Renewable Energy Policy in Germany: Recent Trends and Future Prospects

1. Agenda Priority access for renewable energy Support scheme for renewable energy Recentdevelopments in renewableenergydeployment (Statistics) RoleofPhotovoltaicsforelectricitygeneration Structureof German PV market (roof top specialconsidered) Status quo: Recentdevelopments in German energypolicy Electricity Heating Transport Renewable Energies Heat Act, with requirements for new buildings Financial support through Market Incentive Programme Emission reduction quota for biofuels Tax incentive for natural gas Tax exemptions for electric and hydrogen vehicles Priority access for renewable energy Support scheme for renewable energy 4/3/2019 | 1

2. Renewable energy policy measures tackle all energy sectors Priority access for renewable energy Support scheme for renewable energy Source: BMWi 2016, IEA/IRENA Electricity Heating Transport Renewable Energies Heat Act, with requirements for new buildings Financial support through Market Incentive Programme Emission reduction quota for biofuels Tax incentive for natural gas Tax exemptions for electric and hydrogen vehicles Priority access for renewable energy Support scheme for renewable energy 4/3/2019 | 2

3. Renewable energy policy measures tackle all energy sectors Priority access for renewable energy Support scheme for renewable energy Source: BMWi 2016, IEA/IRENA Electricity Heating Transport Renewable Energies Heat Act, with requirements for new buildings Financial support through Market Incentive Programme Emission reduction quota for biofuels Tax incentive for natural gas Tax exemptions for electric and hydrogen vehicles Priority access for renewable energy Support scheme for renewable energy 4/3/2019 | 3

4. Share of renewables has grown in all sectors, but fastest in electricity 37,8 % 35.0 36.2 Source: Ecofys based on AGEE-Stat 2016, BMWi 2016, BMWi 2018, Agora 2017, Agora 2018. 2020 target 14.0 12.9 10.0 5.2 4/3/2019 | 4

5. Continuous policy development2018 amendment brought only minor changes Source: Ecofys 2016 based on AGEEStat 2016 Share of RES in gross electricity consumption Gross electricity generation from renewables in TWh Share of RES [right axis] Electricity Feed-in Act Energy Concept EEG Amendment: Tenant Electricity supply model PV programme “1,000 roofs” EEG EEG amendment 4/3/2019 | 5

6. Wind, solar PV and biomass have driven the growth of renewables in German primary energy consumption SLIDECONTENTby dena 4/3/2019 | 6

7. The EEG stipulates measures to deploy renewable electricity in a plannable, efficient & secure way Renewable Energy Sources Act (EEG) Source: Ecofys 2016, BMWi 2016 Guaranteed grid access and priority dispatch for renewables Deployment corridor sets growth pathway Support payments: FIP via auctions EEG surcharge to offset support costs Regular monitoring and evaluation 4/3/2019 | 7

8. Latest developments in German Energy policyCoalition agreement and “Coal commission” • Coalitionagreement: “Strive to achieve a share of 65 percent renewables by 2030” • Implement “special auctions” to save up to ten million tonnes of CO2 by 2020: 4GW onshore wind power, 4GW solar power, as well as “one offshore wind power contribution” in 2018 and 2019, “provided that the grid’s carrying capacity is sufficient” • Encourage private investments in storagetechnologywiththeuseofmarketprinciples. • Install a special government commission on “growth, structural economic change and employment” to pave the way for Coal exit (completed) • Task: Plan “for the gradual reduction and phase-out of coal-fired power production, including an end date, and the necessary accompanying legal, economic, social, and structural policy measures" SLIDECONTENTby dena 4/3/2019 | 8

9. The 2017 Renewable Energy Sources Act introduced auctions for new installations Source: Ecofys 2016 based on EEG 2017 Costefficiency Diversity of actors Quantity control Guiding principles Auctions for all major renewable technologies 4/3/2019 | 9

10. Structureof German PV marketMarket forrooftopinstallationsdominates Source: German Solar Association Source: Fraunhofer ISE 4/3/2019 | 10 SLIDECONTENTby dena

