The German Energy TransitionState of play, trends, challenges

PRAGUE, 28 NOVEMBER 2018Matthias Buck

Agora Energiewende – Who are we?

Think Tank with more than 30 ExpertsIndependent and non-partisan

Project duration 2012 – 2021Financed by Mercator Foundation &European Climate Foundation

Mission: How do we make the energy transition in Germany a success story?

Methods: Analyzing, assessing, understanding, discussing, putting forward proposals, Council of Agora

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Agora Energiewende – The way we work

Agora Team Agora Council

Director

GermanyAdministration

International

Studies, public events, etc.

Stakeholders

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Internal discussion and exchange among thepermanent members

Regular exchange and changing advisory

committees in different projects

EuropeCommunication

Impulse Impulse

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Agora Energiewende – The Agora Council

Chair

Federal Politics

Regional Politics

European Union

Trade UnionsFederal Authorities

Environmental Associations

Sales

Grid Operators

Renewable Energies

Energy-intensive Industries

Energy Sector

Public Utilities

Science

25 Members

Dr. Patrick Graichen

Dr. Hans-Joachim Ziesing

StS Rainer Baake

Wolfgang LembAntje von Brook

Stefan Kapferer

Dr. Boris Schucht

Dr. Martin Iffert

Vera Brenzel

Mechthild Wörsdörfer

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The „Energiewende“ –A short introduction

Reasons for the energy transition: Climate change is a reality and calls for a phase-out ofcoal, oil and gas

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Global temperature rise from the time of industrialisation to 2016 → Until the year 2016 there has been an increase of the global temperature by 1,1°C compared to the pre-industrial level

→ In the 2015 Paris climate agreement the international community of states has agreed to limit global warming to a maximum of 2°C, if possible even to 1,5°C.

→ In order to be successful, all states have to significantly reduce their GHG emissions in the long-run. As a large part of the emissions originates from burning coal, oil and gas, the transformation of the energy system is crucial.

-0,5

0

0,5

1

1,5

1880 1910 1940 1970 2000

Glo

bal w

arm

ing

in °C

elsi

us

2017: +1,1 °C

Reasons for the Energiewende:The use of nuclear power is strongly rejected by the German population

Hans Weingartz/Wikipedia

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Anti-nuclear-power-demonstration at the Bonner Hofgarten, October 14, 1979 → In the 1970s the anti-nuclear movement in

Germany developed. Its supporters strongly

opposed the military and also the civil use of

nuclear energy.

→ Discussions regarding the risks and

consequences of nuclear energy were of great

societal importance and among the most

pressing issues during the 1980s and 1990s in

Germany.

→ Today, when it comes to the nuclear phase-out

by 2022 there is a broad societal consensus.

The Energiewende is a long-term energy strategy to phase-out nuclear power, reduce greenhouse gas emissions, and increase energy efficiency and renewable energies

AG Energiebilanzen, own calculations

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Primary energy consumption 1990, 2017 und minimum target 2050 Primary targets

→ Climate mitigation: Reducing greenhouse gas emissions until 2050 by 80 to 95% towards 1990 levels.

→ Nuclear phase out: Shut down of all nuclear units until the end of 2022.

Secondary targets

→ Energy efficiency: Reducing primary energy consumption until 2050 by 50% towards 2008 levels.

→ Renewable energy: Increasing the share of renewable energy in gross final energy consumption until 2050 to 60%.

0

2000

4000

6000

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10000

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1990 2017 2050

PJ

Renewables Nuclear Coal, oil and natural gas Other

Energy efficiency

Renewable energies

Where do we stand with the Energiewende in 2017?

In 2017 greenhouse gas emissions were reduced by 27,6% compared to 1990 levels – the German 2020 climate target is basically out of reach

Umweltbundesamt, own calculaltions

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Greenhouse gas emissions by sectors 1990 – 2017 → Since 1990, three different phases can be distinguished:

Phase 1 (1990 – 2000): Sharp reduction triggered by structural changes after the reunification.

Phase 2 (2000 – 2010): Moderate reduction as a result of modernisation and climate policies.

Phase 3 (2010 – 2017): Stagnation.

→ The 2020 climate target is basically out of reach; the climate target for 2030 is a major challenge.

