Experiences with Renewable Energy in Germany

Insights on Cost and the Renewables Grid Initiative

Berlin, 13.03.2014

DANIEL FÜRSTENWERTH

Agora Energiewende – an Overview

> Thinktank based in Berlin

> Mission: How to make the

German Energiewende

a success story?

> Dialogue and

scientific expertise

Paris, 14.05.2013 | Daniel Fürstenwerth 2

> A project by the Mercator Foundation and European Climate Foundation

> Financing: 2012-2017

> Independent and non-partisan

Renewables Grid Initiative

and lessons learned from grid planning in Germany

Electricity grids are needed to connect

power producers with consumers and

interconnect systems

The new challenge:

• New types of power

production

• European Dimension

Renewable Grid Initiative brings together

NGOs and TSOs that share a common

goal: to integrate Renewables

“We want a grid built in time and in line with environmental

objectives and with people’s concerns”

Focus of NGOs:

„We need renewable

energies and for this the grid

– whithout negative impact

on nature and people“

„We need to ensure

security of supply – and

build power grids without

delay“

Focus of TSOs:

Source: RGI

Focus of RGI work has developed from

European to project level

European Grid Declaration: Finding a common language and

setting basic principles

Best practice project: Sharing experience and knowledge on

what has been implemented

BESTGRID: Testing better practices and cooperating at

project level

Source: RGI

Old World:

“[Exageration] People get

involved when the grid is

build in 6 months in 500m

proximity of their home”

Grid planing follows 4 steps – involvement

of civil society must change

How will the

power system

look like?

Grid planning

Decision by

Government/

Regulator

Building

Grid

New World:

“People get involved in the

entire planning process – via

trusted representatives or

themselves”

German Energiewende –

Cost optimized expansion of renewable energy in

Germany (results of a study by Agora Energiewende)

The Key Insight for the Energiewende:

„It‘s all About Wind and Solar“

9

0

100

200

300

400

500

1990 2000 2010 2020* 2030*

PV Wind offshoreWind onshore Biomass and BiogasOther Renewables Hydro Power

* Forecast by German regulator Bundesnetzagentur

7% 25% 40-45% 55-60% % Renewables

RES-Power Generation in Germany, TWh

INSIGHTS FROM GERMANY'S ENERGIEWENDE

2013 2025 2035

Two key questions for the Energiewende

that had so far not been adressed

10

• What mix and location of wind and

PV is cost-optimal?

• Ressource-driven optimization

• Consumption-driven

optimization

• What is the impact of a delay in grid

expansion?

Analysis conducted by

Erneuerbare Erzeugung und Strombedarf, 2022, Meteo-Jahr 2011, 2. Kalenderwoche

Wochentag

Leis

tung (

GW

)

Mo Di Mi Do Fr Sa So 0

10

20

30

40

50

60

70

80

90

100Biomasse Grundlast

Biomasse wärmegeführt

Biogas flexibel

Biomethan flexibel

Wasserkraft

Onshore-Wind

Offshore-Wind

Photovoltaik

konv. Kraftwerke

Strombedarf

ohne Bahnstrom und Arealnetze

Im Auftrag von

Datenquellen: ENTSO-E, DWD, SODA

Regional distribution of wind and photovoltaic has little impact

on the total cost of power supply.

Expanding wind offshore in a reasonable speed is important to

keep total cost low

Expansion of transmission grids are required in Germany but

expansion of renewables does not have to wait

A strong focus on battery storage systems combined with

photovoltaic is currently not desirable

1.

2.

3.

4.

Agora Energiewende investigated effects

of different renewable energy expansion

path in Germany until 2033

Regional distribution of wind and

photovoltaic has little impact on the total

cost of power supply

Analysis of expansion paths

in Germany until 2033

Ressource driven:

- Wind focused on the north

- 85 GW wind power to

produce 120 TWh

Consumption driven:

- Wind distributed across

all of Germany

- 89 GW wind power to

produce 120 TWh

Results show

two effects on total cost

- Less capacity required and

lower hub-heights of turbines

700 mio EUR lower

investment costs

- Feed-in more balanced in

time and location

300 - 600 mio EUR lower

cost for residual generation

Resulting effect on total

system cost: ~0,5%

1.

