Germany s energy system and the status of the energy transition

Energiewende Germany s energy system and the status of the energy transition Dr Falk Bömeke, LL.M. (Sydney) Federal Ministry for Economic Affairs and Energy Drivers, challenges and opportunities of the current changes in the market 27 February 2018 18-03-02 Referent 1

Source: BMWi Five reasons for the Energiewende Phase-out of nuclear power generation Reduce dependency on energy imports Reduce carbon emissions and reach climate protection targets Show that energy policy can be both sustainable and economically successful Development of new technologies as new sources of growth and employment 3/2/2018 2

Source: BMWi 2018, Ecofys 2018 Nov. 2003 May 2005 Aug. 2011 Jun. 2015 Germany is gradually phasing out nuclear power up to 2022 Nuclear power plants in Germany 20 GW 12/2017 Gundremmingen B (1284 MW) 06/2015 Grafenrheinfeld (1345 MW) 12/2019 Philippsburg 2 (1402 MW) 12/2021 Gundremmingen C (1288 MW), Grohnde (1360 MW), Brokdorf (1410 MW) 12/2022 Isar 2 (1410 MW), Emsland (1329 MW), Neckarwestheim 2 (1365 MW) 10 already retired scheduled for retirement 2005 2010 2015 2020 Fukushima today 3/2/2018 3

Source: BMWi Five reasons for the Energiewende Phase-out of nuclear power generation Reduce dependency on energy imports Reduce carbon emissions and reach climate protection targets Show that energy policy can be both sustainable and economically successful Development of new technologies as new sources of growth and employment 3/2/2018 4

% of total primary energy supply % of total final energy consumption (RES target) Source: Ecofys 2017 based on AGEB 2012, AGEB 2014 Renewables reduce energy import dependence 100 100 renewables (RES) 90 80 domestic production 90 80 lignite hard coal gas 70 70 oil 60 60 other 50 40 import dependence 50 40 oil imports gas imports hard coal imports 30 30 nuclear 20 10 60% RES target (final energy) 20 10 total imports renewables target (right axis) - 1990 2000 2010 2020 2030 2040 2050 0 RES target (final energy, right axis) 3/2/2018 5

Source: BMWi Five reasons for the Energiewende Phase-out of nuclear power generation Reduce dependency on energy imports Reduce carbon emissions and reach climate protection targets Show that energy policy can be both sustainable and economically successful Development of new technologies as new sources of growth and employment 3/2/2018 6

USA & Canada Australia & South Pacific Germany EU28 (excl. Germany) Rest of Europe** Russia China Middle East Former Soviet Republics* Latin America + Caribbean Asia Northern Africa Brazil India Sub-Saharan Africa Tonnes of CO 2 per capita Source: Ecofys 2017, data from EDGAR (2016) and World Bank 2016) Per capita carbon emissions of some western economies are still twice as high as those of China 16 OECD countries 4.9 0.4 Numbers = percentage of global population 12 1.1 2.0 8 6.1 0.4 18.8 4.7 2.0 Global average: 4.9 t CO 2 per capita 4 0 5.9 16.6 3.0 2.8 17.9 12.9 *excluding Russia and EU members **Rest of Europa includes IS, NO, CH and the Balkans 3/2/2018 7

Source: Ecofys 2018 based on BMWi 2018 Gross electricity production in TWh Renewables have become Germany s No. 1 source of electricity 700.0 600.0 500.0 400.0 Electricity mix in 2017 hard coal; nuclear; 14.4% 11.6% (654.2 TWh in total) mineral oil & others; 3.9% wind; 16.1% 300.0 200.0 100.0 lignite; 22.6% gas; 13.1% RES; 29% solar; 6.1% biomass & waste; 7.9% hydro; 4.2% 0.0 gas: 12% hard coal lignite natural gas mineral oil others nuclear renewables 3/2/2018 8

Index 1990=100 Source: Ecofys 2017 based on UBA 2017, World Bank 2017, AG Energiebilanzen 2017 Efficiency measures allow clean growth by decoupling economic development from energy consumption 350 300 250 200 150 100 status 2016 163.4 146.6 91.0 * final energy productivity final energy productivity target GDP primary energy demand primary energy demand target GHG emissions 50 72.6 0 1990 2000 2010 2020 2030 2040 2050 GHG emissions target * status 2015 National targets: +2.1% final energy productivity p.a. 2020/2050: 20/50% reduction vs. 2008 2050: 80-95% reduction vs. 1990 3/2/2018 9

Source: UBA 2017 MtCO 2 eq Germany has made significant progress. But more action needed to achieve 40% emission reduction by 2020 1400 Kyoto target (1st com period) 1200 other emissions 1000 800 600 households transportation commerce, trade, services industry 400 200 0 agriculture energy industry * preliminary data 3/2/2018 10

Source: Ecofys 2018 based on BMWi 2016, UBA 2017, AGEB 2017 The Energiewende is Germany s long-term energy and climate strategy Achieved 2017 2020 2025 2030 2035 2040 2045 2050 Climate % greenhouse gas reduction (vs. 1990) 27.6% (2016) -40-55 -70-80 to -95 Renewable Energy % gross electricity consumption % gross final energy consumption 36% 14.8% (2016) 35 40 to 45 18 50 55 to 60 65 30 45 80 60 Primary energy consumption (vs. 2008) -6% -20-50 Energy Efficiency Final energy productivity (vs. 2008) Primary energy demand in buildings (vs. 2008) 1.3% p.a. (2015) -15.9% (2015) +2.1% p.a. (2008-2050). -80 Final energy consumption in transport (vs. 2005) +1.3% (2015) -10-15 to -20-40 3/2/2018 11

