Renewable energy policy

in Germany and the European Union

Dr. Martin Schöpe

German Federal Ministry for the Environment,

Nature Conservation and Nuclear Safety

JREF Conference,

Tokyo, 9th March 2012

EU Energy Import Dependency

Import dependency in EU-25 according to a business as usual case

18

81

48 45

48

29 31

76

50 47

50

30

46

84

63

55 57

44

50

93

81

64 65

52

59

94

85

65 67

54

0

10

20

30

40

50

60

70

80

90

100

Solid fuels Liquid fuels Natural gas Total

Source: PRIMES 2008

%

1990 2000 2010 2020 2030

2004

PV production capacity

2010

$1.52

2014

$1.05

1979

1992 1998

2002

2004

2011

$1.3-1.5

2015

$1.08

$0.10

$1.00

$10.00

$100.00

1 10 100 1,000 10,000 100,000 1,000,000

Welt

weit

erl

Mo

du

ldu

rch

sch

nit

tsp

reis

(2010$U

S/W

p)

Cumulative Production Volume (MW)

- Kristallin

- Dünnfilm

Poli-Si-knappheit

Source: Mints, Navigant, Bloomberg NEF, First Solar, NREL PV cost

Model

22% cost reduction with every doubling of capacity

Source: REN21 (2011)

Global Renewable Energy Investment Flows

Top 5 Countries for

Renewable Energy

Investment (2010)

1. China ($50 billion)

2. Germany ($41 billion)

3. USA ($30 billion)

4. Italy ($14 billion)

5. Brazil ($7 billion)

6

Climate Renewable

energies

Efficiency

Greenhous

e gases

(vs. 1990)

Share

of

elec.

Overall

share

Primar

y

energy

cons.

Energy

produc-

tivity

Building

moderni-

sation

2020 - 40% 35% 18% - 20%

Increase

to

2.1%/a

Double

the rate

1% -> 2%

2030 - 55% 50% 30%

2040 - 70% 65% 45%

2050 - 80-95% 80% 60% - 50%

(Gross final

energy cons.)

German Climate and Energy Goals

7

Phase out of Nuclear Energy

7 oldest plants + Krümmel:

Immediate decommissioning

Gradual phasing out of

nuclear power by 2022

Shutdown years:

2015, 2017, 2019, 2021, 2022

Source: UBA

Source: EEX (phelix)

Price for whole sale electricity

at the Energy Exchange

Source: EEX

Electricity imports/exports of Germany

Import from … Export to … Import from …

In 2011:

Net export

(3,7 TWh)

Merit Order Curve in France

0

20

40

60

80

100

120

140

0 10 20 30 40 50 60 70 80 90 100

Ku

rzfr

isti

ge v

ar. K

ost

en [€/

MW

h]

kumulierte Kapazität [GW]

Merit Order Curve 2009

Uran Steinkohle Erdgas Heizöl Speicherkraftwerk Pumpspeicher

Nuclear (Uranium)

Hard coal Gas

Hydro

Oil

0%

10%

20%

30%

40%

50%

60%

70%

80%

Au

str

ia

Be

lgiu

m

Bu

lga

ria

Cypru

s

Czech

Re

pu

blic

Den

ma

rk

Esto

nia

Fin

lan

d

Fra

nce

Ge

rma

ny

Gre

ece

Hun

ga

ry

Irela

nd

Ita

ly

La

tvia

Lith

ua

nia

Lu

xe

mb

ou

rg

Ma

lta

Neth

erla

nd

s

Po

lan

d

Po

rtug

al

Rom

an

ia

Slo

va

kia

Slo

ve

nia

Sp

ain

Sw

ed

en

Unite

d K

ing

do

m

EU

27

RE

S in

te

rms o

f fin

al e

ne

rgy [

% o

f d

em

an

d]

RES share 2005

RES potential 2020 - share on current (2005) demand

RES target for 2020

EU-wide RE targets for 2020 …

EU RE policies

Current status of renewables in Germany

Renewable energy sources as a share of energy

consumption in Germany

3.8

9.4

2.9

0.4

3.9

6.4

10.2

5.8

17.1

11.3

18.0 1)

minimum 35.0 1)

