Energiewende

Germany‘s energy system and the status of the energy transition

Sarina Keller

German Aerospace Center

Sept 1st, 2016

16-09-07

2050 Energiewende targets

The energy transition follows a transparent, long-term strategy with specific targets.

16-09-07

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Climate

Renewable

Energies

Energy

Efficiency

% gross final energy

consumption

% gross electricity

consumption

% primary energy

consumption (vs. 2008)

final energy productivity

(vs. 2008)

building renovation

% greenhouse gas

reduction (vs. 1990)

2020 2025 2030 2035 2040 2050

+2.1% p.a. (2008-2050)

doubling of renovation rate: 1% 2% p.a.

-40-55

-70 -80 to -95

35 40 to 4550 65

8055 to 60

1830

4560

-20

-50

13,7%

32.6% (2015)

- 7.3 %(2015)

1.7% p.a.

~1% p.a.

-27%

Achieved

2014

1.7%% transport energy

consumption (vs. 2008)-10 -40

2

German gross electricity production

Renewables have overtaken each conventional source to become the largest electricity source in just ten years.

16-09-07

Gas:11,7%

Lignite: 24,8%

Nuclear Energy: 26,2%

Hard Coal: 21,5%

Oil & Other: 5,8%

Wind: 4,4%

Solar: 0,2%

Biomass:2,3%

Hydro: 3,1%

RES: 10%

2005 total: 622,6 TWh

renewables share: 62,5 TWh

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Gas:8.8%

Lignite:24.0%

Nuclear Energy:14.1%

Hard Coal:18.2%

Oil & Other: 0.8%

Wind:13.3%

Solar: 5.9%

Biomass:6.8%

Hydro:3.0%

Waste: 0.9%

RES:30.0%

2015Total: 647.1 TWh

renewables share: ~ 194 TWh

3

Renewable Energy Sources Act Amendment 2014

16-09-07

Affordability

Security of supply

Environmentally-

friendly energy supply

More efficiency

Focus on cost-efficient technologies

More planning security

Binding target corridors for RES deployment

Introducing quantity control mechanisms

More market integration

Increase market integration through premium system

Tendering scheme for ground-mounted PV

More diversified distribution of costs

EEG levy on self-supply

Adjusted exemptions for the industry

More Europe

Open auctioning scheme for European neighbours

4

Cornerstones of the Renewable Energy Sources Act

16-09-07

• Guaranteed grid access for renewables; priority transmission and distribution

• Support payments for every kWh produced

• Feed-in premium (and feed-in tariffs in some cases)

• From 2017 on mostly based on auctions

• Technology specific payments, also with regard to further provisions (e.g. site and size)

• Renewables’ support costs are offset through the EEG levy; the special equalization scheme reduces the burden for energy-intensive industries

• Grid operators ensure grid stability independently from the public budget

• Expansion corridors guide growth pathway

• Regular monitoring and evaluation; accompanying research

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Technology specific support levels as of April 2016

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Technology-specific payments reflect the varying cost of different types and sizes of renewables.

3.5

3.8

5.79

4.83

3.9

8

12.52

8.42

23.49

25.2

8.69

18.4

12.7

0 5 10 15 20 25 30

hydropower

landfill, sewage & mine gas

biomass

geothermal

wind onshore*

wind offshore*

solar PV

cent/kWh

Remuneration in cent/kWh

* The standard payment for wind

onshore is 8.69 cent/kWh and for

wind offshore 14.9 cent/kWh.

min max

Legend:

6

PV support costs have declined steadily

16-09-07

Support levels

solar energy

(Cent/kWh)

January

2006

June

2015

Roof-top installations

< 10 kW 51,80 12,40

< 40 kW 51,80 12,06

< 100 kW

2015:

<500kWp

49,28 10,79

Ground-mounted systems

Ground-

mounted

40,60 8,00

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10

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30

40

50

60

Ja

n 0

6

Ju

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Ju

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Ja

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Ju

l 08

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Ju

l 09

Ja

n 1

0

Ju

l 10

Ja

n 1

1

Ju

l 11

Ja

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2

Ju

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Ja

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3

Ju

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Ja

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Ju

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Ja

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Ju

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EE

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lectr

icity p

rices

[ct/

kW

h]

ground-mountedsystem

small roof-top system

Electricity price households (net)

Electricity price industry (net)

7

Results of German renewables auctions pilots scheme for ground-mounted PV in April 2015:

• 500 MW were on offer in three separate rounds: 150 MW in 1st and 2nd round each, and 200 in 3rd round

• Competition was high and therefore prices declined significantly.

• A variety of different types of actors was successful.

Auctions to replace feed-in premium based support

16-09-07

The auction scheme led to a further decrease in PV support levels.

