Germany on its Way to Paris Recent Developments and Future Strategy - PowerPoint PPT Presentation

Paris, Seminar Energy Policy 06 May, 2015 Germany on its Way to Paris – Recent Developments and Future Strategy of Decarbonizing the German Electricity Sector Christian von Hirschhausen, et al. Berlin University of Technology, Workgroup for Infrastructure Policy (WIP) and DIW Berlin (German Institute for Economic Research) - 0 -

Agenda 1) Introduction and Conceptual Approach 2) A Primer on the “Energiewende” 3) Climate Policies and Instruments 4) Conclusions - 1 -

A European Internal Market? The Context Power Plants and Networks in Europe Water Biomass Hard coal Wind Lignite Diesel Fuel Oil Gas Nuclear Furnace gas Oil shale Synthetic gas Source: Schneider, Kuhs (2013) Kennedy-School, Lunchtime Seminar Energy Policy - 2 - Christian von Hirschhausen 05 November, 2012

Model: Elmod Szenarienrechnungen zur Kapazitätssituation und Redispatchbedarf in Deutschland basierend auf dem Netzentwicklungsplan 2013: Szenario NEP 2023 • offizielle Darstellung des Netzentwicklungsplans 2013 • angenommener Zubau von Erzeugungskapazitäten • Netzausbau für 2023; Szenario NEP 2023 verzögert • Angekündigte Rückbauten von Kraftwerkskapazitäten erfolgen • Netzausbau verzögert sich; nur Startnetz und HGÜ zwischen Nord- und Süddeutschland (Korridor C) in Betrieb - 3 -

ELMOD: Mathematical Representation (Leuthold, Weigt, von Hirschhausen, 2012) Preis Objective A Angebot n,t node, hour E p E g n generation in n * q n , t � � d n demand in n � � � � � Nachfrage max W p ( q ) d q c ( g ) g p(d n ) demand function in n B n , t n , t n , t n , t x E n , t n , t c(g n ) generation costs in n Menge 0 Constraints Line capacities � max P P P i,t load flow on line i i , t i Energy balance PSPup pump storage hydro (storage) PSPdown pump storage hydro (generation) � � � � � � down up windtinput from wind energy g wi PSP PSP q ni 0 n , t n , t n , t n , t n , t n , t ni netinput Generation capacities � � � � min max on g g on g on binary generation plant variable n , t n n , t n , t n - 4 -

Policentric Approach (~ multi-level governance), according to Ostrom, et al. Level Climate targets ~ competition vs. „planning“ (droit) Global 2°C-Ziel / JI/ COP 20/21 CDM CO2- IED-Richtlinie Carbon tax EU (Schwermetalle Floor 20-20-20; ETS: etc.) Price 2030; - Backloading Flexibilitäts- 2050 - Market Stability anforderungen / Mindest- Reserve Ausgestaltung wirkungsgrade Kapazitätsmarkt Germany BReg*: Kohle- EPS ‘20: -40% förderung Steinkohle- - Spezifisch vs. ‘30: -55% KfW Union Jahresmengen - ‘50: -95% nur neue vs. alte Klimaschutz Raumplanung/ & neue KW plan (BMUB) Tagebaue Kohle- *) ggü. 1990 Ausstiegs- Netzausbau Federal states gesetz NRW*: 2020: -25% | 2050: -80% BB*: 2020: -40% | 2050: -95% *) ggü. 1990 BY: Energiekonzept, 2023, 2050 Communities Energy Vattenfall: -30% (2010 � 2020) Industry - 6 -

Agenda 1) Introduction and Conceptual Approach 2) A Primer on the “Energiewende” 3) Climate Policies and Instruments 4) Conclusions - 7 -

The true energiewende: March, 14, 2011 onwards Klaus Töpfer environmental Minister; Renewables 1991 Law (StromEinspG) Jan. 1991 Chancellor Gerhard Schröder (SPD) and E.on CEO Ulrich 1986/2001 Hartmann (l.) agree on nuclear phase-out (June 2001) Chancellor Angela Merkel (CDU) declares moratorium on nuclear 2011 power (March 14, 2011) - 8 -

The energiewende is the German version of a low-carbon energy system transformation Reduction Share of Renewable Reduction Reduction of Energy Demand of nuclear Energy GHG- energy Emissions Gross final Electricity Primary Domestic Final Electricity energy Productio Energy Heat Energy Demand n Transport 2015 -47% 2017 -56% 2019 -60% 2020 18% 35% -40% -20% -20% -10% -10% 2021 -80% 2022 -100% 2025 40-45% 30% 50% -55% 2030 55-60% 2035 2040 45% 65% -70% -80% bis 2050 60% 80% -50% -80% -40% -25% 95% Basis 2010 - - 1990 2008 2008 2005 2008 - 9 - Source: Own Depiction based on BReg (2010, 2011, 2013)

Energy Mix in Germany: Coal – Nuclear – Renewables (Generation in Germany to 2020/2022; Focus on the South) Renewables in Germany 12/2011: Brunsbüttel Brunsbüttel I + II Brockdorf Krümmel Wilhelmshafen Moorburg I + II Unterweser Solar: 24,6 GW Wind: 28,4 GW GK Bremen Emsland Lichterfelde A Klingenberg Hamm - D/E Walsum -10 Lünen - Stummhafen Grohnde Lausward Krefeld/Uerdingen Neurath BoA II+III Boxberg - R Knapsack II Grafenrheinfeld Staudinger – 6 Biblis A + B Philippsburg 2 GKM 9 Neckarwestheim II Isar 1 Philippsburg -1 Neckarwestheim I RDK 8 Isar2 Grundremmingen B Grundremmingen C - 10 -