Source: BMWi Five reasons for the Energiewende Phase-out of nuclear power generation Reduce dependency on energy imports Reduce carbon emissions and reach climate protection targets Establish an energy policy that is both sustainable and economically successful Development of new technologies as new sources of growth and employment 3/2/2018 12

Source: Edelman.ergo 2016 The Energiewende combines security of supply, cost-effectiveness and environmental protection Environmentally sound Affordable and cost-effective Secure and reliable 3/2/2018 13

Source: BMWi 2017 The energy transition triad combines efficiency, direct use of renewables and sector coupling Efficiency first Direct use of renewables Sector coupling 3/2/2018 14

Average duration of electricity supply failures in 2014 [minutes/year] Source: VDE 2015, CEER 2015; EIA 2014; Canadian Electricity Association 2014 based on SAIDI index, excluding exceptional events Data from 2013 and 2014 according to availability Germany s security of electricity supply remains one of the highest worldwide 400 350 300 250 200 150 100 50 0 354 114 42 55 68 12 Germany Italy UK France USA Canada 3/2/2018 15

Source: Ecofys 2015, based on Agora Energiewende/Öko-Institut 201 Billion euro (2015) Renewable support mainly goes to existing plants; new installations account for a much smaller share 35 30 25 20 15 10 5 0 Other Biomass Offshore wind Onshore wind Solar Other (old) Biomass (old) Offshore wind (old) Onshore wind (old) Solar (old) 3/2/2018 16

Source: Ecofys 2015 based on Agora 2014 Average electricity bills in Germany are comparable to those of other industrialised countries Consumption (kwh) Price (ct/kwh) Electricity bill ( ) Italy 2,700 25 680 France 5,000 16 800 UK 4,200 19 800 Canada 10,800 8 850 Spain 4,400 23 1,010 Japan 5,600 18 1,010 Germany 3,500 30 1,050 US 11,800 9 1,060 Denmark 4,000 30 1,200 0 6000 12000 0 15 30 0 600 1200 Data from 2011-2013 3/2/2018 17

Source: BMWi Five reasons for the Energiewende Phase-out of nuclear power generation Reduce dependency on energy imports Reduce carbon emissions and reach climate protection targets Establish an energy policy that is both sustainable and economically successful New technologies as additional source of growth and employment 3/2/2018 18

Source: Edelman.ergo 2016 The energy transition has positive effects at various levels of the economy 3/2/2018 19

Source: IRENA 2015, REN21 2015 GW Renewables outperform conventionals: making up almost 60 % of new capacity additions in the past 2 years 160 140 120 100 80 60 40 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Non-renewables Renewables total Other RES Solar Wind Hydro Renewables % share 20 0 2001 2005 2010 2014 Non-renewables % share 3/2/2018 20

Source: Ecofys 2018 based on BNetzA 2018, PV Magazine, Bloomberg Auction results worldwide highlight rapidly declining costs for renewables USA 2.7 Mexico 1.9 1.8 6.0 UK Germany 8.5 4.2 The Netherlands 4.2 Morocco 2.5 0 7.4 Denmark 1.9 5.5 Jordan 6.0 UAE 2.4 Saudi Arabia 4.1 India 3.8 3.8 Australia Peru 4.8 3.7 Chile 4.5 Brazil 3.0 Zambia 6.0 South Africa 6.4 4.7 2.3 2.1 Wind onshore Wind offshore Solar Lowest awarded bids All prices in US ct/kwh at 1.1 USD/EUR

Source: REN21 GSR 2017 Largest worldwide renewable power capacities correlate with strongest economies 2016 Not including Hydropower 3/2/2018 22

Source: trend:research 2013 Diversified ownership structure of renewables illustrates broad support in Germany others: 1% contractors: 0.2% farmers: 11% private owners: 35% utilites: 12% funds and banks: 13% industry: 14% Total installed capacity 2012 ~ 73 GW project developers: 14% 3/2/2018 23

Number of patents for RES technologies registered in Germany Source: Ecofys 2017 based on Statista 2016, Deutsches Patent- und Markenamt 2017 The energy transition is a driver for innovation in Germany 2500 2000 1500 1000 Total Geothermal, Biogas Hydro, Wave, Tidal Wind Solar 500 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 3/2/2018 24

Source: GWS, EWI, Prognos 2014 Net job creation by sector in 1000 employees Net job creation shows that the German building sector benefits most from the energy transition 120 100 80 60 40 industry trade building sector 20 0-20 -40 services energy and mining 2010 2015 2020 3/2/2018 25

Source: University of Stuttgart, University of Münster, Fraunhofer ISI and ISE 2016 The Energiewende as a whole enjoys relatively large support within the German population Attitudes towards the Energiewende in % We need a resolute switch to renewable energy 5 13 23 27 33 disagree mostly disagree I am convinced that the energy transition will lead to shortages in thesupply of electricity 20 26 29 19 6 undecided mostly agree Electricity supply from renewables is, in the long term, more affordable than from other sources 5 16 26 31 23 agree Germany's competitiveness in the world will decline due to the energy transition 22 27 25 19 7 The energy transition will allow citizens to produce their own energy and so become more independent 7 13 31 0 20 40 60 80 100 30 20 3/2/2018 26

Thank you for your attention Contact details Bundesministerium für Wirtschaft und Energie Referat IIA1 Scharnhorststr. 34-37 10115 Berlin, Germany Dr. Falk R. Bömeke, LL.M. (Sydney) falk.boemeke@bmwi.bund.de www.bmwi.de 18-03-02 Referent 27