14.0 1)

10.0 1,2)

0

5

10

15

20

25

30

35

40

Share of RES in total final

energy consumption

(electricity, heat, fuels)

Share of RES in total gross

electricity consumption

Share of RES in total

energy consumption for

heat

Share of RES in fuel

consumption for road traffic

in transport sector (2)

Share of RES in total

primary energy

consumption (3)

Sh

are

in

[%

]

2000 2002 2004 2006 2007

2008 2009 2010 2020

1) Sources: Targets of the German Government, Renewable Energy Sources Act (EEG); Renewable Energy Sources Heat Act (EEWärmeG), EU-Directive 2009/28/EC;

2) Total consumption of engine fuels, excluding fuel in air traffic; 3) Calculated using efficiency method; Source: Working Group on Energy Balances e.V. (AGEB); RES: Renewable Energy Sources;

Source: BMU-KI III 1 according to Working Group on Renewable Energy-Statistics (AGEE-Stat); image: BMU / Brigitte Hiss; as at: December 2011; all figures provisional

Targets:

Gross final energy

consumption

Transport

sector

The Renewable Energy Sources Act (EEG)

Cornerstones of the EEG („FIT“)

Garanteed access for RE to the power grid

Priority transmission and distribution

Fixed price („tariff“) for every kWh produced for 20 years.

Tariffs are set technology-specific and specific with regard to further provisions (e.g. site, system services, ...)

Annual degression of the tariffs due to technical development

Equalisation of additional costs for electricity from RE between all grid operators and electricity suppliers (2011: about 3,5 ct/kWh); independence from public budget.

Regular monitoring and evaluation process, comprehensive accompanying research and analysis.

Electricity Prices for Households

EEG-costs (2011): 3,53 ct/kwh

PV support and system costs

Source: IEA-Solar Energy Perspectives/BNEF 2011.

The need for flexible

policy reaction while

keeping a transparent

framework

Keeping

investors‘ confidence while

adapting to market

development

Managing support costs

while keeping economic

momentum

EEG 2012

Newly added

capacity in 2011

Degression for

the

year 2012 < 30 kW

> 30

kW

> 100

kW > 1 MW

2.500- 3.500 MW 9 % (basic

degression) 26,15 24,87 23,53 19,62

3.501-4.500 MW 12 % (9+3) 25,29 24,05 22,76 18,97

4.501- 5.500 MW 15 % (9+6) 24,43 23,23 21,98 18,33

5.501-6.500 MW 18 % (9+9) 23,57 22,41 21,21 17,68

6.501- 7.500 MW 21 % (9+12) 22,70 21,59 20,43 17,03

> 7.500 MW 24 % (9+15) 21,84 20,77 19,65 16,39

PV tariffs (as of 1st January 2012, ct/kwh)

EEG 2012 – new proposal currently under discussion

2010

PV production capacity

Polysilicon 0.16 0.12

Wafer 0.20 0.16

Cell 0.16 0.14

Modul 0.29

0.23

Manufacturing and Profit

0.46

0.35

Trade and Transport 0.10

0.07

Support frame and Installation

0.70

0.60

Converter 0,22

0.16

Manufacturing and Profit 0,13

0.10

0

0.5

1

1.5

2

2.5

3

2011 2013

1,93 €/W

2,42 €/W

Cost composition of a PV system

Power production yesterday

Wind energy

PV energy

22

Employment in the German RE sector

Jobs in the renewable energy sources sector in Germany

3,400

9,500

56,800

63,900

4,500

8,100

119,500

85,700

6,500

14,500

7,800

102,100

7,500

13,300

7,600

120,900

122,000

96,100

1,800

25,100

10,300

49,200

80,600

128,000

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000

Geothermal

energy

Hydropower

Solar energy

Biomass

Wind energy

Increase: approx. 129 %

Figures for 2009 and 2010 are provisional estimate; deviations in totals are due to rounding;