Nuclear Phasing Out “A” (the March, 2011-Moratorium) (source: Matthes, 2012, p. 45) Source: Matthes (2012, p. 45) - 11 -

Modes Price Increases to 2025 (resource prices dominate) 125 -75 -25 25 75 1 145 289 433 577 721 865 1009 1153 1297 1441 1585 1729 1873 2017 2161 2305 2449 2593 2737 2881 3025 3169 3313 3457 3601 2025 3745 3889 - 12 - 4033 4177 4321 2025 Gas CO2 4465 4609 4753 4897 5041 5185 5329 5473 5617 5761 5905 6049 6193 6337 6481 6625 6769 6913 7057 7201 7345 7489 7633 7777 7921 8065 8209 8353 8497 8641

but: high level of CO2-Emissions 120.000 100.000 80.000 60.000 2025 2025 GasCO2 40.000 20.000 0 Coal Gas Lignite Oil Waste DE - 13 -

Renewables Targets and Policies (Egerer and Schill, 2012) - 14 -

From „Base/Mid/Peak-Load“ to „Residual Load“: Load Duration Curves in Germany 2011/2022/2033 (Egerer and Schill, 2012) - 15 -

National Model Results 2033: Wind Intense Week (November Week 49) (November 2011 RES distribution, calculations by Jonas Egerer) - 16 -

National Model Results 2033: PV Intense Week (May W. 19) (May 2011 RES distribution) - 17 -

What Market Design? Capacity instruments are, for the time being, purely national, Germany already has one (~ 4 GW today, 6.5 GW by 2018/19) UK-EMR: Capacity instrument D: Strategic reserve - 18 -

Agenda 1) Introduction and Conceptual Approach 2) A Primer on the “Energiewende” 3) Climate Policies and Instruments 4) Conclusions - 19 -

Phasing-out Coal is Economically „Efficient“: The social costs of lignite, including externalities, are way above the revenue! 12 10 Costs / Price [ct/kWh] 8 6 4 2 0 Wholesale price (2014) FÖS (2012) AEE (2011) DIW Berlin & Fh-ISI (2010) External costs of lignite according to different studies compared to the current electricity price in Germany - 20 -

Climate Objectives have a Long History in Germany 1990: Chancellor Helmut Kohl: -25% by 2005 � Goal not reached (17.8%, update by red-green gov‘t (Schroeder/Fischer) in 2000L addtional 70 Mio. t by 2005 1997: Chancellor Helmut Kohl: (Kyoto – EU internal allocation): -21% by 2012 � Goal obtained (by 2007 already) 2007: Big coalition (Merkel, Environment: Gabriel): - 40% to 2020 � Goal maintained in 2014, but difficult to reach 2010: CDU-FDP (Merkel, Environment: Roettgen): -80-95% by 2050 � - 21 -

GHG Targets and Coal Phasing Out Germany‘s national GHG reduction target implies further measures 1.400 Non-ETS-Sector GHG Emissions in Megatons CO 2 equiv. EU-ETS 1.200 Trend of the last years: Coal_Non_ETS emissions going up! 1.000 Coal_ETS 2020 Ziel*: - 40% Lignite_Non_ETS 800 2030 target*: Lignite_ETS - 55% 600 2050 target*: - 80-95% 400 200 0 *) Base line: 1990 Source: Oei, et al.(2014). - 22 -

Proposal Ministry for the Environment (June 2014) 600 500 400 projection range 300 CO2-emissions in mt 200 100 0 Energy 2012 Energy 2020 Others 2012 Others 2020 - 23 -

CCTS ??? Pilot Plant in Jänschwalde is being cancelled on 5.12.2011 - 26 -

Development of the CCTS Projects since 2011 cancelled. ? delayed ? ? ? ? ? ? ? ? ? ? - 27 - Source: Own depiction based on GCI (2011, 2013) and MIT (2014).

The Failure of CCTS „CO 2 sequestration „It‘s doubtable that not relevant for [CCS] will come into Hürth Mongstad 9 cancelled energy transition“ action in Germany. [...] (De, RWE) (Norway) projects in 2 years 08.12.2010 29.10.2011 14.07.2012 20.09.2013 22.10.2013 27.01.2014 19.10.2011 05.12.2011 18.12.2012 14.10.2013 Longannet Jänschwalde No EU-funding No CO 2 -priority Schleswig-Holstein (UK, 1 Milliarde £) (De, Vattenfall) through NER-300 infrastructure (De) forbids CO 2 - projects storage Source: Own illustration based on Tagesspiegel (2010), BBC (2011), Märkische Rundschau (2011), Vattenfall (2011), Bundesregierung (2012), EC (2012), Bellona (2013), EC (2013), GCI (2013), EUWID (2014). - 28 -

there is no future for lignite neither coal power plants in Germany Andere TWh 700 Photovoltaik 600 Biomasse 500 Wasserkraft 400 Windkraft 300 Mineralöl 200 Kernenergie Erdgas 100 Braunkohlen 0 Steinkohlen Jahr Source: AG Energiebilanzen 2012, BMU, 2011 - 29 -