© Fotolia.com/Sunny studio
2016: a successful year for the energy transition
The energy transition in Germany is not just some distant idea but has been a present reality for quite some time now. It has already become a success and is a course that can no longer be abandoned. Significant progress has been made and the groundwork laid for the work that is yet to be undertaken. The 10-point Energy Agenda has been implemented almost in full, so important milestones in the energy transition have already been reached.
2016 has been a particularly important year on Germany’s pathway towards establishing an energy supply that is environmentally compatible, reliable and economically successful. A string of political decisions have been taken that point the way ahead. These have successfully ushered in a paradigm shift and have brought the various different elements that make up the energy transition into line: renewables, the electricity market, energy efficiency, the grids, digitisation, and financing for the phase-out of nuclear energy. All of these parts of the puzzle now interlock properly, offering an overall picture that is now coherent.
Given these developments, you no longer hear the phrase: “The energy transition will only be a success if...” but “The energy transition is a success because...”. It’s true to say that the energy transition is already a success. Why? Because it is making our energy system more and more...
...compatible with the environment
Out with fossil fuels and in with renewables: this basic shift is a key part of our energy transition. The aim is to make Germany’s energy supply environmentally compatible and virtually carbon neutral. Over the past few years, we have made giant steps towards achieving this. Renewables now cover 31.6 per cent of gross final electricity consumption. This already makes them the most important source of energy in our electricity generation. From now to 2025, we want to raise this figure to between 40 to 45 per cent. Similarly, the target of raising the share of renewables used in the heating sector to 14 per cent is now also within reach, standing at a current 13.2 per cent.
...secure
Germany has one of the most secure energy supply systems both in Europe, and worldwide – despite the fact that the share of energy sources in electricity generation which depend on the weather is actually continuing to grow. In order to make the electricity market fit for incorporating even more renewables in the future, Germany this year passed the Electricity Market Act, the largest electricity market reform since the liberalisation seen in the 1990s. This was vital in order to keep the electricity feed into the grid stable and commercially competitive, even as the share of energy that depends on the wind and sun increases. The Electricity Market Act puts the rules in place for competition between flexible supply, flexible demand, and storage. It also ensures that the electricity supply remains both reliable and affordable. The Act additionally establishes a capacity reserve that acts as a safety net for unexpected events which might occur in the future.
...affordable
The reform of the Renewable Energy Sources Act (German abbreviation: EEG) in 2014 ensured that renewables started to be expanded more systematically and could gradually be integrated into the market. Since the technologies used to exploit renewables are no longer niche-market and in need of special protection, a paradigm shift was decided and implemented via a further reform of the EEG in summer 2016 (EEG 2017). Renewables now need to be able to compete on the market. From 2017, funding rates for electricity based on wind power, photovoltaics and biomass will no longer be set by the government, but will be determined by auctions. The basic principle is that funding will go to those who demand the least. This will make the expansion of renewables easier to plan and more cost-efficient. A number of pilot auctions have shown that the new system really works, with the average funding rate for ground mounted PV falling almost 30 per cent (from 9.17 cent/kWh to 6.9 cent/kWh). Furthermore, Germany’s Combined Heat and Power Act, which was adopted on 16 December, is also based upon competition: in the future, the funding rate for electricity from combined heat and power (CHP) facilities of between 1 and 50 MW and for particularly innovative CHP systems will be determined via auction (for more information, please click here).
The 2014 reform of the Renewable Energy Sources Act has also helped to stabilise electricity prices by slowing the rise in what is known as the Renewable Energy Sources surcharge. This surcharge is used to finance the expansion of renewables, with almost all electricity consumers — both private and commercial — having this surcharge added to their bill. The amount paid is calculated based on the price of electricity on the spot market plus the EEG surcharge. This combined total was at its highest in 2013, but has now fallen for three consecutive years and is set to fall further still in 2017 (for more information, please click here). In order to actually benefit from this fall in price, consumers are well advised to compare prices between different providers and switch to a cheaper tariff wherever this is available. For many people, this can mean a saving of several hundred euros per year.
…easy to plan
The latest reform of the EEG makes the expansion of renewables even easier to plan. For each type of technology — onshore and offshore wind power, photovoltaics, and biomass — specific expansion volumes have been set. In order to dovetail the expansion of renewable energy with that of the electricity grid, the development of wind power is being temporarily restricted in a designated ‘grid expansion area’ – an area in which new transmission lines are needed the most urgently. Ultimately, it is not just a question of generating renewable energy, but also about ensuring it can be transported to the consumer.
...readily accepted
Germany’s wind farms are primarily located in the northern and eastern parts of the country, whilst the main electricity consumers – the large industrial companies – are mostly based in the South and West. In the future, large electricity highways will transport the energy to where it is needed. The German Federal Government has prioritised the laying of cables underground rather than over head, which has also helped boost public acceptance. The grid operators of the two large electricity highways SuedLink and SuedOstLink presented potential routes for new power lines (corridors) in autumn. Discussions on the corridor for the A-Nord line have also begun. However, the backbone of the energy transition – the foundations that are to ensure its success – continues to be the speedy expansion of the AC grid, which largely falls within the competence of the individual Länder.
