renewable energy policy in germany

Dr. Christine WörlenMay 2009

Renewable Energy Policy in Germany: A FIT Success Story

Overview

• German Climate Change Policy• The German Feed-in-Tariff (FIT) scheme to facilitate

investment in renewables• Benefits: CO2 emission reduction, jobs, income

Emission Reduction Policy in Germany

Germany is concerned about climate change.

Germany has always taken a proactive stance on international climate change agreements:

Bonn 1995

Commitments of the government

Hosting the UNFCCC Secretariat

National and EU policies

Current commitment:

EU: 20 % emissions reductions by 2020;

20 % renewables, 20 % energy efficiency.

In case of new climate agreement: 30 % reduction.

German Integrated Energy and Climate Package.

Meseberg 2007: 29 measures Emissions Trading and Clean Development MechanismSupport for climate-friendly energy production (renewables, CHP)Energy efficiency measures for residential households

Implemented to the largest part over 2008 and 2009

E F F I Z I E N Z E N T S C H E I D E T

29-Point Integrated Energy and Climate Programme of the German Federal Government 2007.

1 Amendment to the Combined Heat and Power Act

2 Amendment to the Energy Sector Act (EnWG) on liberalising metering

3 Low-carbon power plant technologies

4 Smart monitoring of power consumption

5 Clean energy technologies

6 Adoption of a modern energy management system

7 Promotional program for climate protection and energy efficiency (outside of buildings)

8 Energy-efficient products

9 Feed-in law for biogas in the natural gas grid

10 Energy Saving Ordinance

11 Heating costs for rental housing

12 Low-carbon building retrofitting program

13 Energy-efficient modernization of buildings and social infrastructure

14 Renewable Energies Heat Act (EEWärmeG)

15 Efficiency retrofitting program for federal buildings

16 CO2 strategy for passenger cars17 Biofuels development18 Reform of the vehicle tax to a pollutant and CO2

basis19 Energy labeling for passenger cars29 Amendment to the Heavy Goods Vehicle (HGV) Toll

Ordinance21 Air traffic22 Water transportation23 Reduced emissions of fluorinated greenhouse gases24 Procurement of energy-efficient products and

services25 Energy research and innovation26 Expansion of electric transport27 International projects for climate protection and

energy efficiency28 Energy and climate policy information programs for

German embassies and consulates29 Transatlantic climate and technology initiatives

Example: Residential Households.

EnEV (Energy Savings Ordinance) Prescribes tolerable energy consumption per square meterStandards became tougher this year (30 %) and will be tightened again in 2012 (30%)Leading to more efficient houses (insulation)

EEWärmeG (Renewable Energy Heat Law)In newly built or significantly renovated houses, a share of the heat requirements (heat and hot water) needs to be covered from:

Solar thermal water heatersBiomass-based boilersBiogasDistrict heating

Marktanreizprogram (investment subsidies)

Integrated Climate and Energy Programme – Summary.

Program of 29 key elements is without precedent both in the history of Germany and internationally

Translates into a package of 14 acts and ordinances

CO2 emission savings of about 220 million tones in 2020 or 36% vs. 1990 levels

Total costs of about 31 billion Euro

Annually saved energy costs of about 36 billion Euro

Net economic benefit of about 5 billion Euro per year.

Energy Supply Side Objectives.

20% of final energy consumption to come from renewable energy.14% of heat demand in Germany to be covered from renewable energy sources.<10 % of fuels to be covered from biofuels. 27 – 30 % of electricity to come from renewables.25% of electricity to come from CHP in 2020.

Renewable Energies in Germany and the FIT

Renewables as share of total final energy consumption in Germany in 2007.

Shares of renewable energy sources among total final energy consumption in Germany

90.2 %Other energy resources,

e.g. hard coal, lignite, mineral oils, natural gas

Biomass3) 6.8 %

RES share 2007

9.8 % 1)

Wind 1.7 %

Hydropower 0.9 %

Other renewables0.4 %

Total: 8,585 PJ1)

RES - Renew able energy sources; 1) Compared to RES in f igures - w ith the conditions of June 2008 - the value have strongly increased. The reason for this is that the respective base value w ere adapted to more current data: for the RE-portion of the f inal energy consumption (FEC) so far the value of 2006 had to be used. The FEC 2007, w hich w as published in the 2nd half of 2008, is 8.585 PJ and therefore fundamentally low er than the value of the previous year - mainly due to the mild w inter. 3) solid, liquid, gaseous biomass, biogenic share of w aste, landfill and sew age gas;Source: BMU-KI III 1 based on AGEE-Stat and ZSW, according to Working Group on Energy Balances (AGEB); all f igures provisional; Version: 15.12.2008

Source: BMU 2008

Renewable energy shares in Germany, 1998 - 2007.