Source: O’Sullivan/Edler/van Mark/Nieder/Lehr: "Bruttobeschäftigung durch erneuerbare Energien im Jahr 20010 – eine erste Abschätzung", as at: March 2011; interim report of research project „Kurz-

und langfristige Auswirkungen des Ausbaus erneuerbarer Energien auf den deutschen Arbeitsmarkt“; image: BMU / Christoph Busse / transit

Publicly funded

research /

administration 2004 2007 2009 2010

160,500

jobs

277,300

jobs

367,400

jobs

339,500

jobs

Investments in the German RE sector

Investments in the construction of renewable energy

installations in Germany 2010

8.8

10.6

12.5

16.8

20.0

27.9

13.7

25.0

16.5

12.8

6.8

8.4

10.9

9.2

0

5

10

15

20

25

30

2004 2005 2006 2007 2008 2009 2010

Inv

es

tme

nts

[B

ill.

Eu

ro]

Investments in RES

Investments in the electricity sector (RES)

Source: BMU-KI III 1 according to the Centre for Solar Energy and Hydrogen Research Baden-Wuerttemberg (ZSW); Years 2004 and 2005 estimated;

image: BMU / Dieter Böhme; as at: December 2011; all figures provisional

25

Thank you for your attention!

More Information:

www.bmu.de/english www.erneuerbare-energien.de/english

Appendix

PV Development in Germany

-

5

10

15

20

25

30

35

40

45

50

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Ja

n

Ap

r

Ju

l

Oct

Ja

n

Ap

r

Ju

l

Oct

Ja

n

Ap

r

Ju

l

Oct

Ja

n

2009 2010 2011 2012

Deployment [MW] System cost [EUR/kW] FIT [ct/kWh], right axis

Share of Renewable Energy in

Electricity Generation in Germany 2011

Electricity

Contribution of renewable energy sources to electricity

supply in Germany

0

20,000

40,000

60,000

80,000

100,000

120,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

[GW

h]

Hydropower Wind energy

Biomass * Photovoltaics

* Solid and liquid biomass, biogas, sewage and landfill gas, biogenic share of waste; electricity from geothermal energy not presented due to negligible quantities produced; 1 GWh = 1 Mill. kWh;

StromEinspG: Act on the Sale of Electricity to the Grid; BauGB: Construction Code; EEG: Renewable Energy Sources Act;

Source: BMU-KI III 1 according to Working Group on Renewable Energy-Statistics (AGEE-Stat); image: BMU / Christoph Edelhoff; as at: December 2011; all figures provisional

StromEinspG:

January 1991 - March 2000

Amendment to BauGB:

November 1997

EEG:

April 2000

EEG:

January 2009

EEG:

August 2004

Structure of electricity supply from renewable energy

sources in Germany 2010

Hydropower:

20.1 %

Wind energy:

36.2 %

Photovoltaics:

11.2 %

Biogenic solid fuels:

10.7 %

Biogenic liquid fuels:

1.6 %

Biogas:

13.9 %

Sewage gas:

1.1 %

Landfill gas:

0.6 %

Biogenic share of

waste:

4.6 %

* Solid and liquid biomass, biogas, sewage and landfill gas, biogenic share of waste; electricity from geothermal energy not presented due to negligible quantities produced; deviations in the totals are

due to rounding; 1 TWh = 1 Bill. kWh; Source: BMU-KI III 1 according to Working Group on Renewable Energy-Statistics (AGEE-Stat); as at: December 2011; all figures provisional

Share of biomass *: 32.5 %

Total: 104.3 TWh

In 2011 ~ 20% of electricity from renewable energy sources

Total Greenhouse-Gas (CO2 equiv.) avoidance via the use of

renewable energy sources in Germany 2010

16.6 27.8

37.9

22.9 7.9

0.5

1.2

5.0

0 10 20 30 40 50 60 70 80

Biofuels

Heat

Electricity

GHG avoidance [million t CO2 equiv.]

Hydropower Wind energy Biomass Photovoltaics Geothermal energy Solar thermal energy Biofuels

75.3 million t

5.0 million t

39.6 million t

Total: approx. 120 million t CO2

equiv., of which approx.

