Energy of the future: Transforming Germany’s energy system

Ensuring a reliable, economically viable and environment-friendly energy supply is one of the great challenges of the 21st century. In 2011 Germany embarked on an ambitious programme to transform its energy system. In future, Germany's energy supply will be generated primarily from renewables.

by the German Embassy in Britain

Ensuring a reliable, economically viable and environment-friendly energy supply is one of the great challenges of the 21st century. In 2011 Germany embarked on an ambitious programme to transform its energy system. In future, Germany’s energy supply will be generated primarily from renewables.

This new policy was triggered by the nuclear disaster in Fukushima, which led to a reassessment of the risk of nuclear power and the decision to phase it out by the end of 2022.

The need to reduce greenhouse gas emissions to combat climate change meant that the only way forward was an expansion of renewable energy sources and greater energy efficiency. Germany set itself two targets: a 50 per cent reduction in primary energy consumption by the year 2050 compared with 2008, and a share of renewables in final energy consumption of 60 per cent by 2050. For electricity generation, the share of renewables is to rise from 20 per cent in 2011 to at least 80 per cent by 2050 .

Germany’s decision provides a unique opportunity to show how competitiveness can be combined with sustainable development in a leading industrial nation.

The main tools of this transformation are economic incentives set by the government. The Renewable Energy Sources Act guarantees priority access to the grid to providers of renewable electricity at a long-term fixed tariff. The costs are divided among all consumers through a surcharge. To keep the costs of this surcharge – and thus energy costs – affordable, the support will regularly decrease for new installations to take account of market developments and technological progress.

The aim is that eventually no support will be necessary because renewable technology is firmly established on the market. Concessions are granted to energy-intensive industries in order to maintain their competitiveness.

In addition, the German government has launched a wide range of initiatives to enhance energy savings and promote more efficient use of energy.

Expansion and modernisation of the electricity grids is the most important factor in ensuring greater penetration of renewable electricity production. An estimated 2,800 miles of new electricity highways will be needed by 2020 to transport large volumes of wind-generated electricity from the north of Germany to the economic centres in the west and south. The scale of the challenge is comparable with the infrastructure development gap following German reunification.

In spite of these challenges, the results of the new policy are encouraging. Renewables are playing a rapidly increasing role in energy supply. Energy consumption is falling, in spite of a growing economy. A reliable electricity supply is being provided despite the shutdown of eight nuclear power plants.

One challenge that remains is the burden of rising energy prices. The renewables surcharge raises costs for end users. Greater volumes of electricity generation from renewables exert downward pressure on wholesale prices, but lead to higher surcharges because of the fixed feed-in tariff.

Further adjustments to the incentive system for producers of renewables will be necessary. Further progress in energy efficiency will be needed to offset price increases. Ultimately, the costs must be seen alongside the savings resulting from the lower consumption of fossil fuels.

As well as meeting ecological and climate policy needs, Germany’s new energy policy is also a strategy for economic growth. Renewable energies, energy efficiency and resource-saving technologies create supply security, jobs and value added.

Germany wants to demonstrate that a major industrialised country can move away from nuclear power, decouple growth from resource consumption, increase efficiency – and be the more prosperous for it.

Analysis published today by the independent Committee on Climate Change shows that every family in Britain could save at least £1,131 and as much as £4,525 if the government adopted a target to decarbonise the power sector by 2030. This piece was also cross-posted at Greenpeace.

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