The German Energy Transition

Transcription

1 Press Fact Sheet The German Energy Transition March 2016 Contents COP21 and its implications for the German energy transition... 1 Energy Efficiency The twin pillar of the energy transition... 2 Renewable energies the rise to market leadership... 6 Transforming the energy system Future of renewable energy support schemes Acceptance in Germany and worldwide Contact & further information: Berlin Energy Transition Dialogue press office c/o Bundesverband Solarwirtschaft e.v. Französische Straße Berlin, Germany press@energiewende2016.com Phone: During the conference on March 17 / 18 we can be reached at

2 COP21 and its implications for the German energy transition The United Nations Climate Change Conference in Paris has proven that a worldwide binding climate agreement is possible. For the first time in history, all countries agreed to a climate accord in which they commit themselves to limiting global warming to below 2 degree Celsius and less. The Paris Agreement links the upper limit with a specific action target: global greenhouse gas neutrality by the second half of the century. What are its implications for the German energy transition, the Energiewende? Paris has given a new impetus for Germany s climate protection policies. The signal is clear: in order to become greenhouse gas neutral, renewable energies have to be expanded swiftly. This is a huge opportunity for the modernization of Germany s economy. The transformation of the energy system plays a vital role as a driver of progress, innovation and jobs. However, there are several challenges which need to be met: The Energiewende has only just begun. Growing shares of renewable energy must be integrated in the electricity market and renewable energies shares in the heating sector and transport are still low. Establishing nationally determined contributions were also an element in the Paris Agreement. Germany s contributions to tackle climate change are manifold, but especially with regard to the energy transition they are significant: By the year 2020, Germany s greenhouse gas emissions shall be reduced by 40% compared to 1990, until 2050 by 80 to 95%. Energy Efficiency The twin pillar of the energy transition High ambitions, high rewards To achieve these targets, the energy sector must switch from fossil fuels to renewable energies and energy consumption needs to be reduced simultanously. Energy efficiency is the twin pillar of the energy transition, the federal government declares in its National Action Plan on Energy Efficiency (NAPE). The government s Climate Action Programme, designed to get Germany back on track to reach its 2020 climate goals, claims that increasing energy efficiency can cut emissions by 25 to 30 million tonnes CO 2 per year. Efficiency reduces costs and the environmental 2

3 impacts caused by the energy system. Therefore Germany set itself ambitious targets. Energy consumption is to be cut by 20% until 2020 compared to 2008, and by half until Energy efficiency is also seen as a lucrative business model. The German manufacturing industry is a world champion on the international market of innovations for energy-saving measures and green products. In 2013 environmental products like insulation material or smart meters worth 82 billion euros were produced and exports reached 50.3 billion euros in This equals 6% of overall industrial production and German technologies account for 14.8% of worldwide trade with environmental goods. The German Industry Initiative for Energy Efficiency (DENEFF) estimates companies specializing in efficiency employed around 850,000 people in Investment in residential buildings reached 39 billion euros and 15 billion euros in non-residential buildings, according to the German Institute for Economic Research (DIW). With interest rates being low, energy efficiency investments can yield a higher rate of return than current long-term investments on capital markets. Still a hard nut to crack Primary energy consumption in Germany reached PJ in This equaled an on-year increase of 1.3%, according to the Working Group on Energy Balances (AGEB). Taking weather effects into account, however, energy consumption would have dropped by 1.5 to 2%. Significant achievements have been reached in curbing power (-4.6%) and heating demand (-10%) from 2008 to In transport energy demand has been rising slightly since One reason is that progress in efficiency has been outweighed by a trend to larger cars and an increase in the travelled distances. 3