57 million t CO2 equiv. through

electricity paid for under the EEG

GHG: Greenhouse-Gas; deviations in the totals are due to rounding; geothermal energy not presented due to negligible quantities of electricity produced;

Source: UBA according to Working Group on Renewable Energy-Statistics (AGEE-Stat); image: H.G. Oed; as at: December 2011; all figures provisional

Total Greenhouse-Gas (CO2 equiv.) avoidance via the use of

renewable energy sources in Germany 2010

16.6 27.8

37.9

22.9 7.9

0.5

1.2

5.0

0 10 20 30 40 50 60 70 80

Biofuels

Heat

Electricity

GHG avoidance [million t CO2 equiv.]

Hydropower Wind energy Biomass Photovoltaics Geothermal energy Solar thermal energy Biofuels

75.3 million t

5.0 million t

39.6 million t

Total: approx. 120 million t CO2

equiv., of which approx.

57 million t CO2 equiv. through

electricity paid for under the EEG

GHG: Greenhouse-Gas; deviations in the totals are due to rounding; geothermal energy not presented due to negligible quantities of electricity produced;

Source: UBA according to Working Group on Renewable Energy-Statistics (AGEE-Stat); image: H.G. Oed; as at: December 2011; all figures provisional

Policy Costs, EU-27:

Remuneration ranges (average to maximum remuneration) for Wind Onshore in the EU-27 MS in 2011 (average

tariffs are indicative) compared to the long-term marginal generation costs (minimum to average costs)

Gross Electricity Production in Germany, according to source:

Renewable Energy in the EU, 2008 and 2020 Goals:

Breadth of the Feed-In Tariff Scheme (EEG)

for Electricity, according to source from 2000 to 2021:

EU Renewable Share of New Installed Capacity:

Merit Order Effect:

Energiewende

Contribution of renewable energy sources to electricity

supply in Germany

0

20,000

40,000

60,000

80,000

100,000

120,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

[GW

h]

Hydropower Wind energy

Biomass * Photovoltaics

* Solid and liquid biomass, biogas, sewage and landfill gas, biogenic share of waste; electricity from geothermal energy not presented due to negligible quantities produced; 1 GWh = 1 Mill. kWh;

StromEinspG: Act on the Sale of Electricity to the Grid; BauGB: Construction Code; EEG: Renewable Energy Sources Act;

Source: BMU-KI III 1 according to Working Group on Renewable Energy-Statistics (AGEE-Stat); image: BMU / Christoph Edelhoff; as at: July 2011; all figures provisional

StromEinspG:

January 1991 - March 2000

Amendment to BauGB:

November 1997

EEG:

April 2000

EEG:

January 2009

EEG:

August 2004

0%

10%

20%

30%

40%

50%

60%

70%

80%

Au

str

ia

Be

lgiu

m

Bu

lga

ria

Cypru

s

Czech

Re

pu

blic

Den

ma

rk

Esto

nia

Fin

lan

d

Fra

nce

Ge

rma

ny

Gre

ece

Hun

ga

ry

Irela

nd

Ita

ly

La

tvia

Lith

ua

nia

Lu

xe

mb

ou

rg

Ma

lta

Neth

erla

nd

s

Po

lan

d

Po

rtug

al

Rom

an

ia

Slo

va

kia

Slo

ve

nia

Sp

ain

Sw

ed

en

Unite

d K

ing

do

m

EU

27

RE

S in

te

rms o

f fin

al e

ne

rgy [

% o

f d

em

an

d]

RES share 2005

RES potential 2020 - share on current (2005) demand

RES target for 2020

Renewable Energy in the EU: Targets

Source: IRENA, IEA

Global Energy Subsidies, 2007-2010

Worldwide Subsidies for Fossil Fuels and Renewables (in Billion US$)

Fossil Fuels

Renewables

0

100

200

300

400

500

600

2007 2008 2009 2010

Mld

US$

Source: Bloomberg NEF Feb. 2011

Onshore Wind Cost Reductions, 1984 – present:

Influenced

by material

costs

Next doubling

200 GW/4 Years?