1 Aggregated Costs of the German Energiewende How to improve Cost Effectiveness Prof. Dr. Georg Erdmann TU Berlin; Chair Energy Systems Founder of Prognoseforum GmbH Member of the Federal Commission Energie der Zukunft IAEE International Conference, New York 16 June 2014
German Energy Concept 2050 [as of September 2010] 2 Political target Base year 2012 2020 2050 Greenhouse gas emissions 1990-24.7-40% -80-95% Primary energy consumption 2008-4.3-20% -50% Final Energy productivity 2008 1.1% 2.1% p.a. Electricity consumption 2008-1.9-10% -25% CHP electricity share 17.3 25% Heat demand of building stock 2005-16% -20% Primary energy in building stock 2005-80% Modernization rate of buildings 1% 2% p.a. Final energy in transportation 2005-0.6-10% -40% Number of electric vehicles 7100 1 mio REN share in energy consumption Nuclear phase-out until 2022 2010: 21,5 TW 12.4 12,6 TW 18% 8,5 TW 60% REN electricity share 23.6 35% 80%
Target function of Energy Policy 3 How to determine the indicators the weights of these three targets? Costs pricewürdigkeit of energy services Environment Umweltverträglichkeit (without GHG) Supply security
Renewable Electricity in Germany [Source AGEB] 4 140 120 100 80 Renewable electricity generation [TWh/a] Biomass PV Wind Hydro 60 40 20 0 1990 1995 2000 2005 2010
5 Merit Order of the German Power Plant Portfolio 2010 Marginal cost [Euro/MWh] 150 100 Load (wo wind and PV) 50 0 Hydro, Biomass, CHP Nuclear Lignite Hard coal CCGT Electric load Hard coal Gas 93 GW
6 Merit Order of the German Power Plants with Wind and PV Portfolio 2010 Marginal cost [Euro/MWh] 150 100 Load (wo wind and PV) 50 0 Hydro, Biomass, CHP Lignite Hard coal CCGT Hard coal Gas Electric load 93 GW
7 Costs of Renewable Electricity Generation [Own forecast calculated from Eckpunktepapier of 22 January 2014] 30'000 Costs of renewable electricity [mio Euro] 25'000 20'000 15'000 Net payments for renewable electricity (~18 bn Euro in 2014) 10'000 5'000 TSO- Market value of direct sold Revenues renewable electricity from EEX 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
8 German Electricity Bill to Final Users [Source: Independent Expert Group Energy of the Future ] 60 50 40 Total expenditures of industrial, commercial and residential customers [without VAT; Billion Euros] 39 40 41 41 42 42 41 41 39 34 38 37 41 43 47 51 55 59 59 61 63 65 30 20 10 1991 1995 2000 2005 2010
Renewable Electricity Levy [Germany; calculated from Eckpunktepapier of 22 January 2014] 9 0,08 0,06 0,04 Renewable electricity levy [Euro/kWh] Before amendment in 2014 Government ambition with amendment in 2014 0,02 0,00 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Levy on Adjusted Final Electricity Consumption 10 Payments for REN support minus REN market value Regular final electricity consumption Adjusted final electricity consumption equal to total final electricity consumption minus Share of electricity consumption of energy intensive industries which is exempted from the levy Own generation which is partly exempted from the levy
11 Adjusted Final Electricity Consumption [Germany; calculated from Eckpunktepapier of 22 January 2014] 500'000 Adjusted electricity consumption [GWh] 400'000 300'000 200'000 100'000 0 2000 2005 2010 2015 2020 2025 2030 2035
Problems of the Present REN Support 12 Increasing overall costs (not including the costs of the required efficiency investment expenditures) while greenhouse gas emissions increase No investments into power generation without additional state aid (capacity market in spite of overcapacities) Present renewable electricity levy implies various distribution effects of relevant size Leads to increasing complexity of state interventions Electricity business becomes lobbying business
Renewable Electricity Support Schemes 13 Price control Volume control Obligation of grid operators (or ISO) to purchase all offered renewable electricity at legally defined (and technology specific) fixed feed-in payments Legally defined and technology specific market premium (on top of the market price) but the renewable generators must sell the electricity Obligation of retailers to hold a minimum number of Renewable Electricity Certificates (register of installations must exist) Dominant model but challenged by the EU Commission New dominant German scheme after 2014 How to address the problem of intermittency?
Intermittent Nature of Wind Power 14 20,000 16,000 Wind power generation [MW] Amprion EnBW 50Hertz Transmission Transpower 12,000 8,000 No capacity contribution Gradient 8,000 MW/h 4,000 0 1.1.2010 31.1.2010
Renewable Electricity Support Schemes 15 Price control Volume control Obligation of grid operators (or ISO) to purchase all offered renewable electricity at legally defined (and technology specific) fixed feed-in payments Legally defined and technology specific market premium (on top of the market price) but the renewable generators must sell the electricity Obligation of retailers to hold a minimum number of Renewable Electricity Certificates (register of installations must exist) Renewable investment tenders (define the additional capacity and select the investor that asks for the lowest market premium) Obligation of retailers to physically acquire a minimum amount of renewable electricity (as percentage of electricity sales to final customers) Dominant model but challenged by the EU Commission New dominant German scheme after 2014 How to address the problem of intermittency? How to avoid the misuse of market power? Do all 800 retailers have the capacity to comply?
Proposed Market Integration Premium 16 Market integration premium to retailers [Euro/MWh] 0 20 40 60 80 100 Retailer s share of intermittent electricity [%]
17 Technology Specific Market Premiums [Example based on Prices and Costs of 2014] Average prices / costs [Euro/MWh] 120 PV Biogas 100 Wind 80 60 40 Day-ahead Price New GT 20 0
18 Ordered Day-ahead Price Level Necessary for Financing new GT Day-ahead price [Euro/MWh] 210 150 51.13 Euro/MWh at 500 h/a 52.50 Euro/MWh at 1000 h/a 54.07 Euro/MWh at 1500 h/a 55.80 Euro/MWh at 2000 h/a 90 42.60 Euro/MWh 30-30 1000 2000 3000 4000 5000 6000 7000 8000 Hours
19 Contribution of Remaining Power Plants in the Electricity Supply Scenario for 2030 100 Load [GW] 80 60 Ordered load duration 40 20 0-20 Contribution of conventional power plants Ordered residual load without biogas / bio-methane 1000 2000 3000 4000 5000 6000 7000 8000-40
Why this could be a solution? 20 Freedom instead of state control Physical market integration of intermittent renewable generators Incentive for increasing flexibility (storages, demand response, ) Creating a fair competition on the generation side without oversubsidizing Creating an incentive to reach the renewable targets How to make this solution politically feasible? European Court of Justice: freedom of trade (Warenverkehrsfreiheit)
21 Thank you Tel: +49 (030) 314 246 56 Fax: +49 (030) 314 269 08 georg.erdmann@tu-berlin.de georg.erdmann@prognoseforum.de