11. 2017 amendment introduced auctions also for PV roof-top installations • Ground - mounted installations, • rooftop installations • and installations on other physical structures, e.g. landfills • Small and medium scaleinstallationsunder 750 kWp areexemptedfromauctions. • PV rooftopover 750 kWp: Big rooftopinstallations in directcompetitionwithgroundmountedinstallations. • Noroof top installationsuccesful in theauctionsyet. • Nobigrooftopinstallations in thesegment > 750 kWp aretakingplace – Efficienyoftheinstrumentquestionable SLIDECONTENTby dena 4/3/2019 | 11

12. Specific capacity addition targets make deployment of renewables more plannable Annual capacity addition targets per technology in MW Source: Ecofys based on BMWi 2016 and EEG 2017 4/3/2019 | 12

13. Wind and solar capacities are steadily growing 2018: 52,931 MW 2018: 46,508 MW Source: Ecofys 2018 based on AGEE-Stat 2018, BNetzA 2016, BSW Solar 2017, Deutsche Windguard 2017 2017: 42,394 MW 2018: 6.382 MW 2017: 50,469 MW 2017: 5,407 MW 2011: 188 MW 2011: 25,916 MW 2011: 28,524 MW Number of installations in 2016: 1,690,374 Number of installations in 2016:29,900 Number of installations in 2016:1,238 4/3/2019 | 13

14. Excursion: Latest development EEG 2018: Extra tenders • Withthe EEG 2018 thefederalgovernmentintroducedagreedvolumesof extra tendersforboth PV and wind installationsuntil 2021. • Additional 4 GW fortendersuntil 2021 • Additional 1 GW (2 x 500 MW) in 2020. • All installationsabout 750 kW havetoparticipate in thetendering, also roof-top installations. • In ordertoimprovegridstabilityandsystemintegrationof RE innovationtenderswereintroduced. • Special degressionforsmallerroof-top installations. Source: Ecofys and Edelman.ergo 2018 based on BNetzA 2018 SLIDECONTENTby dena 4/3/2019 | 14

15. Support costs for solar PV declined significantly since the introduction of auctions in 2015 Source: Fh-Ise 2019 March PV tenderpublished March 29: 6,59 (500 MWp) SLIDECONTENTby dena 4/3/2019 | 15

16. Declining module costs in particular have driven down the price of solar PV systems in Germany Share in average price Source: Fraunhofer ISE 2018 Costs for Balance of system (BOS) including inverter Average price (€/kW) Costs of modules Year Average retail price for rooftop systems with an installed capacity of 10-100 kW SLIDECONTENTby dena 4/3/2019 | 16

17. Main incentive? How much is the feed-in tariff for roof top installations currently? Source: German Solar Association Upto 10 kWp Upto 10 kWp Upto 100 kWp • The feed-in tariffmerelyconstitutes a safetynetforinvestors. • Self-consumptionisthemaindriverforroof-top installations SLIDECONTENTby dena 4/3/2019 | 17

18. Other support measures besides Feed-in-tariff for roof-top installations • KfW:State-owned promotional bank • KfW is especially active in promoting energy-efficient housing for owner-occupied houses as well as for landlords, both for new houses and refurbishments. • Instrument:KfW gives low interest loans for investments in installations for renewable electricity production in accordance with the EEG. • Example: The financial support is a long-term and low-interest loan with a fixed interest period of 5 or 10 years including a repayment-free start-up period. SLIDECONTENTby dena 4/3/2019 | 18

19. Landlord to tenant electricity supply modelTenants are to take on a more prominent role • Scope: Adress social dimension of the energy transition; also tenants shall participate in energy transition. • Mieterstrom: Collective self-consumption model. • Definition: electricity that is being generated by a solar installation on the rooftop of a residential building and then passed on to final consumers (which particularly includes tenants) • Incentive: The PV-system operator (often: landlord) receives an additional subsidy for every kWh consumed (sold) to the tenant within the building. • The PV electricity supplied within this model always needs to be 90 % or less of the basic tariff of the local electricity provider. • Verify, if a similar regulation should be adopted in Turkey? SLIDECONTENTby dena 4/3/2019 | 19