bdew - quo vadis german energy policy - andreas kuhlmann

www.bdew.deBDEW Bundesverband der Energie- und Wasserwirtschaft e.V.

Quo vadis German Energy Policy

Andreas KuhlmannDirector Strategy and Politics

Berlin, 24 October 2013

BDEW Bundesverband der Energie- und Wasserwirtschaft e.V. Andreas Kuhlmann

For me „Energiewende“means first and foremost...

25 22 2132 34

22

38 34 3626

4752

32 36 3731

1727

all CDU/CSU SPD Linke Grüne Piraten

Nuclear phase-outDevelopment of renewable energiesAchieving climate targets

By political party

n=1.010


23.10.2013


Energy concept 2010 / overview

Overview of the objectives: Reduction of greenhouse gases: 2020: 40%, 2030: 55%, 2040: 70%, 2050: 80-95 %

Expansion goals for renewable energy: Gross final energy consumption: 2020: 18%, 2030: 30%, 2040: 45%, 2050: 60% Gross electricity consumption: 2020: 35%, 2030: 50%, 2040: 65%. 2050: 80%

Reduction of heating needs: 2020: 20%, 2050: 80% (primary energy needs) Doubling the rate of energy-related renovation: from today‘s 1% to 2% p.a.

Reduction of primary energy consumption by 20% by 2020 and by 50% by 2050 Increasing energy productivity by 2.1 % p.a.

Reduction of electricity consumption (10% by 2020, 25% by 2050)

E-Mobility: One million e-cars by 2020


23.10.2013

BDEW Bundesverband der Energie- und Wasserwirtschaft e.V. Andreas Kuhlmann Seite 4

Energy concept 2010 / overview

In summary:

Very ambitious!


23.10.2013


The „German Energiewende“:

Source: BDEW, BMU-Leitstudie 2011

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

MW

Thermal waste treatment Water power >5 MW* Water power <5MW*Biomass Wind onshore Wind offshorePhotovoltaics Geothermal energy**

Renewable Energies Act (EEG)Roads Act

* Partly estimated; **Geothermal energy not visible (2011: 10 MW)

2012

Maximum load: ca. 83.000 MW

Minimum load: ca. 35.000 MW

Photovoltaics

Wind offshore

Wind onshore2000

?

Quo vadis German Energy PolicySeite 5

23.10.2013


Deployment of power plants in 2001Utilisation of power plants and load (in MW)

Wednesday, 17 October 2001

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23Time of day

Psp.-ErzeugungPhotovoltaikWindSonst. EEWasserkraftSonstigeErdgasSteinkohleBraunkohleKernenergie

Sources: Statistisches Bundesamt, www.eeg-kwk.net, BDEW (own calculation)


23.10.2013


Situation 21 to 25 March 2013

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 00000 03 06 09 12 15 18 21 00 03 06 09 12 15 18 21 00 03 06 09 12 15 18 21 00 03 06 09 12 15 18 21 00 03 06 09 12 15 18 21

Wind Photovoltaics Load

Thursday,21.03.2013

Friday,22.03.2013

Saturday,23.03.2013

Sunday,24.03.2013

Monday,25.03.2013

Residual Load: 65.274 MW2% load coveragewith Wind&PV

Residual Load: 14.405 MW69% load coveragewith Wind&PV

Sources: Transmission System Operators, BDEW (own calculation)


23.10.2013


0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

08.0

3.30

08.0

3.30

09.0

3.30

09.0

3.30

10.0

3.30

10.0

3.30

11.0

3.30

11.0

3.30

12.0

3.30

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3.30

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3.30

13.0

3.30

14.0

3.30

14.0

3.30

15.0

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15.0

3.30

16.0

3.30

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Residual load Consumption (network load)

0

10.000

20.000

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MW

WindPhotovoltaics

Wind & PVConsumption (network load)

I

Wind, photovoltaics and electricity in 2030:A simple estimation

Source: BDEW (own calculation)

Wind & photovoltaics in 2030 Residual load in 2030Installed capacity: wind 62.800 MW*, photovoltaics 63.000 MW*Electricity consumption: -15% gg. 2008; weather as in 2011

* According to BMU-Leitstudie 2010

Seite 8Quo vadis German Energy Policy

Seite 823.10.2013


Photovoltaics feed-in, May 15th, 2013

Photovoltaics

For comparison:

Nuclear

0

5 000

10 000

15 000

20 000

25 000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Feed

-in in

MW

Time of day

15 May 2013

Sources: EEX, www.eeg-kwk.net


23.10.2013


June 2009 July 2009

June 2011 July 2011

Utilisation gas power plantGersteinwerk (427 MW, implemented in 1973)

Source: RWE


23.10.2013


Electricity generation capacity (GW)Gross electricity generation (TWh)

• It is necessary to significantly expand capacities for renewable energies to achieve a share of 35 % in electricity consumption by 2020 and 50 % by 2030 (with constant electricity consumption)

• The conventional generation system must be held available as back-up or system service, however, electricity generation declines significantly (economic efficiency?)

