Questions and answers about transforming the energy system

General issues

1. What are the key points and objectives of the German government's Energy Concept and the decisions on transforming the energy system? What kind of time frame does it envisage?

   The Energy Concept is the roadmap for implementing a long-term overall strategy for an environmentally sound, reliable and affordable energy supply system by 2050. The transformation of the energy system is a unique energy policy programme which sets out to increase energy efficiency, expand renewable energy sources and reduce greenhouse gas emissions. The rapid entry into a new age of energy supply includes the phasing out nuclear energy by the end of 2022. Thus the energy shift essentially has two pillars: one core target is a 50-percent reduction in primary energy consumption by the year 2050, compared with 2008 . The German government will strive to ensure that the renewables share of gross final energy consumption reaches 60 percent by 2050, while the renewables share of electricity generation alone is to rise from the present 20 percent of electricity consumption to at least 80 percent in 2050.

2. How long term are the German government's plans in the energy sector, and how long term can they realistically be at the present time?

   The Energy Concept sets out an overall strategy for the next four decades - up to 2050.

3. What sort of measures (legislation, funding etc.) are being used to implement the transformation of the energy system?

   In its efforts to accelerate implementation of its energy concept following the Fukushima disaster, the Federal Government has come forward with an extensive package of measures. The centrepieces of the transformation of our energy system include the Renewable Energy Sources Act (EEG), the Energy Industry Act (Energiewirtschaftsgesetz - EnWG), the Grid Expansion Acceleration Act (Netzausbaubeschleunigungsgesetz - NABEG), relevant changes in construction laws, an amended act for establishing a special "Energy and Climate Fund", and the expansion of energy research. The EEG features the following key elements:
   • Retention of the following basic philosophy: priority feed-in, grid owners' obligations to permit grid connection on application, differentiated prices for electricity feed-in;
   • Introduction of a market premium designed to provide incentives for direct selling of electricity from renewable energy sources
   • Flexibility premium to provide incentives for gradual system integration: this subsidises the additional investments required for flexible, market-oriented operation of biogas systems (storage systems, additional system capacities).
   With regard to wind-energy use on land, an amendment of construction-planning law will provide greater legal certainty for designation of new wind-energy sites and for repowering, i.e. for replacement of smaller wind turbines with larger, more efficient ones, at existing sites. Together with the Länder, the German government has the task of setting in motion the joint federal and Länder initiative for wind energy, which aims to further develop the regional policy plans for the designation of adequate wind energy areas. What is more, the basis for construction of offshore wind farms has been further improved (with, inter alia, collective grid connection of offshore wind farms, and a EUR 5 billion special loan programme of the KfW Bankengruppe for the first 10 offshore wind farms). In addition, the Combined Heat & Power Act (KWKG) is already promoting construction and modernisation of CHP systems and construction of new heating networks. In connection with amendments of energy-industry laws, we have further improved the conditions for use of CHP systems (the period for commissioning of new systems has been extended to the end of 2020, and the annual cap on support for CHP systems has been eliminated). An extensive revision on the basis of the interim review is on its way through the parliamentary procedure. A CHP electricity share of 25 percent is to be achieved by 2020. For small installations up to 20 kW_el, the Combined Heat & Power Act is supplemented by the "mini-CHP support programme" which resumed on 1.4.2012. Since the beginning of 2012, the proceeds from emissions trading have been collected within the Energy and Climate Fund to be made available for additional measures relative to Germany's transformation of its energy system and to national and international climate-protection efforts. The "Market Incentive Programme" (Marktanreizprogramm; MAP) is the central instrument that is helping to achieve the aim of a 14-percent share for renewable energy in the heat sector in existing buildings by 2020. The MAP supports renewable energy technologies in the heat sector - for example solar thermal energy, wood-pellet heating systems, heat storage systems, biomass heating plants and deep geothermal energy. Since 2011 the financial resources of the MAP have come partly from the federal budget and partly from the Energy and Climate Fund (EKF). Via the National Climate Initiative launched in 2008, the Federal Environment Ministry is using various programmes and projects to support effective climate protection measures in local authorities, in industry, among consumers and in schools and other educational establishments. In this way the Federal Environment Ministry is contributing to the success of the energy system transformation. It promotes the development and implementation of climate protection projects and the market launch of innovative climate protection technologies, and also provides incentives for information, qualification, networking and advice. This paves the way for achieving the ambitious national climate objectives set out in the Energy Concept (40 percent reduction in greenhouse gas emissions by 2020 compared with 1990; 55 percent reduction by 2030 and 80-95 percent by 2050). Since 2011 the financial resources of the National Climate Initiative have been stepped up by additional funds from the Energy and Climate Fund. By promoting technological innovations, energy research is making a major contribution to ensuring the success of the restructuring process towards an energy supply system based largely on renewable energy and exploiting the potential that it offers for growth and employment. The German government has considerably increased the relevant support funding. Under its new Sixth Energy Research Programme, which was adopted on 3 August 2011, the German government will make some EUR 3.5 billion available for research and development in the field of sustainable energy technologies during the period 2011 to 2014, including EUR 1.3 billion in the renewable energy sector. This means a substantial increase in funding for innovative, environmentally sound technologies - by 75 percent compared with the last four years.

