2017 Germany Trade & Invest 23

24 and for Public Charging Stations Acute demand for public charging stations. These will potentially also be equipped with batteries as well as with smart grid technologies Electric Vehicles (PHEV + BEV) vs. Public Charging Stations (Number of units, ) 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Electric Vehicles Public Charging Points 0 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Sources: IEA 2017, BDEW 2017 Germany Trade & Invest 24

25 SINTEG New Smart Energy Program EUR 600* Million for 5 showcase regions from 2016 to C/sells: interconnected, regional energy systems with cellular structure and focus on PV integration that balance each other HAMBURG 3 DÜSSELDORF 2 FRANKFURT 1 STUTTGART 5 MUNICH BERLIN DRESDEN 2. Designnetz: decentralized renewable power supplied flexibly to urban and industrial load centers 3. Enera: Stabilizing the grid by improved measurement and data analysis coupled with new market mechanisms 4. NEW 4.0: Maximizing the efficient use of regional wind power overproduction by flexible demand response and interregional trade in electricity 5. WindNODE: Sectors electricity, heat, and mobility are integrated to flexibly accomodate fluctuating regional wind power Source: BMWi, 2016 *Including EUR 230 million state support Germany Trade & Invest 25

26 Germany Trade & Invest Contact Germany Trade & Invest Foreign Trade and Inward Investment Promotion Agency Claus Habermeier Director at Germany Trade and Invest New York Office 80 PINE ST FL 24 New York, NY Tel: +1 (212) Energy Storage Smart Grid Heiko Staubitz Senior Manager Friedrichstr Berlin T +49 (0) heiko.staubitz@gtai.com Supported by the Federal Ministry for Economic Affairs and Energy on the basis of a decision by the German Bundestag. Germany Trade & Invest 26