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The German ‘ Energiewende’ under pressure

The German ‘ Energiewende’ under pressure. Dr. Sylvia Borbonus Wuppertal Institute Presentation at Clean Energy Workshop: How the EU ’ s clean energy revolution fell victim to ‘ blind austerity ’ ? of the European Trade Union Institute, November 25 th , Brussels.

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The German ‘ Energiewende’ under pressure

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  1. The German ‘Energiewende’ under pressure Dr. Sylvia Borbonus Wuppertal Institute Presentation at Clean Energy Workshop: How the EU’s clean energy revolution fell victim to ‘blind austerity’? of the European Trade Union Institute, November 25th, Brussels

  2. The Wuppertal Institute A think tank on transition research • President: Prof. Dr. Uwe Schneidewind • Vice President: Prof. Dr. Manfred Fischedick • Foundation of the institute: 1991 underProf. Dr. Ernst Ulrich von Weizsäcker (-2000) and Prof. Dr. Peter Hennicke (-2008) • Legal form: Non-Profit-Organisation • Owner: North Rhine-Westphalia • Approx. 200 employees • Approx. 150 -170 projects per year • Budget 2010: 2.8 Mio. Euro by North Rhine-Westphalia • 9 Mio. Euro by external funding sources (UN, EU, ministries, industry, NGOs) • A joint subsidiary by UNEP and WI UNEP/WI Collaborating Centre on Sustainable Consumption and Production (CSCP)

  3. The organisational structure Research groups

  4. Content • Introduction • The German Energiewende: What exactly are we talking about? • What are the conflicts? • The cost debate • Costs or investments? • The benefits of the German Energiewende • The power price debate • Why are power prices on the rise? • Do power prices affect poor households? • Diverging interests • Decentralized and democratic transformation 1

  5. German energy transition: What exactly are we talking about? Hennicke/Johnson/Kohler/Seifried (1985) The “Energiewende” is possible 1985 - 2010: A long way to make the “Energiewende” happen! However: Werefertothe time after the Fukushima catastrophe Energyconceptofthe German Federal Government (2010): ambitioustargetsforenergyandclimatepolicy Energypackage (2011): a comprehensive legislative packageincludingnuclearphaseout

  6. Goals of the Federal Government‘s Energy Concept (2010) as cornerstones of the Energiewende ” The German energy transition after Fukushima represents a policy-driven, sustainability-oriented restructuring of both the supply and demand-side components of the entire energy system by 2050.

  7. Controversial topics of the “Energiewende” • Costs: How much, how long, who pays? • Security of power supply vs. system integration of intermittent power? • Focus on power: system transformation of heat and transport sector? • Supply side biased; how to foster energy (resource) efficiency? • Decentralized („smart grids“) vs. centralized power („Desertec“)? • Citizens participation and democratisation? • Lifestyle changes to sustainable consumption and production? Costs and power prices are at the heart of the debate: in media and politics social concerns and ecological needs are played off against each other in order to thwart the German „Energiewende“.

  8. How much does the energy transition cost? Difficulties in determining the costs and current assessment 8

  9. Is the energy transition affordable? • There is no easy answer to this question, requires first of all to clarify what exactly we are talking about: • What is the „Energiewende“? • Only nuclear phaseout? • Only expanding renewables or renewables plus energy efficiency? • Only power system or also heating and transport? • Do we consider absolute costs or additional costs (compared to business as usual)? • Do we consider costs for single groups in society or for the whole economy? • Which time frame do we consider (short-term vs. long-term)? • Do we concentrate on market costs or do we integrate external costs? 9

  10. Typical differential costs of the „Energiewende“ All sectors; according to German Federal Ministry of the Environment „Lead Scenario 2012“ Source: BMU 2012

  11. How much does the Energiewende cost? Assessment by Federal Ministry of the Environment ‚Leitstudie‘ (2012) • Transitional additional costs of a comprehensive energy transition are estimated to be approximately at most 20 billion € per year; without potential savings by additional energy efficiency measures • The German gross domestic product (GDP) in 2012 amounted to approximately 2.650 billion € • The costs of the Energiewende add up to at most 0,8 % of the German GDP or 1,3 % of private consumption (~1.500 billion €) • Can Germany temporarily afford to do without (transitional) consumption in the amout of 1,3 %? • Is this really a significant welfare loss? Is it really a cost explosion that might even initiate the deindustrialization in Germany? 11

  12. Germany on the edge of deindustrialization? Export balance and trade surplus as measured by gross domestic product (GDP) [Mrd. €] 6 % are considered ‚healthy‘ Germany hasbeenrealizingthelargesttradesurpluseswithinthe European Union andfacesgrowingcriticismbyothereuroareamemberstates Source: DUH 2013