Challenges for the generation system: Considerably more capacity fo the same task

Con

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Con

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Con

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Ren

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Ren

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Ren

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0

40

80

120

160

200

240

2010 2020 2030

Con

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l

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Ren

ew.

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Ren

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0

100

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2010 2020 2030

Quo vadis German Energy Policy Seite 1123.10.2013


German Energiewende:New issues…

What about security of supply in Germany?

What will be the future market design? Capacity remunerations?

How far will prices for energy rise?

Will there be a real EU framework for energy and climate policy?

How is the Energiewende to be financed?

Can expansion of the networks and infrastructure keep pace withthe expectations and the expansion of renewable energies?

And many other issues…

Result: Uncertainty


23.10.2013


Technical challenges: We need…

rapidly adjustable, highly flexible power plants

a reservoir of adequate conventional reserve capacities

new storage technologies

an intensive expansion of the power networks

a new market design

new control technologies and system services

and above all more intelligence in the whole energy supply system. Fromthe consumer and the grids to generation itself.

Bottom line: a whole range of new innovations…


23.10.2013


What does the public think?


Importance and progress of theEnergiewende

4149

62 3

29

58

4

The Energiewende is ... The Energiewende isprogressing…

n = 1.011

veryimportant

important lessimportant

not at allimportant

very well well not verywell

poorly

As of 06/2012; changes vs. 01/2012 in brackets

(-11)(+12)

(-1)(-1) (-1)

(-11)

(+6)

(+3)


23.10.2013


When electricity is generated primarilyfrom renewable energies, …

22 22

48

morelessno change

16

78

believe it

do not believe it

75

6

18

increasedeclineremain stable

…we will depend … on electricity imports...

…there will bemajor power failures.

…electricity pricestend to...

n = 1.011

(+3)

(+2)

(-5)

(+/-0)

(-1)(-6) (+1)

(+2)

As of 06/2012; changes vs. 01/2012 in brackets


23.10.2013


„Energiewende“ has...

61

19 15

37 3526

ratheradvantages

noconse-

quences

ratherdis-

advantages

ratheradvantages

noconse-

quences

ratherdis-

advantages

for me individuallyfor the industrial locationGermany

(+9)

(+2)(+/-0)

(-1) (-5)

(+/-0)

n=1.010; changes vs. 01/2012 in brackets


23.10.2013


The money issue


Electricity bill for households

37,65 33,8325,14 25,03 28,29 29,90 31,65 32,73 34,18 35,55 37,89 41,18 40,51 40,25 41,33 41,76

12,25 14,38

15,52 16,7418,70 20,24 20,74 21,70 22,58 24,65 25,26

26,52 28,59 33,34 34,1842,04

49,90 48,2140,66 41,77

46,99 50,14 52,39 54,43 56,76 60,20 63,1567,70 69,10

73,59 75,5183,80

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: BDEW, As of: 04/2013

Generation, transport and sales

+ 68 %

Taxes and levies(EEG apportionment, KWK surcharge, surcharge accord. to§ 19 Network Charges Ordinance (StromNEV), offshore wind power surcharge, electricity tax, concession fee, VAT)

+ 243 %

+ 11 %

Changes comparedto 1998

Average monthly electricity bill of a three-person household in EurosYearly consumption: 3,500 kWh


23.10.2013


9,15 8,51

5,46 5,61 5,99 6,177,02 7,65

9,26 9,0010,70

8,70 8,63 8,83 8,987,61

0,20 0,250,35 0,42

0,510,69

0,88 1,02

1,16

1,31 2,05

3,530 3,5925,277

0,361,23

1,231,23

1,23 1,23

1,23

1,231,23

1,54 1,541,54

9,34 8,86

6,05 6,47 6,867,98

8,929,73

11,53 11,41

13,25

11,4012,07

14,04 14,33 14,87

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Erzeugung, Transport, Vertrieb Konzessionsabgabe EEG-Umlage*KWK-Aufschlag §19-Umlage Offshore-HaftungsumlageStromsteuer

Electricity prices for industrial customersalso rise considerably due to levies and taxes

0,19

0,080,11

Average electricity prices for the industry in Cent/kWh (including electricity tax)Annual consumption 160 to 20,000 MWh (Supply at medium voltage level; feed-in 100kW/1,600h to 4,000kW/5,000h)

0,090,11

0,13 0,11

0,050,11

0,050,11

0,050,11

0,050,11

0,05

0,110,05

0,11

0,05

0,11

0,11

0,05

0,11

0,05

0,11

0,03

0,11

0,070,04

0,11

0,100,07

0,17

0,15

0,260,31

* From 2010 application of the Ordinance on a Nationwide Equalisation Scheme Sources: VEA, BDEW; As of: 05/2013