...smart
Digital technologies are opening up brand new possibilities for bringing supply by energy providers into line with demand by electricity consumers. The Act on the Digitisation of the Energy Transition, which entered into force in September 2016, creates the framework needed for the use of smart metres and other digital technologies. The roll-out of smart metering systems among large-scale providers and prime consumers will begin in 2017. At the same time, testing will commence into how generation and consumption can be linked through digital networking. The relevant investigations will be undertaken across five pilot regions located nationwide and funded by the Federal Ministry for Economic Affairs and Energy.
...efficient
The long-term goal of the energy transition – to create an energy supply that is virtually carbon-neutral – can only succeed if we reduce our entire energy needs and make better use of the potential for increasing our energy efficiency. The German Federal Government has therefore made energy efficiency the number one priority in the efforts being undertaken to realise the energy transition. ‘Efficiency first’ is a key basis. The National Action Plan for Energy Efficiency (NAPE), which was tabled at the end of 2014, has now largely been implemented. Several new programmes have been launched in 2016, including the Heating Optimisation Programme which provides funding for the replacement of old pumps and for hydraulic balancing, and the Energy Efficiency Incentive Programme which provides support for the replacement of old boilers and the installation of ventilation systems.
Almost 80 per cent of all German companies have already taken measures to save energy or are in the process of doing so. These include installing energy saving lighting in halls and offices, optimising heating systems, or undertaking energy-efficiency retrofits on company buildings. In order to support this kind of investment in companies, the Federal Ministry for Economic Affairs and Energy has launched a range of new funding programmes over the past year, including schemes to support the use of waste heat and the wider use of highly efficient horizontal technologies. A further programme that was launched in 2016 is the STEP up! competition, whereby companies take part in a funding auction. The funding is awarded to those companies who achieve the highest energy savings for each euro of funding.
The Federal Ministry for Economic Affairs and Energy has also launched an information campaign called ‘Germany makes it efficient’. The idea is to get companies, associations, the municipalities, and private households to use existing potential for improving their energy efficiency. The internet platform (in German only) set up for the campaign provides information on energy efficiency, as well as tips on how to significantly reduce energy consumption. There is also an integrated product finder designed to help with the purchase of electrical appliances. This is part of the Economic Affairs Ministry’s National Top Runner Initiative which aims at getting highly efficient appliances onto the market and into households.
...viable
Germany is gradually phasing out nuclear energy due to the large risks associated with this means of energy generation. All nuclear power stations in Germany will have been decommissioned by 2022, as provided for by the Federal Government’s 2011 decision to phase out nuclear energy. Important financial issues linked to the phase-out have now been clarified: the Federal Economic Affairs Ministry has developed an act that redistributes responsibility for nuclear waste management, and this act has now been adopted. The most important points are as follows: Responsibility for the management and financing of the decommissioning and dismantling of nuclear power plants (NPP) and for packaging the nuclear waste will lie entirely with the NPP operators. The German government is responsible for interim and final storage. The funds for interim and final storage will be provided by the operators and paid into a fund. These arrangements ensure that the economic situation of the operators is not put at risk, and that the costs are not borne solely by society (for more information, please click here).
...a factor in the level of competitiveness offered
Companies that invest in energy efficiency also improve their own position on the market. The less energy that a company consumes, the more competitive it is. In 2005, more than 250kWh of electricity was needed in Germany to generate €1,000 in revenue. Today the figure is just 213kWh. The link between economic growth and energy consumption is being broken more and more often.
German companies are not only partaking in the energy transition, but they are also making the energy transition happen: they are pioneering and producing technology in the fields of renewable energy and energy efficiency. Their expertise is highly sought-after both in Germany and around the world. This boosts exports and creates a large number of jobs: some 330,000 in the field of renewables.
The Special Equalisation Scheme ensures that companies with high electricity consumption operating in sectors facing global competition receive a reduction on their renewable energy surcharge. This financial relief helps safeguard competitiveness and, as a result, jobs. In future, the Special Equalisation Scheme featured in the Renewable Energy Sources Act is to also apply to the surcharge in the Combined Heat and Power Act.
...European
The energy transition can only be implemented efficiently in the European internal market. Cross-border electricity markets raise supply security, and having a well-developed transmission grid in Europe makes it easier to balance supply and demand for electricity. This is why the German Federal Government regularly engages in dialogue with Germany’s ‘electricity neighbours’ and works together with other European countries to shape the European Energy Union. This year saw the launch of the first cross-border auctions for photovoltaic installations, with Germany opening up an auction to Denmark. In return, German providers were able to take part in a Danish auction (for more information, please click here).
...forward-looking
In order to lay the right foundations now for the decades to come, the Federal Ministry for Economic Affairs and Energy has this year launched two major dialogue processes. These processes are to serves as the basis for developing a mid to long-term strategy for achieving the 2050 climate goals. The Green Paper on Energy Efficiency sets out key questions and discussion points for the most important challenges to be dealt with in a future energy efficiency policy. The ‘Electricity 2030’ input paper sets out points for discussion vis-à-vis the long-term challenges for energy policy towards ensuring an electricity supply that is climate-friendly, secure, and affordable. The public consultations ran to the end of October. Key results will be set out in two evaluation reports, to be presented in spring 2017.
Further information on the current status of the energy transition
To find out more about the current status of Germany’s energy transition, please see the Fifth monitoring report on the energy transition (available in German only), which was adopted by the German Federal Cabinet on 14 December (see also Direct finds).