4 A broad mix of policy instruments Germany s energy efficiency policy relies on the full range of policy instruments: incentives by public funding and loans, regulatory measures as well as information and consulting. Reliable information and independent consulting shall lead businesses and private households to smart investment decisions in energy efficiency measures. Financial incentives like low-interest loans or investment grants enable target groups to carry out those measures. Price signals can also set incentives for energy-efficient behaviour. External effects, such as environmental impacts of energy consumption, are partly internalized into energy prices through an energy use tax. Another major approach is to set efficiency performance standards for new products or investments. The Energy Saving Ordinance (EnEV) sets minimum requirements for efficient energy use in new buildings and for large-scale renovations of existing buildings. EU-wide provisions on energy labelling of products ensure transparency and set incentives for more efficient products. Requirements to ecodesign set 4

5 binding minimum requirements for the environmentally friendly design of energyrelated products. Quantitative targets of the Energiewende: greenhouse gas emissions Energy efficiency primary energy consumption (compared to 2008) Electricity consumption (compared to 2008) Energy demand in buildings (compared to 2008) Heat demand in buildings (compared to 2008) Energy consumption in transport Renewable energies Share in final energy consumption Share in electricity consumption -27% -40% -55% -70% -80% to -95% % -50% -4.6% -10% -25% -14.8% -80% -12.4% -20% +1.7% -10% -40% 13.5% 18% 30% 45% 60% 27.4% (2015: 32.6 %) 35% 40%-45% (2025) 55%-60% (2035) 80% Share in heating 12% 14% Share in transport 5.6% Increase number of million 6 million electric cars Source: BMWi, BDEW, Federal Motor Transport Authority (KBA) 5

6 Renewable energies the rise to market leadership Renewables become dominant power source Growth of renewables has been most dynamic in the power sector. In 2015, renewables surpassed coal, nuclear and natural gas as Germany s most important energy source on the power market. The share in gross power supply reached 32.6%, compared to 27.4% in On 23 August, the share of renewables set a record high of 83.2% of power demand between 1pm and 2 pm. Power production from renewables rose by 33.4 TWh from 2014 to 2015 due to a sunny and windy year. Wind power production alone increased by 30.6 TWh (+50%). Photovoltaics (PV) contributed 2.3 TWh more than in Biomass, water and geothermal power production stayed roughly the same. 6

7 The use of renewable energies avoided million tonnes of CO 2 -equivalents in 2015, compared to 143 million tonnes in million tonnes are attributed to the power sector, 40.6 to the heat sector. 4.9 million tonnes have been avoided through renewables in the transport sector. The successful rise of renewables has not yet reached heat and transport. These two crucial sectors for climate protection are still lagging behind. Climate friendly options only contributed 13.2% to heat demand and 5.3% to energy use in the transport sector in In renewable-based heat and cold consumption there has been a slow increase, the numbers in transport have stagnated in recent years. The government therefore raised investment grants for renewable heating systems in In the transport sector, a biofuel quota applies and the government pushes electric mobility to put one million electric cars on the road by Renewable energies contribution to primary energy rose from 11.5% in 2014 to 12.5% in

8 Economic benefits RENEWABLES AN INVESTMENT HUB The successful rise in power production goes hand in hand with investments in renewable capacities. Installed capacity of wind, solar, biomass, water and geothermal power more than tripled over the last ten years, from 28 GW in 2005 to 97.4 GW in The share of all installed capacity in the power market rose from 20% to 48%. Investment in new installations of renewable energy plants increased to 18.8 billion Euro in 2014: Wind energy Solar energy (PV and solar thermal) Biomass Hydro Geothermal and environmental heat Total Source: BMU/BMWi Globally, investment in renewable energies reached record levels in According to Bloomberg New Energy Finance (BNEF) investment increased to $329bn, an onyear increase of 4%. In Europe, investment decreased by 18% to $58.5bn. On the other hand the two other leading markets for renewables, China and the US, saw investment rises to $110.5bn (+17%) and $56bn (+8%) respectively. The global market for wind and solar energy grew by 30%. 64 GW of wind and 57 GW of solar capacity were added in Solar and wind combined made up half of all capacity added in all generation technologies in RENEWABLES A DRIVER OF INNOVATION German companies are among global market leaders in many fields and a source of inventions and innovation. The massive cost reduction in solar and wind power is one 8