40

50% gridsplanned by TSOs

100% gridsplanned by TSOs

Benefits of Grid Expansion in 2030, Bn EUR

Results of recent analysis of EU

Commission (DG Energy): Economic

benefit of building all grids planned by

TSOs is highly questionable

3.

• Cost of PV+battery systems would need to be reduced by ~80% in order to make a

power system based on PV+Battery economicaly efficient from a system perspective

• From a individual perspective, PV+Battery systems can be profitable today due to

savings in taxes, grid fees and other levies

4.

A strong focus on battery storage systems

combined with photovoltaic is currently not

desirable

2013 2023 2033

- 80%

Battery storage (2 kW, 6 kWh)

PV-Modul (4 kW Aufdachanlage)

~ 11.000

~ 2.000

Cost reduction required for a typical PV+battery system until 2033, in EUR

German Energiewende –

Cost of Power Generation Technologies

Cost of renewables 1:

The old world (2000-2009)

17

Feed-in Tarifs per technology in ct/kWh

Source: BDEW, own calculations

Prices for PV have reduced dramatically in

recent years

18

Feed-in Tarifs per technology in ct/kWh

-80%

Source: BDEW, own calculations

Cost of renewables 3:

Today and in the future

19

Feed-in Tarifs per technology in ct/kWh

Values >2018:

Rough Estimates

Source: BDEW, rough illustrative assumptions on future developments

0

5

10

15

20

25

0 1 2 3 4 5 6 7 8 9 10Remuneration in ct/kWh

Power Generation in TWh

EEG-Remuneration for new installations in 2015

The key idea of the current reform of the

EEG: to focus further renewable expansion

on the most cost-effective technologies

20

Biomass*

Wind offshore

PV

Average depends on mix

of renewable

technologies

Wind onshore

Thank you for your attention!

…open discussion

21

New Wind and Solar Power is not more

expensive than new conventional power plants

22

New Wind and Solar Today are Competitive

with new Gas- and Coal Power Plants

23

109

72

57

106

76

104 106

0

50

100

150

NewNuclear

(UK, 2023)

Solar(Germany,

2013)

Windonshore

(Germany,2013)

Windoffshore

(UK, 2018)

Gas CCGT(UK, 2018)

Hard Coal(UK, 2018)

CSSCoal/Gas

(UK, 2018)

Feed-in Tariff*,

in EURreal 2013/MWh

109

*Averages over 35 years; UK FiT converted to EUR, German FiT converted from nominal to real values 2013 (2% inflation), assuming a

new wind/PV plant is built in 2033 for FiT of today; ranges represent different quality of wind sites/ different size of solar PV installation

**Source: DECC, Electricity Generation Costs, Oct 2012

-35% -50%

LCOE**,

in EURreal 2013/MWh

A combination of Wind onshore + Solar + Gas would cost ~70 EUR/MWh

Other European countries have similar, some even better

conditions for Wind and PV power production

24

Quality of Wind Quality of Solar

What did we learn?

How will the power

system look like? Grid planning

Decision by

Government/

Regulator

Building

Grid

• Don‘t focus on the last peak of renewable production

(would we do that for highways?)

• Production closer to demand requires less grids

• A paradigm change in grid planing is required:

Build grids to reduce total system cost

26

Coalition treaty introduces a

„corridor“ for renewable expansion

that confirms existing targets

Renewable Expansion Targets

0

10

20

30

40

50

60

70

80

90

100

2013 2020 2025 2030 2035

%

Coalition treaty (CDU/CSU/SPD)

B90/Die Grünen

Current law (EEG)

Target 2025:

40-45%

Target 2035:

55-60%

Offshore:

2020: 6,5 GW (10)

2030: 15 GW (25)

Biomass:

Focus on waste

& residues

Cost for New Wind and Solar Today are

35-50% Lower than Cost of New Nuclear

27

New Nuclear(UK, 2023)

Solar(Germany, 2013)

Wind onshore(Germany, 2013)

-35%

Feed-in Tariff, in EURreal 2013/MWh

109

Conservative comparison:

• Wind and Solar

build in 2013

(current German law)

• Assuming no further cost

reductions

-50%

Averages over 35 years; UK FiT converted to EUR, German FiT converted from nominal to real values 2013 (2% inflation), assuming a

new wind/PV plant is built in 2033 for FiT of today; ranges represent different quality of wind sites/ different size of solar PV installation