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2nd and 3rd round: uniform pricing1st round (pay-as-bid)

8.49

9.17

8.00

7

7.5

8

8.5

9

9.5

10

Jan 2015 May 2015 Sep 2015 Jan 2016

cent/

kW

h

Level of feed-in premium as result of the auctions compared to the old EEG

Feed-in permium ofold EEG

Results of auctionsin cent/kWh

8

October 2014

Broad discussion process withGerman and European stakeholders (Green Paper)

Key question: How to helpelectricity market fullfil its tworoles:

Reserve function

Dispatchfunction

An Electricity Market for Germany‘s Energy Transition

16-09-07

Autumn 2015 -Spring 2016

Enactment of legislation

July 2015

Decision for an energy-only market 2.0 (White Paper)

Further consultations in the context of the Electricity Market Platform

§

Bill for the

Electricity

Market Act

9

Key elements of the electricity market act 2016

More flexibility

Ensure system

security

Lower carbon

emissions

• Free price formation

• Strengthen incentives to uphold balancing

group commitments

Strengthened market

mechanisms

• Wider access to balancing capacity markets:

more competition between power stations,

consumers and storage facilities

Fair competition between

flexibility options

• Power stations of approx. 4 GW ready to

step in exceptional situations where demand

cannot be met in any other wayCapacity reserve

• Prolonged beyond 2017 to guarantee secure

grid operation and relieve congestion

• Winter grid reserveGrid reserve

• Old lignite-fired power stations will be placed

on „security stand-by“ and decommissioned

after four yearsSecurity stand-by

• Monitoring of security of supply will no longer

focus solely on national output, but also on

European internal electricity market

Monitoring of security

of suppy

16-09-07 10

2017 revision of the Renewable Energy Sources Act

16-09-07

We are switching the funding for renewable energy from prices fixed by government to prices set by competitive auctions

The revision is based on the following three principles: Future RES expansion will be cost-efficient

All stakeholders will have a fair chance in the auctions. Stakeholder diversity will be maintained

The deployment corridor for renewable energy will be adhered to

From 2017, funding will be auctionedfor: onshore/offshore wind energy, photovoltaics, biomass

Exempted: installations ≤750 kW (biomass: ≤150 kW)

Auctions will cover 80% of newbuild

11

16-09-07 12

2017 Renewable Energy Sources Act: Corridors

16-09-07

Onshore wind energy: In 2017, 2018 and 2019, 2,800 MW and from 2020, 2,900 MW (gross) will

be auctioned each year

Offshore wind energy: The existing offshore targets will remain unchanged. Up to 2030, offshore

wind farms will be installed with a total capacity of 15,000 MW.

PV: 600 MW will be auctioned each year: ground-mounted installations, rooftop

installations and installations on other physical structures, e.g. landfills.

Biomass In 2017, 2018 and 2019, 150 MW will be auctioned each year, and in 2020,

2021 and 2022, 200 MW each year (gross).

13

The Market Incentive Programmeoffers support through two different channels:

• KfW (state owned development bank) targets large industry projects

• BAFA (public agency) supports smaller households and SME projects

The programme was amended in April 2015

The annual support volume is roughly € 350 million

The Market Incentive Programme for renewable heat

The Market Incentive Programme incentivises additional renewable heat technology deployment.

16-09-07

Biomass816.4

Solar Thermal

228.3

Heat Pumps

58.2

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Installed capacity supported through

BAFA in MW in 2013

14

Main federal-level energy efficiency measures

Energy efficiency policies find a balance between consultation, information, incentives and regulation.

16-09-07

Transport

Buildings

Industry and business

• Labelling (EU Directive Fuel Economy)

• Regulation of consumption

• Motor vehicle taxation

• E-mobility strategy

• Mobility and fuel strategy

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taxation – regulation – financial incentives – information & consultation

• Obligatory energy audits

• KfW credits and loans

• Energy consulting services

Industry and business

• Energy saving legislation

• KfW progammes for

construction

Buildings

• Energy Efficiency Labelling

Ordinance

• National Top Runner

Initiative

Products & appliances

Transport

• Motor vehicle taxation

• Regulation of consumption

15

Binding measures for new buildings since 2009

or

The Renewable Energies Heat Act (EEWärmeG)

At least one measure has to be chosen for all new buildings.

16-09-07

Use of renewable energies

• Solar energy: at least 15% of energy

consumption

• Biomass: at least 50%

• Biogas: at least 30%

• Geothermal energy: at least 50%

Substitute measures

• Use of industrial waste heat

• Combined heat and power production

• Efficiency measures of at least 15%

above the requirements of the Energy

Saving Ordinance

• Access to district heating

Leading role of the public sector

Requirements also for existing public building stock

16

Sustainable transport: number of vehicles and share of biofuels in the transport sector

The number of electric vehicles and chargeable hybrids increased significantly but the 2020 target of 1 million is still far away.

16-09-07

Sourc

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Ecofy

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016

based

on B

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Wi 2

014,

KB

A 2

015

Share of biofuels in

German transport sector´03 ´04 ´05 ´06 ´07 ´08 ´09 ´10 ´11 ´12 ´13 ´14

Total biofuel share (%) 1.5 1.9 3.8 6.6 7.8 6.1 5.5 5.9 5.7 6.1 5.5 5.4

Total biofuel quota (%) 5.25 6.25 6.25 6.25 6.25 6.25

0

5,000

10,000

15,000

20,000

25,000

30,000

2008 2009 2010 2011 2012 2013 2014 2015

To

tal co

mu

lative

num

ber

of

ca

rsin

Ge

rma

ny

chargeablehybrids

electricvehicles

17

Market price signal reaches owners of RES, who thus react to market needs

• RES-E generators can create additional profit by adjustment to market prices

• Efficient market integration, incentives improved prognosis and balancing

Increase market integration through premium system

The market premium bears new opportunities and incentivises flexibility.