Source: BMU 2008

Renewable energy sources as a share of energy supply in Germany

0.81.4

2.53.11.3

1.5

2.3

2.6

1.0

1.2

0.1

0.03

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

1998 (2.1 %) 2002 ( 3.0 %) 2006 ( 5.7 %) 2007 (6.9 %)

[%]

Fuel consumption

Heat supply

Electricity generation

Deviations in the totals are due to rounding, provisional f iguresShare of primary energy consumption (PEC) calculated according to the eff iciency method (acc. to the substitution method: 9.4 % );

Source: BMU-Brochure: "Renew able energy sources in f igures – national and international development", Internet Update, KI III 1; Version: 15.12.2008; provisional f igures

Renewable electricity in Germany, 1990 - 2007.

Source: BMU 2008

Development of electricity generation from renewable energies in Germany, 1990 - 2007

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Ele

ctri

city

gen

erat

ion

[G

Wh

]

Hydropower Wind energy

Biomass* Photovoltaics

*Solid, liquid, gaseous biomass, biogenic share of w aste, landfill and sew age gas; StrEG: Act on the Sale of Electricity to the Grid; BauGB: Constuction Code; EEG:Renew able Energy Sources Act;

Electricity from geothermal energy is not presented due to the negligible quantities of electricity produced; Source: BMU-Brochure: "Renew able energy sources in f igures – national and international development", Internet Update, KI III 1; Version: 15.12.2008; provisional f igures

EEG 1 April 2000

New EEG 1 August 2004

StrEG 1 January 1991

Amendment to BauGBNovember 1997

EEG 2009ex 1 January 2009

Tariffs

• ..are granted for 20 years• …vary by technology• …vary by plant (resource quality, plant size, feedstock)• …get lower over the years (degression)• …negotiated such that at current investment prices some

(marginal) profit is attained.

Tariffs under the FIT, 2009.Technology Min

(Cts/kWh)

Max(Cts/kWh)

Degression

Remarks (depends on…)

hydropower 3.50 12.67 1% plant size, age

Methane from dumps, sewage, mines

4.16 11.00 1.5% Plant size, fuel

Biomass 2.5 13? 1% Plant size, fuel, CHP, technology, feed-in

geothermal 10.5 18 1% Plant size, technology, CHP

Wind power: onshoreoffshore

(5)3.5

(10.4)15.50

1%5%

Location, technical compliance, repowering

Solar photovoltaics 31.94 48.01 8 – 10 % Plant size, building integration

BMU, 2008

Feed-in Tariffs are not just tariffs:

• German Feed-in Law (EEG) is – Purchase price guarantee– Grid access guarantee– Purchase obligation, priority for feed-in

• Grid operator buys at predefined rates; • National equitization fund• Every power customer pays• Law is reviewed every four years• Federal law• Annual degression incentivizes early action

Advantages of Feed-in Tariffs: Simple, stable, fair, effective.

• Industry needs a long-term perspective for large investment and capacity decisions.

• Operators need clear price signals, • non-discriminatory grid access, • reward for early action, • minimal transaction costs. • All of these factors reduce the total cost of deploying

renewables through lower risk and lower transaction costs, and maximize deployment activity.

Advantages of Feed-in Tariffs: Simple, stable, fair, effective (II).

• Germany has overachieved her renewable energy targets. – In 2000, the target for 2010 was 12.5%. – This target was actually reached in 2007 with 14.7%.

• Costs for systems in Germany are lower than in other jurisdictions.

FIT regimes save cost.

Böll 2008

Costs and Benefits

RE costs as share of power price

Expected development of the monthly EEG-costs per average household (3500 kWh/year).

Source: BMU 2006

Eu

ro 2

00

5/m

on

th

Future costs of wind power.

Low-cost wind powerAs of 2015, prices for power from conventionally-fuelled power plants will surpass those for wind energy. New power-plant construction and rising procurement costs will determine conventional power prices.

CO2 avoidance through renewable energy, 2007.

Source: BMU 2008

Total CO2 avoidance via the use of renewable energy sources in Germany, 2007

23.1 million t 34.2 million t 19.5 million t

21.9 million t

2.1 million t

0.5 million t

0.9 million t

15.0 million t

0 10 20 30 40 50 60 70 80 90

Fuels

Heat

Electricity

CO2-avoidance [million tonnes]

Hydropower Wind energy Biomass Photovoltaics Geothermal energy Solar thermal energy Biofuels

78.9 million t

23.3 million t

15.0 million t

Total: approx.117 million t CO2

from this approx. 57 million t CO2

through the EEG


Income from building renewable energy in Germany, 2007.

Source: BMU 2008

Turnover from the Construction of Renewable Energy Powered Installations in Germany, 2007

Biomass heat EUR 1,440 mill.

(13.2 %)

Biomass electricity

EUR 1,050 mill. (9.6 %)

Geothermal energy 1)

EUR 680 mill. (6.2 %)

Photovoltaics EUR 4,675 mill.

(42.7 %)

Solar thermal EUR 755 mill.