9 indicator of innovative capacity in the renewable energy sector. The provisions of the German Renewable Energy Sources Act (EEG) have enabled German companies to continuously improve processes and products. Economies of scale also play a major role in cost reductions. An obvious indicator of innovation in wind power is the impressive increase in plant size and generator power. In the year 2000, the average generator power was about 1 MW. In 2015 it reached 2.7 MW. Improvements in technology lead to higher power output. Electricity generation costs have reached grid parity in many areas around the world. Wind power in Germany already has lower costs than new hard coal or natural gas power plants at very good onshore locations. In Germany, a kilowatt hour from onshore wind power cost 4.5 to 11 cents in 2013, depending on sites. The highest cost reductions have been achieved in PV. From 2006 to 2015 average system prices fell by more than 70 percent. PROVIDING MORE ENERGY SECURITY Currently, Germany imports more than 70% of its primary energy consumption. Security of supply can only be guaranteed with renewables which are the only domestic energy source sustainably available for future generations. In large parts energy sources are imported from politically unstable regions with mining conditions that carry heavy consequences for humans and nature. 9

10 EMPLOYMENT AND NEW PERSPECTIVES FOR STRUGGLING REGIONS Suppliers of chemicals, glass, steel, copper and electronics highly benefit from growing demand for renewable technologies made in Germany. Wind power producers are now among the most important customers of the steel industry. The Energiewende creates jobs in manufacturing, the services industries, installation and operation of the plants in many parts of the country, especially in remote areas which have lacked perspectives for many decades were employed in the renewable industry in CITIZENS ENERGY The expansion of renewable energy is accompanied by a shift in the ownership structure of electricity production. Almost half of all renewable power capacity so far installed in Germany is in the hands of private individuals, according to a study by trend: research released in This is evidence that citizens can actively take part in the growth of renewable energies. 10

11 Those ownership structures point to the decentralized character of the Energiewende. Studies have shown that the increase in renewable energy production can generate double digit billion Euro benefits in terms of value added on the local level. RENEWABLES - AN EXPORT ENGINE Renewable energies have been a reliable export engine not only for the German manufacturing industry, but also for other sectors such as services. In the renewable energy sector, export turnover in the areas of components production and energy plant production amounted to some 8.6 billion euro in 2014, according to an estimate from the German Aerospace Center (DLR). For all the major branches of renewable energies, the export business has been a key pillar of success. Export ratios of major renewable energy sectors according to industry estimates: The German wind energy industry boasts an export ratio of some 66%, according to the German Wind Energy Association (BWE). The export ratio of the German solar industry was around 70% in 2015, according to the German Solar Association (BSW). In the German biogas industry, the export ratio will reach some 66% in 2016 according to a forecast by the German Biogas Association (FvB) from September

12 Some 120,000 heat pumps were manufactured in Germany in 2015, out of which 80,000 were destined for export markets. Biodiesel producers in Germany reached an export ratio of more than 50% in (all figures are based on industry estimates or forecasts) Transforming the energy system Power production from wind and solar energy form the core of the future energy system because of their low generation costs. In the course of a year wind and solar roughly complement each other. However, fluctuating power production is the key challenge for transforming the energy system. All other players and elements will have to adjust accordingly and offer flexibility to the system to guarantee reliable supply. Other renewable energy technologies such as biomass, hydro and geothermal energy can ideally complement supplies from fluctuating sources. Furthermore gas plants will play a crucial role as a supplement which will be fired with renewable gas like bio-methane or synthetic natural gas in the future. Expanding wind and solar power production will lead to growing supplies of excess power. Therefore more short term storage technologies like pump storage and batteries will be needed as well as long term solutions like power-to-gas. Cogeneration plants currently still work heat led. In face of the system transformation they have to work more flexibly and base their power production on the needs of the Energiewende. Some power consumers already adjust their power consumption to supply (demand-sidemanagement). In the future, all consumers from private households to industrial large-scale consumers will play a role in the power market by responding to supply. The coupling of all three sectors, power, heat and transport, is another crucial flexibility option. Marginal cost of wind and solar is essentially zero. Therefore excess power from these sources should not be wasted by curtailing. It can be used in heating technologies like heat pumps and district heating networks. In the transport sector, excess power can be used directly in electric cars or indirectly by converting it into methane, hydrogen or liquid fuels. Batteries in cars can also stabilize the grid by feeding power back into the grid when solar and wind power production is low. On 20 March 2015 a partial solar eclipse and storm Niklas at the end of the same month put the flexibility of Germany s power system to an unprecedented test, which it passed with flying colours. Power production from renewable energies fluctuated heavily, but the interaction of flexibility options worked smoothly. During 12

