Generation in Germany under Decarbonisation: The German Energiewende Bangkok, November 2013

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Generation in Germany under Decarbonisation: The German Energiewende Bangkok, November 213 Lars Dittmar lars.dittmar@tu-berlin.de Department of Energy Systems Prof Dr. Georg Erdmann www.ensys.tu-berlin.de

German Energiewende in a Nutshell I- 198: The term Energiewende ( Energy Turnaround ) was coined by a German green think tank (Öko-Institute) Two main targets: (1) nuclear phase out and (2) carbon emission reduction transition to renewable energies 1991: First feed-in tariffs for renewables (Chancellor Kohl) 2: Renewable Energy Sources Act (EEG) (Chancellor Schröder + Green Party) 22: Decision on nuclear phase out by 22 (Chancellor Schröder + Green Party) Lars Dittmar 2

German Energiewende in a Nutshell II- 21: Decision on the exit from the nuclear exit and ambitious targets for decarbonisation, renewables and energy efficiency (Chancellor Merkel) 211: exit from the exit from the exit In the wake of the Fukushima disaster decision to phase out nuclear power by 222. (Chancellor Merkel) Shut-down of 8 out of nuclear power plants within a view month Ambitious targets kept for emission reduction, share of renewables and energy efficiency Ambitious targets + Nuclear phase out Energiewende Lars Dittmar 3

Selected Targets of the Energiewende Lars Dittmar 4

18 16 14 12 1 8 6 4 2 TWh 21 +9% 212* Gross Electricity Production in Germany 21 (629 TWh) and 212 (618 TWh) 21 +1% 212* 21-29% 212* 21-19% 212* 21 +1% 212* 21 +33% 212* 21 +31% 212* Lignite Hard Coal Nuclear Nat. Gas Other RES Net Export *: preliminary Source: BDEW 213 Lars Dittmar 5

Development of Renewable Electricity in Germany Induced by the German Renewable Energy Sources Act (EEG) the share of renewables in the German electricity mix increased from 7 to 23 percent ( 117 TWh) between 2 and 212. In the same timeframe annual gross transfer payments grew from EUR 1.2 to EUR 21 billion ( 342 USD/Cap/a). The difference between transfer payments and the market value of renewable electricity (net burden) is apportioned to consumers via their electricity bills as levy ( EEG levy ). The total EEG levy (= net burden) in212amountstoeur 17 billion ( 27 USD/Cap/a) Lars Dittmar 6

Essential Elements of the German EEG Grid operators (TSOs and DSOs) are obliged to provide grid connection for EEG power plants. Mandatory purchase of EEG electricity by the grid operator. Priority of EEG (&CHP) electricity over any other source of power generation. EEG plant operators receive fixed feed-in tariffs (FiT) for each kwh fed into the grid over 2 years. By 212 about 4 FiT categories differentiating acc. to energy source, vintage (decreasing rates), capacity, technology etc. Additional cost of EEG electricity are apportioned to all electricity consumers ( EEG levy ). Lars Dittmar 7

Development of Renewable Electricity Generation in Germany TWh 16 14 12 1 8 6 4 2 Biomass Solar PV Wind Hydro Share of gross electricity production [%] Share [%] 25 2 15 1 5 199 1992 1994 1996 1998 2 22 24 26 28 21 212 Source: BMU 213 Lars Dittmar 8

Relative Contribution of Costs and Electricity in 211 by Renewable Energy Source Share of REN Costs[%] Share of REN Generation [%] Solar PV 49 22 Biomass 29 29 Wind onshore 19 42 Other 2 6 Wind offshore 1 1 6 4 2 2 4 6 Lars Dittmar 9

Components of the National Electricity Bill in 211 (excluding on-site generation ~1%) Billion USD* USD*/kWh Share% *:Purchasing Power Parity (OECD)=.84; Sources: Expert Committee "Energy of the Future 212 Expected Change Aggregate Expenditures 75.7.16 1. 2. (1) State Induced 26.1.6 34.5 2. of which Eco Tax 8.6.2 11.4? Concession Levy 2.6.1 3.4 2. Renewable Electricity Levy 14.7.3 19.4 2. Cogeneration Levy.3..3 2. (2) State regulated 21..4 27.7 2. of which Transmission Fees 2.7.1 3.5 2. Distribution Fees 18.3.4 24.2 2. (3) Market driven 28.6.6 37.8 of which Market Value Renewable Electricity 5.2.1 6.9. Generation and Sales 23.4.5 3.9. Lars Dittmar 1