(6.9 %)

Wind energy EUR 2,228 mill.

(20.8 %)

Hydropower EUR 70 mill.

(0.6 %)

Total: approx. € 11 billion

1) Large plants and heat pumpsSource: BMU-Brochure: "Renew able energy sources in f igures – national and international development", Internet Update, KI III 1; Version: 15.12.2008; provisional f igures

Income from renewable energy installations in Germany, 2007.

Source: BMU 2008

Turnover from the Operation of Renewable Energy Powered Installations in Germany, 2007

Photovoltaics EUR 1,600 mill.

(11.0 %)

Wind energy EUR 3,510 mill.

(24.2 %)

Geothermal energy EUR 0.05 mill.

(< 0.1 %)

Biofuels EUR 3,810 mill.

(26.2 %)

HydropowerEUR 1,200 mill.

(8.3 %)

Biomass electricity EUR 2,520 mill.

(17.4 %)

Biomass heat 1)

EUR 1,880 mill.(12.9 %)

Total: approx. € 14.5 billion

1) Only fuels used exclusively to supply heatSource: BMU-Brochure: "Renew able energy sources in f igures – national and international development", Internet Update KI III 1; Version: 15.12.2008; provisional f igures

Total income from renewable energy in Germany, 2007.

Source: BMU 2008

Total Turnover from Renewable Energy Sourcesin Germany, 2007

Geothermal

energy 1)

EUR 680 mill. (2.7 %)

Wind energyEUR 5,790 mill.

(22.7 %)

HydropowerEUR 1,270 mill.

(5.0 %)

Solar energy 2)

EUR 7,030 mill. (27.6 %)

Biomass EUR 10,700 mill.

(42.0 %)

Total: approx. € 25.5 billion

1) Large plants and heat pumps2) Photovoltaics and solar thermal energy;


Wind energy suppliers in Germany, 2007.

Source: BMU 2008

Share of providers of wind energy installations in newly installed capacity in Germany up to end of 2007

Gamesa2.6 %

Other1.0 %

REpower Systems10.9 %

Fuhrländer2.7 %

Nordex4.8 %

Enercon50.3 %

Siemens Wind Power3.5 %Vestas

24.1 %

Source: Molly, J.P.: Status der Windenergienutzung-Stand 31.12.2007; Deutsches Windenergie-Institut (DEWI)

Gesamt: 1,667 MW

Total jobs in renewable energy in Germany, 2005 - 2008.

Source: BMU 2009

The solar industry in Germany.

• Since 2003, the turnover of the German PV industry has multiplied by a factor of 10 (total €5.5 bn)

• Of this, 37.6 % were exported. • Over 40,000 jobs were created in solar factories and

installation businesses. • Until 2010, the solar industry association BSW

expects around 54,000 jobs, in 2020 maybe twice as many.• Preconditions: stable home market, investments into

research.

BSW Präsentation Marktentwicklung

The solar industry in Germany (II).


Farm revenues.


Sweetwater, TX

• Nolan County, Texas had 20% of the population living in poverty in 2004.

• Now 1,100 of the 15,000 residents have jobs directly related to wind energy.

• Sweetwater area is steadily growing again for the first time in decades.

• Nolan County‘s property tax base has expanded from $500 m in 1999 to $2.4 bn in 2008.

Source: windpowerworks.org 2009

Manufacturing of utility scale wind turbine components in the US in 2008.

• 13,000 direct new jobs, nearly $2 bn in investment• Towers, components, gearboxes, housings, turbines, blades, materials,

lifts… Source AWEA Annual Statistics 2008

Iowa School Districts

• Each school that operates a turbine saves or generates between $3,500 and $560,000 annually.

• Wind power presents a unique educational opportunity.

• Forest City Community School District’s turbine annually produces about 60 percent of the district’s electricity consumption. This clean, locally grown power has allowed the district to reduce its carbon dioxide emissions by 657 tons and sulfur dioxide emissions by 2.9 tons annually.

Source: Iowa Policy Project 2007

Wind energy became an issue of local pride in each of these

school districts.

Danish wind cooperatives

Source: Böll 2009

85% or all wind power capacity is owned by individual or local cooperatives.

What helps develop community wind schemes?

Source: windustry 2007

Conclusion

• Germany has very ambitious climate change objectives, and implements the policies to put them into a reality.

• Energy efficiency and renewable energies will be among the main vehicles.

• The policies implemented are having multiple benefits: – increased energy security – decreased GHG emissions, – Creation of an industry of global significance,– Jobs and national income.

• Among the social and economic benefits of the FIT is increased resilience against the current global downturn.

Thank you for your attention.

Christine Wörlen, Ph.D.Am Weinhang 8 | 10965 Berlin | Germany fon +49 - (0)30 - 7809 787-0 fax +49 - (0)721 - 1513 323 46mobil +49 - (0)1522 - 1971 234 mail [email protected]

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