23.10.2013


Most industrial firms have to pay forrenewable energies…

Sources: BDEW (own calculation based on forecast data for EEG apportitionment 2013 of 15/10/2012), BAFA, Stat. Bundesamt

96 %

4 %

44,865industrial

firms

Full EEG apportitionment:rd. 43,000 industrial firms

1,638 businesses/business units benefit from the special equalisation scheme under Article 16 EEG

* Economic activities defined in sections B (mining and quarrying) and C (manufacturing), German Classification of Economic Activities, 2008 edition (WZ 2008)

96% of all industrial firms in Germany pay the full levy(2013: 5,277 ct/kWh) for the renewables energy act (EEG)!


23.10.2013


…but there are some exceptions:

96 %

4 %

44,865industrial

firms

Full EEG apportitionment:rd. 43,000 industrial firms

1,638 businesses/business units benefit from the special equalisation scheme under Article 16 EEG

Only 4% of all industrial firms in Germany pay a reduced levy for the renewables energy act (EEG): • electricty intensive industrial

firms (e. g. steel, aluminium, chemical base materials, paper)

• costs for electricity have toexceed 14% of the gross valueadded

• >1 GWh yearly consumption• Additionally: Railways• International competition…

* Economic activities defined in sections B (mining and quarrying) and C (manufacturing), German Classification of Economic Activities, 2008 edition (WZ 2008)Sources: BDEW (own calculation based on forecast data for EEG apportitionment 2013 of 15/10/2012), BAFA, Stat. Bundesamt


23.10.2013


Financial reliefs for power-intensive industryEEG 2013: Who will be „relieved“?

47 %

25 %

8 %

4 %

16 %

243.1 TWh

Source: BDEW (own calculation based on EEG 2013 forecast data of 15/10/2012)

Full EEG apportionment/5.277 ct/kWh:113.8 TWh

Limited EEG apport.0.05 ct/kWh: 60.6 TWh

Reduced EEG apport.1%/0.05277 ct/kWh: 20.9 TWh

Reduced EEG apport.10%/0.5277 ct/kWh: 9.9 TWh

Full EEG apportionment for nearly half of the industrial electricity consumption! Without exeptional rules according to §40 EEG 2012, the surcharge in 2013

would be 4.23 ct/kWh, thus 1.05 ct/kWh lower.

Industrial electricity consumption in 2013 according to EEG forecast 2013: 243,1 TWh

Relief from EEG apportionment according to §37 EEG: Industries consuming approx. 30-40 TWh from own electricity generation plants


23.10.2013


What about jobs?


Development of jobs in the field ofrenewable energies in Germany

After continued growth, the number of jobs slightly declined for the first time in 2012. Thiswas especially due to the crisis in the solar industry. The total number of jobs remained on the previous year‘s level because wind and bioenergy developed well.

?


23.10.2013


Jobs: Consequences

But: Almost 42 million employees in Germany

About 29 million social secured employees

Out of which 5.2 million in manufacturing industry sector (18 %)

830,000 employees in energy intensive branches alone.

Challenging questions: Which consequences will Energiewende have on these jobs?

Will industry sector jobs remain competitive?


23.10.2013


Status Quo:

Problems:

Uncertainty (security of supply, prices, market design…)

Energy prices

International competition of German economy

Hope:

Financial reliefs

Still: Germany‘s energy security is one of the best in the world

Innovation: Energiewende is one of the most interesting andchallenging industrial projects of our time


23.10.2013


BDEW-proposals

The Path to New Market Structures for the Success of the Energy Transition


BDEW- Proposals September 2013 Market integration, i.a. through mandatory direct marketing

for new installations (2 steps) System integration, i.a. by mandatory equipping with

technical components to deliver system services

Pillar I: Substantial EEG-Reform

Pillar II: Introduction of a decentralised capacity market

Creation of a legal basis for the introduction of a decentralised capacity market with an obligation for retailer / BRP to secure firm capacity

Activation when need is foreseeable

Accompanying measures in four areas

1. Use potentials for optimisation of the Energy-Only Market2. Introduction of a Strategic Reserve with a regional element

to replace the current grid reserve3. Creation of the basis for grid expansion4. „Embedding“ the measures within the EU Internal Energy

Market


23.10.2013


Substantial reform of EEG


„Change of roles“

Conventionalenergy: ca. 80%

RES: ca. 20%

2012

Sources: BDEW, AG Energiebilanzen,: 08/2012; Targets of Federal Gov

Conventionalenergy: ca. 20%

RES: ca. 80%

Target year 2050

RES-Share of Gross domestic electricity consumption in Germany:

08.10.2013Quo vadis German Energy Policy

23.10.2013


EEG-Reform: Step 1 (I)

Mandatory direct marketing for new RES-installations Abolition of Management premium for new RES-installations Mandatory remote control capability of installations by

direct marketers for technical and operational system integration Mandatory provision of technical facilities for system

services Possibility for a change into direct marketing for existing

RES-installations while receiving a reduced management premium


23.10.2013


EEG-Reform: Step 1 (II)

Replacing guaranteed 20 years of support by volume-limited support Synchronisation of RES-expansion with grid extension by Strategic distribution grid planning

(Dimensioning of grids to 97% of possible yearly energy feeding volume – complete compensation of installation operator)

Introduction of allocation signals for RES-installation operators as part of system planning

Reform existing privileges (e.g. Exemption from EEG-levy) to avoid the effects of loss of solidarity


23.10.2013


EEG-Reform: Step 2

Transition – asap – from an ex-post market premium set by politics to an introduction of a competitively determined support level (ex-ante market premium) , e.g. in an auction model, on the basis of a coordinated RES-expansion between federal and Länder levelPrecondition: Well-prepared in advanceAdvantages if auction is correctly designed: Increase of cost efficiency of the energy transition Maintaining multiplicity of participants Achievement of renewable energy expansion goals Shift of previously socialised economic risks to the

investor


23.10.2013


Decentralised Capacity Market


Decentralised capacity market - Concept

Currently uniform product„electricity“

is divided into two components

Energy(kilowatt-hours)

VSN – security of supply certificates(capacity)


23.10.2013


Decentralised capacity market – Central Elements Obligation on electricity retailers /BRPs to provide of security of supply

certificates (VSN) equal to the sum of the related electrical capacity at the time of shortage firm capacity becomes product of its own

Providers of firm capacities (Power plants, storage, controllable RES) can offer VSN

Standardisation of VSN suitable for exchanges and publicly tradable.

Product freedom for demand-side flexibility ( Innovation, Efficiency)

Introduction of a financial penalty in case of non-compliance at shortage

Accounts likewise for provider and demander of VSN

Penalty level determines level security of supply

Participation of foreign capacity possible if firm interconnection capacity can be booked


23.10.2013


Decentralised capacity market - advantages

Market solution No determination and tender of capacity need by the state Value of VSN is determined by supply and demand Demand side flexibilities are integrated in the market Energy Only market is only supplemented

Low administrative burden through decentralized approach Electricity retailers know best their customer‘s capacity need

Sole Focus on security of supply No pursuance of secondary objectives like climate protection

Possibility for connection with EU- Internal Energy Market


23.10.2013


Accompanying measures – EOM and Strategic Reserve

Further development of EOM EOM to remain the effective and efficient Dispatch-Instrument central market place for RES, power plants, storage, flexibilities

Diverse Options for further development exist Currently further work on this

Further development of EOM is the right choice, irrespective of a market design chance later on („no regret“)

Strategic Reserve Instrument to secure transition Appropriate indicator for need to activate VSN-Model Possible overlap with VSN-System in introductory phase


23.10.2013


MW

€/MWhAngebotNachfrage

MW

SR-Kapazität

Keine Markträumung möglich

Einsatz der Strategischen Reserve (SR) ermöglicht Markträumung

€/MWh

Principle of a Strategic Reserve

14. StadtwerkeForum der Thüringer Energie AG Seite 40

01.10.2013


Accompanying measures – Grid infrastructure and European perspective

Grid infrastructure

Introduction of a stronger capacity component for network fees to counteract effects of loss of solidarity

Implementation of the BDEW „Roadmap Smart Grids“

Recognition of innovation and abolition of the time delay for distribution grids in the incentive regulation

Limitation of avoided network tariffs on controllable systems

European involvement

Strengthening the ETS with ambitious CO2-reduction targets beyond 2020

Rapid activation of the pentalateral Forum as a nucleus for European coordination of security of supply and market design


23.10.2013


CWE Nordic

CEE

700

1100

2000

800

6002300

1000

8002200

900

41652575

32003500

285

1300 (2600)

1200

1000

6101500600

CSE

SWE

UK‐CH

CWE – Central Western EuropeCEE – Central Eastern EuropeCSE – Central South EuropeSWE – South Western Europe

Integration of the European energy exchange until2014 and beyond…

Targets of market integration in the European energy exchange:

By end of 2014: European Day-ahead trade (implicit auction and price coupling)

Intra-day trade of excess capacities on an integrated market platform

Establishment of a cross-border electricity balancing market


23.10.2013


BDEWGerman Association for Energy and Water IndustriesReinhardtstraße 3210117 Berlin

Phone +49 30 / 300199-0www.bdew.de

Thank you for your attention!


23.10.2013

bdew - quo vadis german energy policy - andreas kuhlmann

Technology

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