16-09-07

Feed-in Tariff

level (FiT)

Low

market

price

High

market

price

Profit

Market Premium (paid out by TSO, average difference between

market price and FiT, determined monthly)

Average Market Revenues(fluctuating market price)

Risk

€

18

As of August 2014, operators using part of the generatedelectricity directly (self consumption) have to pay

35% of the EEG levy for RE and CHP

100% of the EEG levy for electricity from other sources

Small installations (<10 kW) only pay the levy for electricity going beyond 10 MWh per year

the change is only applicable to new installations, not retroactively

Grid fees depend on the grid connection and its usage

Distribution of costs – EEG levy on self consumption

The EEG 2014 helps to distribute the burden among more actors.

16-09-07 19

Energy pay-back times of PV and wind turbines in Europe

PV and Wind pay back the energy used in 0.4 to 3.3 years.

16-09-07

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1

1.5

2

2.5

3

3.5

PV Mono-Si2011

PV Multi-Si2011

PV Thin Film2011

Wind Onshore2014

Wind Offshore(n.y.)

En

erg

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ac

k t

ime

in y

ea

rs

20

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The contribution of renewables to the electricity system varies widely depending on the season.

German electricity system volatility today

Winter 2015 - week no. 51 (December) Summer 2015 - week no. 35 (August)

electricity demand photovoltaic hydroconventional

plantsonshore / offshore wind biomass

Po

we

r g

en

era

tio

n (

GW

)

21

Future: German electricity system volatility in 2022

By 2022 renewables can cover the total demand for certain hours e.g. over midday, but for the calm winter days conventional back-up capacity will still be needed.

16-09-07

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Energ

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015

GW

80

60

40

20

Winter 2022 (November)

Mon Tue Wed Thu Fri Sat SunMon Tue Wed Thu Fri Sat Sun

GW

80

60

40

20

Summer 2022 (August)

electricity demand photovoltaic hydroconventional

plants

onshore /

offshore windbiomass

Po

we

r ge

ne

ratio

n (

GW

)

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Costs of balancing measures to ensure grid stability

System service costs decline since 2010 due to better coordination between the four TSOs.

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0

200

400

600

800

1000

1200

1400

1600

2007 2008 2009 2010 2011 2012 2013 2014

mill

ion

Eu

ros [m

€]

renewablescurtailment

redispatch, reactivepower

transmission loss

balancing energy

23

Four areas to increase flexibility

Technology neutral policies foster innovation: Different flexibility measures are suitable for different challenges to the grid.

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Grid expansion

Flexibility

(thermal and renewables)

Demand response

Power-to-heat

Grids

Generation

Consumption

Storage

Share of RE80%65%50%20% 35%

2025 2035 2050 Target year

Batteries

Pumped storage

Power-to-gas

24

Combined heat and power (CHP)

CHP is an important efficiency technology which utilises excess heat for district heating and thus reduces energy losses in power generation.

16-09-07

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43% HARD COAL / LIGNITE

60% CCGT

43-60%

40-57%

Hard coal

lignite

40 - 60 %

55 – 95 %

10 - 62 %

5 - 45 %

25

Combined heat and power (CHP) in Germany

Highly efficient CHP shall make up 120 TWh of German power generation by 2025.

16-09-07

110120

0

50

100

150

200

250

[TW

h]

CHP heat generation in Germany CHP electricity generation in Germany

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YearFinancing CHP

in Mio. €

2004 795

2005 862

2006 787

2007 641

2008 523

2009 490

2010 397

2011 220

2012 264

2013 364

2014 494

2015 532

2016

–

2022

up to

1.500 Mio. € p.a.

26

Amendment of CHP act (2015)

The CHP amendment ensures that the highly efficient and clean technology plays an important role in Germany’s energy supply.

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Key elements of the amended CHP act

• Change of CHP expansion target Increase of support

volume to 1.5 billion Euro per year

• No support for auto generation CHP plants > 100 kW

• Surcharge for existing efficient, gas-powered CHP

plants in public supply > 2 MW

• Support of new heat networks and heat storage

27

PV module price development – past and future

Investment costs for PV modules continue to decline.

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Cumulated Produced

Capacity in GW

28

300.80

303.30

76.95

138.14

0

100

200

300

400

500

600

700

800

900

2006 2007 2008 2009 2010 2011 2012 2013 2014

Su

pp

ort

in

mil

lio

n E

uro

s Nuclear Fusion

Nuclear Safetyand final storage

RenewableEnergies

Energy Efficiency

Support for energy-related research and development

Energy research is a key element of the energy transition.

16-09-07

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