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992

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1995

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Energy sector Industry Buildings Transport Agriculture Other

2017 vs. 1990: -27.7%

Target 2020: min. -40%

Target 2030: min. -55%

The structure of primary energy consumption has gradually changed since 1990 – shifting from coal and nuclear to renewables and gas

AG Energiebilanzen

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Primary energy consumption by energy source Energieträgern 1990 - 2017 → The primary energy consumption has

decreased by 1600 PJ since 1990.

→ The structural shift is the result of energy policy

(increased energy efficiency and renewables),

industry-related structural changes related to

the German reunification (decrease in coal and

lignite exploitation), and modernisation of the

heat sector (from oil to gas).

0

2 000

4 000

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10 000

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1990 1995 2000 2005 2010 2015

PJ

Oil Lignite

Hard coal Natural gas

Nuclear Renewables

Other incl. net flows from/into other countr ies

In 2017 primary energy consumption is still dominated by fossils, but renewables account for 13 percent now

AG Energiebilanzen

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Primary energy consumption by sources 2017 (2016 in brackets) → In 2017, Germany‘s primary energy consumption reached a total of 13.500 PJ.

→ Around 80 percent of Germany‘s primary energy consumption was provided by fossil fuels: 35% were provided by oil, 23 by natural gas and 11% by each lignite and hard coal.

→ Nuclear energy accounted for 6%, renewable energy for 13% (up from 1% in 1990).

Hard coal: 11%

Lignite: 11%

Oil: 35%

Natural gas: 24%

Nuclear: 6% Renewables: 13%

Other including net flows

to/from foreign countries:

0.3%

Primary energy consumption (PJ)

1678 1780

11750 11770

13428 13550

2016 2017

RenewablesConventionals

Germany has partially decoupled economic growth from energy consumption

AG Energiebilanzen, Statistisches Bundesamt, own calculations

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Primary energy consumption, gross electricity consumption and GDP 1990 -2017 and efficiency target 2020 → Since 1990, Germany‘s GDP has increased by

50 percentage points, which translates into a 2% increase per year.

→ Primary energy consumption has decreased by9 percentage points.

→ Energy intensity in 2017: The generation of1 GDP-Euro required 4,6 PJ of energy.

122125

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150

97 98 9591 77

105112 112 109 101

40

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1990 1995 2000 2005 2010 2015 2020

1990

=100

Gross domestic prod uct Primary energy consumption Gross power consumption

Target 2020: -10% vs. 2008

Target 2020: -20% vs. 2008

The contributions of the different sectors toreducing GHG emissions vary significantly

Umweltbundesamt

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GHG emissions by sectors 1990 - 2017 Reasons for the developments in the different sectors: → Energy industry: Decommissioning of old coal-fired

power plants, the expansion of RES and increased useof CHP.

→ Industry: Collapse of the East German industry after reunification, increased efficiency and increased use ofnatural gas-CHP.

→ Buildings: Retrofitting of old coal-stoves and oil-firedheating systems, increased use of natural gas and district heating, high buildings efficiency standards fornew buildings and energetic restoration.

→ Transport: Increase in the transport of goods and persons, decrease in fleet consumption not sufficient.

→ Agriculture: Decrease in livestock, innovative feed.→ Sonstige: 70% decrease in methane due to ending

waste disposal in dumps0

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Energy Industry Industry Buildings Transport Agriculture Others

Total: - 27.7 Percent-30%

-32%

-38%+4%

-20%

-74%

So far, the expansion of renewable energy is mainly taking place in the power sector

Umweltbundesamt

15

Renewables share in power, heating and transport 2000 - 2017 → Since 1990, the share of renewable energy in primary energy consumption was increased from 1% to 13% in 2017.

→ Most progress regarding renewable energies has been made in the power sector: Since 2000, the share of renewables increased from 6% to 36%. Around two thirds of the increase were contributed by wind and solar.

→ In the heating sector, renewables have increased from 4% in 2000 to 13% in 2017 -most of it being biomass.

→ In the transport sector, there is no relevant progress up to now, with biofuels only reaching a share of around 5%.

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2000 2005 2010 2015

%

Power 36%

Heating 13%

Transport 5%

Power 6%

Heating 4%

Transport 1%

The Energiewende in the Power Sector in 2017State of play

In 2017, renewables power generation reached its historical peak so far with more than 200 TWh

AG Energiebilanzen

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Gross power generation by type 1990 – 2017 → Since 1990, gross power production has increased by 105 TWh.

→ Power from renewables has increased by 200

TWh in this time.

→ Nuclear power generation has been cut by half due to the statutorily determined nuclear phase-out.