13 the solar eclipse solar power production fell by 7.5 GW and ramped up by 11.3 GW within just one hour. Future of renewable energy support schemes Over the first two decades, the German energy transition focused on growth and market access. Producing additional kilowatt-hours was the driver for achieving leverage. The German Renewable Energy Sources Act and its guaranteed feed-intariffs was the key for rapid growth of renewable power production by guaranteeing reliable investment conditions. This highly successful instrument has been exported into many other countries and regions across the globe. The power system changed dramatically from centralized power production in only a few fossil and nuclear plants to a more decentralized approach. Part and parcel of this decentralized approach are 1.5 million solar power installations, wind turbiness and around biogas as well as hydro power plants. While conventional power systems respond to demand, the new system is based on fluctuating wind and solar energy. Therefore many challenges lie ahead to transform the entire system. These challenges range from grid infrastructure and digitization to market design. Germany is now shaping the next era of the Energiewende. The German government currently changes the legislative landscape of the renewable energy market. Feed-in-tariffs are substituted by auctions to gain more political influence on the speed of renewables expansion and subject them to market forces. Exemptions apply to small installations. Acceptance in Germany and worldwide The transition to renewable energy enjoys continued strong support among the German population. This is also the case when compared to other major economies of the Western World. Regardless of their expansion status, renewables have a high degree of acceptance with approval ratings well above 80 percent in most cases. Targets for expanding the use of renewable energy are strongly supported, too. This applies to European Union member states, Japan and, depending on the costs, also to the United States, Canada and Australia. 13

14 On average, 90 percent of the population in the EU perceived an increase of renewables to be important, of which 49 percent voted for "very important" and 41 percent for "fairly important", as the Eurobarometer survey on behalf of the European Commission shows. The highest degree of acceptance was shown in Germany: here, 93 percent are in favour of further expansion of renewable energies. In the UK and France, nearly 90 percent of respondents perceived renewable energy targets for national governments to be important or very important. In countries at the lower end, like Poland, still a third of the population thought that the renewable energy targets of their government are very important, 55 percent opted for quite important. 14

15 However, this overall socio-political acceptance needs to be translated into an increasing market-related acceptance which manifests itself in higher sales and a more intensive market penetration. After 2020, there are currently no binding EU targets for the further expansion of renewable energies in individual EU member states. The goal set to date is a share of at least 27 percent of final energy consumption from renewable sources by 2030 in the European Union as a whole. A different approach is pursued in North America, where concrete expansion goals for renewable energy have been set by state and provincial governments. These goals also meet with very high approval. Overall the analyzed polls show that people do not have any reserve when confronted with the dynamic development of renewable energies. At the G7 Summit in June 2015 in Elmau and at the UN Climate Conference, the international community committed itself to decarbonization and to limiting global warming. 15

16 This fact sheet has been prepared by: Renewable Energies Agency (Agentur für Erneuerbare Energien) Invalidenstr. 91, Berlin, Germany Phone: Web: For BETD2016 related inquiries, please contact: Berlin Energy Transition Dialogue press office c/o Bundesverband Solarwirtschaft e.v. Französische Straße Berlin, Germany Phone: During the conference on March 17 / 18 we can be reached at