  13. The costs of the energy transition cannot be seen in isolation: The economic benefits of the “Energiewende”

  14. Feed-in law accelerates the market of green electricity Steep learning curves and cost degression for wind and PV power in Germany

  15. Learning effects and cost degression 8 cts/kWh: price of PV-power in 2015 (without storage); HH pay 27cts/kWh (2013)

  16. Reducing external damage costs of fossil electricity: 260 bn € external costs can be avoided by green power up to 2030 Source: BMU 2012

  17. Germany on the way to sustainable energy? Decoupling and reducing energy import dependency (2012: import costs 105 bn€) Primary energy in Germany in 2010 and in 2050 according to typical energy scenarios Share of imported energy energy efficiency renewable energy Source: Samadi 2011, based on data from AG Energiebilanzen 2011 and scenario studies cited

  18. Fostering „green growth“ and „ecological modernisation“ Additional investments for the Energiewende according to BMU-Lead Study (2011) Quelle: Nitsch et al 2011

  19. Revenues from power market equipment (German industry) 60 bn € (2020); Federation of German Industry (BDI): „The Energiewende is feasible – with reasonable costs“

  20. Employment in Germany´s renewable energies sector More than 380,000 Germans work in the renewables sector Source: BMU 2012

  21. The power price debate: Does the Energiewende unproportionately charge enterprises or low-income households?

  22. Comparison of electricity prices in the EU German households: high; industry: comparable

  23. Power prices for industry and households [ct/kWh] In the last ten years, energy intensive industry paid 10 cent and less per kilowatt hour – households have to afford two and a half times higher prices Source: DUH (2013)

  24. Power price development for households (annual consumption 3.500 kWh) [ct/kWh] Power priceshavebeenrisingcontinuallysincethe turn ofthemillenium Power priceincludingrenewableenergysurcharge Renewableenergysurcharge The renewablesexpansionbegantoinfluencethe power pricenoticeablyonly in 2011; beforeit, otherinfluencingfactorsweredominating such aslackingcompetitionbetweenthefourbig utilities andrising fossil fuelprices Source: DUH (2013)

  25. Cost components of electric power for German households Many drivers – Renewable Resources Act only one factor  Source: BMU 2012

  26. Development of the surcharge and other factors influencing the power price increase Taking a closerlookatthe EEG surchargepredictedfor 2014: The merecostsoffosteringrenewableenergiesamounttoonly 2,54 cent per kilowatthour

  27. Development of energy costs for an average three persons household The costsofmobility (gasoline) andheating (heatingoil) represent larger items in absolute numbers Household-level energycostshavebeenrising in the last yearseveniftherenewableenergysurchargeisexcluded. Source: DUH)

  28. Development of energy prices at household level (base year 2010) Heating oil Central + district heating Natural gas Power Gasoline + diesel All trendsgo in the same direction: all energycostshavebeenrisingsincethe turn ofthemillenium, not only power Source: DUH (2013)

  29. Share of power costs as measured by gross domestic product [%] „From an aggregated perspective, the increase in power prices is not as dramatic as often asserted in public debates“ (Expert Commission for the Assessment of the first monitoring report on the Energiewende, December 2012) Source: DUH (2013)

  30. Germany‘s subsidies for renewables Reasonable range compared to other countries 

  31. Total financial exemptions with regard to the power price of the industry [Mrd. €] Unter the last government coalition of christdemocrats and liberals the total power price exemptions of the industrie reached with 16,8 Mrd. € their highest level so far Source: DUH (2013)

  32. Decentralized power options and new actors e.g. regional utilities, citizens cooperatives drive the “Energiewende”

  33. Decentralized options support large scale implementation100%-Renewable-Energy-Regions in Germany • Political decision towards 100% renewable energy in more than 100 cities or regions • Aim: Complete change towards renewable energy as well as reducing energy use • Using regional sustainable energy sources to create regional welfare (income effects) • Main barriers: co-ordination, local acceptance, lack of funds • Innovative financing (citizen companies, cooperatives, local funds)

  34. Financing the „Energiewende“ in the power sector The important role of „citizens capital“ ( > 50%) Private households The ‚big four‘(Eon, RWE, Vattenfall, EnBW) only contribute 7 % of the power sector investments of the Energiewende Farmers Four big power companies • 15.08.2014

  35. Conclusions • The German energy transition is broader than often discussed. It also includes transportation and housing sector. • The Energiewende is an ambitious, but feasible and affordable undertaking. It strengthens Germany‘s industrial base and creates new jobs. • A number of steps have to be taken to ensure that the cost of renewable electricity is equally spread across power consumers. • German industry needs to pay its fair share in the switch to renewables. • The German energy transition is driven by citizens and communities.

  36. Thank you for your attention! Have you visited our website? http://www.wupperinst.org

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