→ Power generation from coal is declining, mostly

in the case of hard coal. However, this decline does not advance quick enough to reach the climate targets. Germany is still one of the

most excessive producers and users of coal in the power sector.

20 25 38 63105

189218

153 154170

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9276171 143

148154 146

155 148

141 147143

134 117

118 9336 4149

73 8162 87

550 537577

623 634 648 655

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1990 1995 2000 2005 2010 2015

TW

h

Renewables Nuclear Lignite Hard coal Gas Oil Other

The expansion of renewables is based on wind and solar –they supply two thirds of the renewables power production

AG Energiebilanzen

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Power production from renewable energies 1990–2017 → Within the renewables wind is number 1: On-and offshore-wind have generated 107 TWh of power in 2017.

→ Biomass provided 21% of renewable power in 2017 and is thus the number 2 of renewable power sources.

→ Solar covered 18% of the renewable power generation.

→ Since 1990, hydro has remained stable at a level of 20 TWh per year. Germany’s potential for hydro power generation is rather limited and no significant increases to be expected.

20 22 25 20 21 19 202 3 14

34 50 512 10

28

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2025 38

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105

189

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1990 1995 2000 2005 2010 2015

TWh

Hydro Biomass incl. waste Onshore Wind Offshore Wind Solar

Germany aims for 65% renewables share in gross power consumption in 2030

AG Energiebilanzen

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Share of RES in the gross power consumption 2000 – 2017 → Renewables have reached a share of 36,4% in

the gross energy consumption in 2017. On

average this corrsponds to a yearly increase of

1,7%

→ According to the new treaty of the German

coalition government, the share of RES is

supposed to further increase to 65% (before:

level of ambition 55-60% by 2035).

→ Among the main factors influencing the RES

share is the added volume of wind and solar

but also the yearly fluctuation of the wind and

solar output

7%

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%

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27

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32

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%

0%

10%

20%

30%

40%

50%

60%

70%

2000 2005 2010 2015 2020 2025 2030

RES-Share in gross power consumption Target

Target 2030:

65 %

2017:

36.4 %

How does the Energiewende change the energysystem?

With wind and solar, the new power system is based on two technologies that completely change the picture

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Gross electricity generation of renewable energies 2000 - 2035

Electricity generation and consumption in a sample week 2023

AGEB (2015a), BNetzA (2014), BNetzA (2015b), own calculations Fraunhofer IWES (2013)

Specific characteristics of

Wind and Solar PV

High capital costs2

Very low variable cost3

Intermittent1

GW

Flexibility is the paradigm of the new power system –baseload capacities are not needed any more

Own calculations on basis of Agora Energiewende (2015b)

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Electricity generation and consumption in a sample week with 50% RES share Key flexibility options

Flexible fossil and bioenergy power

plants (incl. CHP)

Grids and transmission capacities for

exports/imports

Demand Side Management

Storage technologies (Batteries, Power-

to-Gas)

Integration of the power, heat and

transport sectors (power-to-heat,

electric cars)

With the progress of the energy transition, the power sector moves more and more to the centre of the energy system

AG Energiebilanzen, Öko-Institut

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Development of the energy consumption within an 80% and 95% emissions

reduction scenario, respectively → The potential of RES for direct use in the

heating and transport sectors (solar and geo

thermal energy, biomass and bio fuels) are

constrained.

→ Power from RES plays an important role in the

decarbonization of these sectors („sector

integration“).

→ Electricity-led decarbonisation is often the

least-cost pathway also in transport and for

heating & cooling.

1856 2004 2000

4640

17191279

2656

1144

709

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PJ

Power Heat Fuels

2050

Reduction target:

- 80%

Reduction target:

- 95%

How much does the Energiewende cost?

Between 2011 and 2015, consumer spending on energy is relatively stable at around 200 Bln. Euros

BMWi

25

Consumer spending on energy, 2011–2015 → Consumer spending on energy demonstrates a downward tendency since 2013.

→ In 2016, the consumer spending on energy accounted for roughly 6% of the GDP.

→ There is a structural shift observable: While the spending for fuels and heating decreased, those for power increased.

→ The reasons for lower fuel and heating expenses are decreased world prices for oil and gas, while cost for renewables expansion have driven up power spending.

64 64 71 70 70 69

57 6164 54 52 53

83 8684

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204211

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193 191

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2011 2012 2013 2014 2015 2016

Mrd

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Power Heat Transport

After significant increases in previous years, household electricity prices are relatively stable since 2013

Statistisches Bundesamt

26

Average power costs for private households per year → The annual bill for households has remained on a similar level over the last years.

