The Past and Future Impact of Germany s Renewable Energy Sources Act (EEG).

Transcription

1 Dr. Christine Wörlen The Past and Future Impact of Germany s Renewable Energy Sources Act (EEG). Washington D.C., August, 2007

2 Table of contents. German Energy Agency (dena): Who we are General background on Renewables and German / EU goals. The legal framework of the EEG Impacts of the EEG on the deployment of renewable energy, technological innovation, prices and costs. Outlook and conclusions. 2

3 German Energy Agency (dena): Who we are.

4 Ownership structure of the German Energy Agency. Federal Ministry of Economics and Technology Federal Ministry for the Environment, Nature Conservation and Nuclear Safety Federal Ministry of Transport, Building and Urban Development 4

5 Fields of competence and activity at dena. 5

6 Source: Bundesverband WindEnergie e.v. Challenges for the energy sector in Germany.

7 Why? Climate Change Energy Supply Security Technological Leadership World Market Leadership 7

8 EU 15 greenhouse gas emissions and Kyoto targets. EU-15 GHG-emissions Kyoto targets and 2002 emissions relative to 1990 (in %) Spain Portugal UK Sweden Ireland Finnland Netherlands Luxembourg Italy Germany France Denmark Belgium Austria 2002 target Source: EEA,

9 Structure of the primary energy consumption in Germany in Oil Total Lignite Hard coal Source: BMU 2007, ZSW 2007 Nuclear power Renewable Energies other and balance Gas 9

10 EU and Germany: Targets for renewable energy deployment.

11 For Comparison: The legal competence for the regulation of the energy sector is comparable on the following levels: U.S. federal level U.S. state level EU level EU member state level For example: Unbundling in power sector Target setting for renewable energies Are prescribed on EU level. Implementation of policies to achieve these goals happens on level of member states. 11

12 European Union & member states 2001/77/EC - Directive on Electricity Production from Renewable Energy Sources: an increase of the contribution of renewable energy sources to electricity production in the internal market for electricity. subsequent procedures: national EU- targets are set seperately for each member state each member state transfers its target into national jurisdiction in Germany the Renewable Energy Law ( EEG). SET Plan March 2007 Council decides to reach 20 % energy efficiency and 20 % renewable share of renewables in primary energy supply by

13 German targets on renewable energies (1) Renewable Energy Sources Act German target within the EU-directive on renewable energies (2001/77/EC) 12,5% indicative share of electricity produced from renewable energy sources in total German electricity consumption by 2010 Target for 2020 share of 20% German Environmental Minister Sigmar Gabriel Target of 12,5% will be reached in 2007 new target: % share of electricity produced from renewable energy sources in total German electricity consumption by 2020 and 45% by

14 German targets on renewable energies (2) In the end of 2006 the German parliament passed a law on a quota system for biofuels 4,4% quota diesel (biodiesel) 1,2% quota petrol (ethanol) Targets currently discussed: Primary Energy Supply: 20 % in 2020, all renewables Power: % (2020), 45 % (2030), all renewables Heat. 17 % in 2020 Transportation: 10 % (2020), 20 % (2030) (biofuels) 14

15 Renewable energy technologies.

16 For grid connected electric power generation. What you need Capacity Widely used in Wind energy Kinetic energy from the wind 300 kwel to 5 MWel (2005) Germany, Spain, USA, India, etc. Waterpower Kinetic energy and water pressure Run-off river power stations: 5 GWel, small- scale up to 1 MWel Canada, Austria, Scandinavia, etc. Deep geothermal energy High-temperature water or steam MWel Philippines, Kenya, Costa Rica, Iceland, USA, etc. Bioenergy Wood, crop wastes, biowaste 100 kwel to 50 MWel Switzerland, Germany, Scandinavia PV Direct sunlight and diffuse solar radiation 1 kwel to several MWel Germany, Japan, Luxembourg, etc. 16

