ForTheDoers Blog

Energy transition in Germany: A huge modernisation project

Peter Röttgen  ·  11 July 2019

Germany is committed to climate protection. The German “Energiewende” that began 20 years ago is now also an important development factor for the country.

Two decades ago, Germans began the work to turn around the country’s energy system that was based almost fully on fossil and nuclear energy. It was clear from the beginning that renewable energy would be the main tool for decarbonising electricity generation as the public opinion was increasingly negative towards nuclear power.

As often is the case, the beginning was challenging. The installation of the first renewable energy plants were not taken seriously and critics claimed that the electricity grids could only cope with a few percent of fluctuating generation. However, today almost 40% of the electricity supply in Germany is renewable. But the energy transition is not just about electricity generation and building more and more wind and solar plants, it is also about solving questions related to transport, storage and use of energy.

Can Germany be 100% renewable?

The target of a 100% renewable energy system is often cited in public discussions, either to establish a strong target for renewable energy or, vice versa, in order to criticise the energy transition of fundamentalism. Be it either way, there is now enough expertise to show the feasibility of a very high degree of renewable electricity supply. The German government coalition has set a target of 65% renewable energy in the electricity sector by 2030 and the industry is already considering whether to initially target 80% or 95% by 2050, which would lead to a bigger difference in infrastructure planning.

But it's not just about the power market. For the heating sector, especially when it comes to existing buildings, which typically have individual gas or oil boilers the questions of feasibility is less important than the question of affordability as the tools for decarbonising like heat pumps, emission free gas or power-to-heat in district heating are already available. In the transport sector major car manufacturers are already committed to e-mobility and the installation of charging infrastructure is being increasingly promoted. It also remains to be seen whether and to what extent hydrogen-based mobility will be involved.

Is security of supply guaranteed in the future?

The question of ensuring security of supply is crucial in Germany as the country has decided to shut down nuclear power in 2022. In addition, the proposed phase-out of coal power would take place latest by 2038. With regard to security of supply, the needed generation capacities as well as system stability are essential. Data from the to-be-closed power plants, expected energy efficiency measures and consumption of electricity, heat and traffic fuels, on one hand, and the targeted emission reductions, on the other, provide the technical framework for the decarbonised energy system. It is clear that natural gas will become increasingly important and the existing gas infrastructure has to be adapted.

The system development goes hand in hand with interfaces between electricity, gas and heat, so that supply of all sectors as well as their decarbonisation is guaranteed (“sector coupling”). This means that it is much more economic that energy can be used in all sectors than keeping e.g. electricity only in the power sector or paying billions of euros for wasted energy due to grid congestions and curtailment of renewables. In this respect, it is not only a question of expanding the networks but also of new transformation technologies such as Power-to-Gas/X or Power-to-Heat. It allows the conversion of renewable electricity e.g. into emission-free gas or heat, to use in transport as well as multiple usage in industry, private households and mobility. Together with power storage and demand response systems as well as conventional balancing power, they provide additional flexibility and system stability going forward.

Can Germany afford the Energiewende?

Should Germany have stayed with horse breeding more than 100 years ago and refrained from developing the automobile industry? Certainly not, as we saw in the last decades. Also the energy transition in Germany is an extensive and necessary process for modernising energy supply and consumption. Of course this costs money, but it creates a modern infrastructure and not just that. It is about a very large potential of new products in almost all areas of life and correspondingly transformed and new jobs.

The Industrial Union for Mining, Chemical and Energy (IG BCE) has recently presented a package of measures combining climate protection, technological leadership and job prospects. In this respect, it would be necessary also to calculate the costs that would arise if one did not invest in the future.

Thanks to fast technology development and significant cost decrease, today investments in wind and not at least solar are already very interesting.

Clean energy will help Germany prosper

It's all about innovation and it's important for every country to be a part of it. Because a modern energy supply is decisive for the prosperity of a society. This is not only a historically well-documented argument, but today the march of clean energy technology can be seen worldwide. Companies that carry their environmental and social responsibility tend to perform better also financially in the longer term.

It is also clear in specialist circles that the energy transformation will only be successful if a stable regulatory environment is established so that investments can be made in good time. In addition, the legal framework must be adapted to the increasingly regenerative, decentralized and digital system in order to permit the new business models. And, finally, the transition must be extended to other sectors, namely transport, heating and industry, if we want to reach climate neutrality by 2050 in line with the goal of the European Commission.

With the commitment to the Paris Convention, the draft of the National Energy and Climate Plan (NECP) and the prefigured Climate protection law, the political will to reduce emissions is in place and companies that act accordingly are being rewarded. It is clear that Germany has chosen the right path.

peter-röttgen

Peter Röttgen
Vice President, Public Affairs, Germany