→ Nevertheless, a strong decrease in prices

cannot be expected in the near future, particularly because

• RES expansion still needs to be financed;

• the number of interventions for grid

stability (due to delays in grid expansion) will probably rise.

→ There is a vital debate on shifting taxes, leviesand charges on power to conventional fuels in a fiscally neutral way.

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1 5001 448 1 427

187 237291 288 287

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2005 2010 2014 2015 2016

Eu

ro

single-person household two-person household

household with 3 persons or more Average power price per MWh

Today, wind and solar are already cost competitive to all other newly built power plants

Own calculations, *based on variable utilization, CO2 -price and investment cost,

Offshore wind excluding grid connection cost

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Range* of levelized cost of electricity (LCOE) 2017

5.48.0

5.49.2

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OnshoreWind

OffshoreWind

PV(ground-mounted)

PV(roof-top, up

to 30 kW)

Lignite Hard Coal Gas(combined

cycle)

Gas(turbine)

ct20

17/k

Wh

7.1

9.8

7.0

11.5

9.7 9.710.8

23.4

→ Levelized costs indicate that RES generation

costs decrease, also below the generation

costs of coal plants.

→ Ground-mounted PV and onshore wind power

plants are the two cheapest technologies for

power generation in Germany.

→ While RES-plants imply high investment costs,

the production costs for power from fossil fuels

depend on variable costs (CO2-Price and fuel

costs).

→ Gas power plants have the highest fuel costs.

Cost challenge in the power sector: Overcoming the „cost hill“ between 2018 to 2025

Own projections based on Öko-Institut

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Compensation for plant operators 2010 - 2035 → In the middle of the 2020s, the costs of RES will decline, while simultaneously, the RES share in gross power consumption will increase.

→ Reasons:

- RES power plants become cheaper.

- In 2021 a high number of old plants will exit the support scheme, because they will have reached the maximum support period of 20 years.

- A stronger effect of the emissions trading system makes power generation from fossil fuels more expensive.

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17%

32%

44%

54%

66%

73%

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Solar

Offshore Wind

Onshore Wind

Biomass

Other

Solar (stock)

Offshore Wind (stock)

Onshore Wind (stock)

Biomass (stock)

Other (stock)

RES-Share in grosspower consumption

What are the main challenges of the Energiewende?

Energiewende 2030: To reach the 2030 climate target, energy-related greenhouse gas emissions must be reduced by 60% relative to 1990 levels

Agora Energiewende

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Greenhouse gas emissions and median GHG trajectory to 2050 → The year 2030 is an important milestone in the German Energiewende. It represents the half-way mark on the path to Germany’s all-important targets for 2050, when energy-related emissions must be 92 % below their 1990 levels.

→ In 2015, emissions from energy combustion were down by 26 %. By 2030, they must fall another 34 percentage points.

→ Doing this requires a sweeping transformation, nothing less a total redesign of the power, heating and transport sectors.

A Ten-Point Agenda for the Next Phase of the Energy Transition

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1. An energy transition frameworkCreate a legal framework to ensure

reliability and predictability

3. EfficiencyMake Efficiency First the guiding principle

for planning processes and investment

decisions

2. EuropeSupport Europe’s energy transition;

coordinate Germany’s efforts within Europe

4. RenewablesUse wind and solar to increase renewables

to 60% of the power sector and 30 % of

primary energy consumption

5. Fossil FuelsReduce carbon-intense coal and oil by 50

%, and introduce carbon-neutral synthetic

fuels

7. NetworkBuild a network fit for the future, modernize

heating and gas networks and electrify the

transport sector

6. Levies and surchargesReform taxes, levies, surcharges and

network tariffs

9. IndustryUse opportunities, minimise risks: introduce

a forward-looking industry policy for the

energy transition

8. Power marketOrganise a flexible, digital power market

that incentivises investment

10. GemeinschaftswerkMake the energy transition a collective

endeavour

Thank you for your attention!

Agora EnergiewendeAnna-Louisa-Karsch-Str.210178 Berlin

T +49 (0)30 700 1435 - 000F +49 (0)30 700 1435 - 129

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Agora Energiewende is a joint initiative of the Mercator Foundation and the European Climate Foundation.

Matthias.Buck@agora-energiewende.de