17 For off grid electric power supply. PV stand-alone systems What you need Capacity Applied in Solar radiation Several Watts to several kwel Africa, China, etc. Small-scale wind energy Low-speed wind 100 Wel to 80 kwel China, Mongolia, etc. Pico and miniscale hydropower plants Water pressure Several kw to 10 MWel (25 MW) A wide range of countries 17

18 For heating and cooling. What you need Capacity Application Solar-thermal energy Solar radiation 5 10 sqm (domestic) > 20 sqm (public and industrial) Germany, Japan, Greece, Turkey, etc. α Near-surface geothermal energy Slight temperature differences 6 8 kw therm Switzerland, Germany, etc. α Deep geothermal energy High-temperature water or steam 2 30 MW therm Philippines, Kenya, Costa Rica, Iceland, USA, etc. α Biomass α Heating Cooling Seasonal storage Wood, pellets, biowaste, crops 2 kw therm or more (fireplace, pellet stove, wood heating) 600 kw 60 MWtherm (district heating) α Germany, Austria, Canada, Scandinavia,etc. 18

19 For transportation and shipping. What you need Capacity Applied in Bio-fuels: Bio-diesel and bio-ethanol, Biooil, rapeseed oil, BTL (biomass to liquid) energy crops, biogenic waste, wood 500t 200,000t Brazil, USA, Germany, France, Italy, etc. Hydrogen (RES) electricity 1 kwel to 50 MWel Iceland, Germany, USA, etc. 19

20 The German Renewable Energy Experience.

21 The German RE experience. Germany can look back on many years of experience and has been a global pioneer in the area of RE technology. Largest installed wind power capacity in the world Largest PV market in the world Largest solar thermal market in Europe Pioneer in the field of biofuels and hydrogen Main policy instrument in the power sector: EEG 21

22 History of Germany s Renewable Energy Sources Act EEG (Erneuerbare Energien Gesetz) 1991: First feed law (StrEG) comes into power, by the urging of a CSU member, Matthias Engelsberger. reimbursements and purchase commitments are mandated for the grid owners. Tariff: 90 % of the average proceeds for each kilowatt-hour for wind and solar electricity (approx Pfennig) StrEG was amended and reimbursements raised several times to promote new technologies. April 1, 2000: The EEG replaces StrEG, Tiered tariffs by technology, plant size, location (for wind), etc. gradual decrease in reimbursements ( degression ), depending on time of grid connection July 21, 2004: The EEG in its current form enters into force Tier structure more refined New degression rates Currently: Second Review Process will be kicked off in the next parliamentary session. 22

23 Electricity from wind energy in Germany Renewable Energy Law ( EEG) [GWh/a] Programme: 100 MW Wind and 250 MW Wind Electricity Feed Act (StrEG) Electricity generation Capacity [MW] Source: BMU

24 EEG: Legal foundations. Federal law (further development of the Power Feed-In Law of 1991) Priority for feed-in of RE Extensive regulation for grid access legally regulated payment rates Long-term perspective and investment security (15 30 years) Incentive for the opening up of new potentials and technologies (esp. biomass and geothermal energy) Strong incentive for efficiency boost, by degression of payment rates 24

25 EEG: Description of operation. 25

26 Pillars of the EEG: Obligations of the Network Operators, 4 Abs. 1 EEG. Connection Obligation, ( 4 Abs. 1, Satz 1, 2. HS EEG) Priority given to the attachment of equipment for the production of energy from renewable energy sources to electricity mains. Grid owners are not able not claim another energy source is being used and not take energy produced from renewable energy sources. Obligation to Accept Delivery Grid owners are required to take all energy produced by renewable energy sources ( 12 Abs. 1 EEG) Transmission Obligation 26

27 Pillars of the EEG: Obligation Grid Expansion, 4 Abs. 1 und 2 EEG. Technical difficulties do not justify the rejection of grid access. Grid operator has to invest to connect RE plant to grid. Only economically reasonable investments can be demanded, but the definition is rather generous. Principle of the proportionality: Cases are considered by an individual basis. Required grid expansion has to take place immediately, without delays. The immediate start and finish of required grid expansion projects should be within a few months. 27