72

57

0

5

10

15

20

Price(ct/kWh)

Power Generation

(TWh)

EEG

1.0

150

Capa-

city

mecha-

nism

Energy-Only-Market for

residual generation

390

EEG

2.0

35% Renewables 600

60

65% Non-renewable

Illustrative

Ensure further renewable

expansion cost efficiently 1

Ensure security of supply

cost efficiently 2

Two key challenges for the Energiewende

in the coming years

Remuneration of power generation in Germany in 2020

Wind power technology today alows to produce wind in

sites not even considered before

Wind Turbines today 40 times more powerful than 20 years ago

29

Investments in Renewable Energy (as well

as Nuclear) are impossible when they are

linked to electricity market prices

30

Two possible electricity price worlds for 2015-2045

Wind and Solar will also dominate the

Future of Europe‘s Energy System

31

RES-Power Generation in Europe*, TWh

*Decarbonisation Scenarios of the European Commission‘s Energy Roadmap 2050: http://ec.europa.eu/energy/energy2020/roadmap

**incl. small shares of CSP, tidal etc. that are not separately published in EU Energy Roadmap

2005 2050 Scenario:High RES

0

1000

2000

3000

4000

5000

PV

Wind

Other RES

Hydro

2005 2050 Scenarios:Nuclear & CCS

0

1000

2000

3000

4000

5000

32

The grid in Germany is amongst the most

stable in the world – with 25% renewables

*Ohne außergewöhnliche Ereignisse

Quelle: 5th CEER Report on the Quality of Electric Supply 2011, BNetzA

Ungeplante Unterbrechungen der Stromversorgung in Minuten

im Jahr 2010

33

Germany continues to export power to it‘s

neighbours

Stromhandel zwischen Deutschland und den Nachbarstaaten seit 2003

-500000%

-400000%

-300000%

-200000%

-100000%

0%

100000%

200000%

300000%

400000%

500000%

GWh

Import

Export

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Quelle: Entso-E

Private Individuals and Farmers

Own More than 50% of Renewable

Energy in Germany

Paris, 14.05.2013 | Daniel Fürstenwerth 34

40%

11%

14%

11%

9%

7% 7% Private Individuals

Farmers

Project Developers

Investment Fonds/Banks

Others

Businesses

Other Utilities

Big 4 Utilities

Source: www.unendlich-viel-energie.de/de/detailansicht/article/224/energie-in-buergerhand-privatleute-treiben-die-energiewende-voran.html

2

Ownership of Installed Renewable Energy Capacities in Germany in 2010

(total 53 GW)

Due to the yearly schedule, grid planning

processes in Germany are running in parallel

How will the power

system look like? Grid planning

Decision by

Government/

Regulator

Building

Grid

How will the power

system look like? Grid planning

NEP

2012

NEP

2013

How will the power

system look like? Grid planning

NEP

2014

How will the power

system look like?

NEP

2015

Ilustrative

What did we learn? - Process

How will the power

system look like? Grid planning

Decision by

Government/

Regulator

Building

Grid

• Intensive Consultations and Political Awareness on Scenarios

• Law granting full access to modeling data to ministries,

limited access to outside experts

• Large efforts to communicate with society on regional/local level

• Massive capacity building took place in

TSOs, Regulator, Scientists, NGO

The German Case: Grid Planning with high

level of transparency and stakeholder

involvement

Process

phases

Developing

scenario

framework

Consul-

tation on

scenario

Developing grid

development plan

Consulta-

tion and

revision of

1st draft

Consul-

tation

of final

plan

Revi-

sion

2nd

draft/S

EA

Scenario framework Grid development plan Consultation

TSOs

Regulator

TSOs

Regulator

Respon

sible

Public &

DSOs

Experts

TSOs

ACER

Public, DSOs,

regulator

Public

DSOs

Consult

ed

Three different consultation phases for grid development plan

Series of public events to explain grid development plan

Source: RGI

Ilustrative

Grid map by IAEW,

own illustrative drawings

Ilustrative

Grid map by IAEW,

own illustrative drawings

Recent analysis of Prognos challenge

„common knowledge“ of cheap transmission

for PV Power produced in South of Europe

40