Energiewende and the Electricity Market Lars Dittmar 11

Basic Characteristics of the Commodity Electricity Demand(t)=Supply(t): Electricity supply and demand must be in a continuous physical balance Diurnal and seasonal fluctuations in demand Storing electricity is only to a minor degree economically reasonable (Exception Hydro-thermal systems) Installed Capacity = Peak Demand + Reserve Margin Capital intensive: High share of fixed cost in generation, transmission, and distribution Lars Dittmar 12

Loads Highly Variable by Hour Day and Season Demand [GW] 8 7 6 5 4 3 2 6 5 4 3 2 1 1 3 5 7 9 11 13 15 17 19 21 23 1 Lars Dittmar 13

Stylized Merit Order 6 short term marginal cost (EUR/MWh) 5 4 3 2 1 1 3 5 7 9 11 13 15 17 19 21 23 Daily demand fluctuations GT Diesel P peak High Demand P off peak Hydro, Wind, Solar Low Demand Nuclear Coal CCGT Gas Turbines installed capacity (GW) Lars Dittmar 14

EEX Spot Market Price and Merit Order vs. Residual Load (i.e. Load minus Renewables) 29 EEX Price [Euro/MWh] 2 15 1 5 1 2 3 4 5 6 7 8-5 -1 Residual Load Available Capacity [GW] Lars Dittmar 15

8 7 6 5 4 3 2 1 12: Load Demand and Merit Order Shape Prices: Avg. Hourly Load and Prices in Germany 211 12: Price [EUR/MWh] 12: 12: 12: Load [GW] 12: 12: Mo Tue Wed Thu Fri Sat Sun Sources: EPEX 212, ENTSO-E, own calculation Lars Dittmar 16

Hourly Generation of Electricity on 3 rd Wednesdays in Germany 211 GW 8 7 6 Solar Wind Charge P-Storage Other 5 4 Discharge P- Storage Hydro 3 2 1-1 1 2 3 4 5 6 7 8 9 1 11 12 Hydro RoR Other Thermal Nat. Gas Oil Hard Coal Lignite Nuclear Source: Destatis, German TSOs Lars Dittmar 17

Not only demand, but also irregular supply must be balanced. Example Wind Feed-in Germany 21 Wind Power [GW] 25 2 15 1 5 1 2 3 4 5 6 7 8 Sources: German TSOs Hours of the Year Lars Dittmar 18

Wind Power Duration Curves for Germany 26-212 P/Pinstalled [%] 1 9 Back-up 26 27 28 29 21 211 212 8 7 6 27 5 4 3 21 2 1 2 Sources: German TSOs 4 6 8 1 time per year [%] Lars Dittmar 19

GW 3 Growth Solar Generation in Germany 21-213 25 2 15 1 5 21 211 212 213 Source: German TSOs Lars Dittmar 2

Solar Power Duration Curves for Germany 27-212 P/P installed [%] 1 8 6 4 27 28 29 21 211 212 Night 2 1 2 3 4 5 6 7 8 9 1 % of time per year Lars Dittmar 21

Variable Renewables and Implications for Market Prices: Merit Order Effect short-term Marginal Cost ( /MWh) P 1 P REN Merit Order Effect Wind, PV Installed Capacity (GW) Lars Dittmar 22

EUR/MWh 1 Price Duration Curves Germany (EPEX) 211 8 6 4 2-2 -4-6 -8-1 212 213 2 4 6 8 Hours of the year Sources: EPEX Lars Dittmar 23

Future Prices Base Load Germany EUR/MWh Base 29 Base 21 Base 211 12 1 Base 212 Base 213 Base 214 Base 215 Base 216 Base 217 Base 218 Base 219 8 6 Shut Down of 8 Nuclear Plants 4 2 28 29 21 211 212 213 Sources: EEX Lars Dittmar 24

Price-Duration-Curve: Power Plant Investments on Competitive Markets Hourly day-ahead prices [Euro/MWh] 8 6 4 2 Expected annual operating hours Are these returns sufficient? Marginal costs of a new plant Ordered price duration curve for the planning horizon 1 2 3 4 5 6 hours of the year Source: Erdmann 211 Lars Dittmar 25

Conclusion The Energiewende is a mammoth policy project The current national electricity bill is not (yet) that high as one may expect Current market prices do not cover the costs of conventional capacities. Additionally sales volumes are declining. The RES-Policy-Design of produce and forget has to be changed create demand for secured capacity Conventional power plants are still needed, also in the long-run (~5GW with 8% RES) Lars Dittmar 26

ขอบค ณมาก Thank You Lars Dittmar 27