28 Pillars of EEG: Reimbursement Obligations, 5 Abs. 1 EEG. Every offered kwh produced from renewable energy systems must be taken by the grid owners, ( 5 Abs. 1 EEG). The actual compensation amount differs depending upon the technology, installation type, performance class and range of application. A gradual annual decrease ( degression ) in the tariff, depending on the year of deployment, is in place to incentivize the industry for more cost reductions and performance innovations. Hardship exemption for energy-intensive companies, 16 EEG. 28

29 Feed in rate under the EEG for Duration (yrs) Cents/kWh Hydropower % Biomass % Degression Geothermal energy % (as of 1 Jan. 2010) Wind energy (onshore) % Wind energy (offshore) % (as of 1 Jan. 2008) Photovoltaics % 29

30 EEG: Description of operation. 30

31 Share of costs for one kwh of electricity in private households (18,6 Cent), 2005 Source: BMU

32 The Effect of the EEG on Germany s Energy Market.

33 Expected Effects from the Implementation of BMU Recommendations. Expansion of RE Power production until : 74 Mrd. kwh, 2020: 156 TWh from RE. 2010: 15,5%, 2020: 27% (total power consumption 570 TWh in 2020). 33

34 Structure of the electricity generation of renewable energies in Germany in Wind energy Total: Photovoltaics Biogenic solid fuels Biogenic share of waste Hydropower Geothermal power Landfill gas Sewage gas Biogas Biogenic liquid fuels total biomass: 23 % (without seage and landfill gas) 34

35 Development of renewable energies in Germany, Source: BMU

36 Electricity from wind energy in Germany [GWh/a] [MW] Electricity generation 2001 Capacity Source: BMU

37 Electricity from photovoltaic in Germany yearly addition [MW p] cumulated installed capacity [MW p] Introduction EEG Introduction roof-top program Source: BMU, 2007 added capacity per year Cumulated installed Capacity

38 Electricity from biomass in Germany Electricity Generation [GWh/a] Entry into force of the Electricity Feed Act Introduction of Biomass Ordinance Entry into force of EEG : 10,2 TWh from solid bimass incl. biogenic share of waste, 5,4 TWh from biogas, rest from solid biomass Source: BMU

39 Electricity from biogas in Germany number of plants installed capacity [MW] 39 Source: Fachverband Biogas, 2007 number of plants installed capacity [MW] est.

40 Contribution to other political goals: conservation, technological development, job growth, economic growth.

41 Impact of EEG Since Climate Protection 2006: Reduction of CO 2 emissions, estimated to be 100 Million tons. Windenergy: 26,289,000 tons, Hydropower: tons Nature and Enviroment The goal of minimizing the impact on the environment has been met with mostly sucesses. Problem: Monocultures used in energy production can have negative effects on the soil, water, plants and animals. Problem: Import of palmoil is accompanied with the destruction of tropical rain forest. Industrial development: International leadership of German RET industry. Currently 22 bn. turnover, in 2020: 250 bn. Projected number of jobs in 2020: , which is significantly higher than the loss of jobs in the conventional energy sector. 41

42 Distribution of the turn over (rd. 21,6 Mrd. ) of the German renewable energy industry in Biomass Solar energy Source: BMU 2007, ZSW 2007 Geothermal power Wind energy Hydropower 42

43 Jobs in the renewable energy sector in Germany in Wind energy Biomass Source: BMU 2007, ZSW 2007 Solar energy Hydropower increase since 2004: more than 36% Geothermal power 43

44 Technological development and market driven innovation. Cost reduction.

45 Source: Die Windindustrie in Deutschland : BWE und VDMA Power Systems Wind technology development. 20 years 100 times more power. 45

46 Most powerful wind turbines worldwide. Source: Bundesverband Windindustrie (BWE) Enercon E-112 REpower 5M Multibrid M5000 Nominal power 4,5 MW - 6 MW 5 MW 5 MW Hub hight 112 m 120 m 102,6 m Rotor diameter 114 m 126 m 116 m Currently intstalled 9 Turbine 3 Turbine 2 Turbine 46

47 Offshore Wind actual state of planning in Germany. Copyright: BWE 13 wind parks in the North Sea (939 turbines) and 2 in the Baltic Sea (183 turbines) already approved expected capacity of the constructed offshore windparks until 2011: about 1,500 MW aim of the strategy for the use of offshore wind power of the German Government until 2025/2030: MW, corresponding to 15% of the total electricity consumption (base year 1998) 47

48 EEG payment rates and the electric power price trend. Low-cost wind power As of 2015, prices for power from conventionallyfuelled power plants will surpass those for wind energy. New power-plant construction and rising procurement costs will determine conventional power prices. Source: BEE 48

49 Impact of EEG Since On balance: Lower power prices Increased production of renewable energy has had a lowering effect on average price of electricity through the so-called merit order effect, as the most expensive power stations are no longer needed to cover demand and the electricity price on the German power exchange sinks. Merit order effect has 2006 led to savings of 5 billion and overcompensates the incremental costs of the EEG (2006: approx. 3 billion) Avoidance of external costs- for example the costs associated with climatic change, forest devastation, health consequences, and an increase in pollution - by the use of renewable energies, ex.s 2005: EEG reallocation approx. 2.4 billion, avoided external ones costs approx. 2.8 billion 49

50 Outlook for the Future.

51 EEG payment rates and the electric power price trend. Low-cost wind power As of 2015, prices for power from conventionallyfuelled power plants will surpass those for wind energy. New power-plant construction and rising procurement costs will determine conventional power prices. Source: BEE 51

52 BMU provided recommendations for currently ongoing review process. Recommendations include fine-tuning of tariffs. Mostly fine-tuning of the degression rate Innovation bonus Capping of expected cost differential. Difference between EEG-tariff and average power purchase costs ca. 3 Mrd., peak in 2016 at ca. 5 Mrd., decrease after that. Increase in household costs. Total EEG tariffs paid (5.5 bn. Euros in 2006) will increase to 11,6 bn in 2018, then decrease This projection strongly depends on the effectiveness of the law, particularly in the areas of PV and off-shore wind. 52

53 Expected development of the monthly EEG costs per average household (3500 kwh/year) Euro 2005/month Source: BMU

54 Expected Effects from the Implementation of BMU Recommendations Associated Costs Household customer has to pay about 1.2 ct / kwh more. Single person household with an average consumption of kwh p.a. bears 1 more per month in 2006, and will bear 1,40 in person-household with an average consumption of kwh p.a. bears 2,20 per month in 2006 and will bear 3,60 per month in Then will decrease to 3,00 in 2020 and continue lowering trend. This increase of 0,6 ct/kwh until 2020 is low, compared to the overall increase in power prices of 5,5 ct/kwh von 2000 bis Additional energy conservation measures will have impact. 54

55 Share of costs for one kwh of electricity in private households (18,6 Cent), 2005 Source: BMU

56 Germany: Primary energy scenario through [PJ/a] CO2-emissions (1990 = 100%) Source: DLR, ifeu Nuclear energy Coal Mineral oil Natural gas Ren. energy, domestic & imported CO2 emissions 56

57 Conclusions. Legal framework of EEG has unleashed unimagined growth in installations, jobs, and turnover Market development: Germany is largest wind power and PV market in the world Jobs: around in the renewable energy sector (2006) High societal acceptance: for renewable energies 57

58 Conclusions. Similar instruments are now being applied in about 30 countries Key elements: priority grid connection and purchase, planning and investment security (20 years) degression scheduled review process every four years to react on market trends 58

59 Thank you. Christine Wörlen Head of Renewable Energies Deutsche Energie Agentur GmbH (dena) Chausseestr. 128a Berlin Deutschland Tel: +49 (0) Fax: +49 (0)

60 Efficiency decides.