4. How is the success of the German government's energy concept measured and how is its implementation monitored?

   The German government will review the implementation of the programme of measures annually on the basis of a sound monitoring system. To this end it will submit an annual report on the basis of centralised energy data and reports from competent institutions, including the Working Group on Energy Balances (Arbeitsgemeinschaft Energiebilanzen), Federal Statistical Office (Statistisches Bundesamt), Federal Network Agency (Bundesnetzagentur), Federal Environment Agency (Umweltbundesamt), Federal Cartel Office (Bundeskartellamt), Federal Office of Economics and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle). A progress report after three years will assess the implementation of the measures and the foreseeable course on the way to achieving the objectives of the Energy Concept. The monitoring process will also be supported by an independent commission of four experts who will examine and comment on the German government's report.

5. To what extent is energy saving being promoted?

   In the areas of energy-saving and energy efficiency, the Federal Government is relying on three mainstays: require - promote - inform. In order to double the rate of renovation and modernisation in the building sector, the Federal Government plans to tighten minimum-efficiency standards gradually and to introduce a long-term renovation schedule for existing buildings. As a result, efforts in this area will not be limited to tightening of regulatory law (an amendment of the Energy Saving Ordinance (Energieeinsparverordnung) is to be introduced in 2012). In addition, the economic incentives for energy-efficiency-oriented building modernisations are to be significantly improved. To that end, annual funding available under the CO₂ Building Rehabilitation Programme is to be increased to EUR 1.5 billion. And a broad spectrum of measures is in place for the purpose of enhancing energy efficiency. Relevant examples include the funding programmes for:
   • Commercial refrigeration systems, in the framework of the National Climate Initiative. The measures carried out to date have produced electricity savings averaging 40 percent.
   • Mini-CHP systems, also in the framework of the National Climate Initiative. This has achieved average CO₂ reductions of more than 40 percent and - in an especially significant orientation - has promoted the market introduction of pertinent new products for one- and two-family homes, which account for 80 percent of existing buildings.
   The third pillar - information - also comprises an extensive range of efforts. For example, energy consultations and energy-saving measures are being supported for small- and medium-sized enterprises (SMEs). In the framework of the "climate looking for protection" ("Klima sucht Schutz") campaign, an effort of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), consumers can obtain pertinent advising online. In the "electricity-saving check" ("StromsparCheck") programme, long-term-unemployed persons retrained as electricity-saving facilitators visit low-income households and provide advice on ways to save energy - and, thus, to reduce electricity and gas bills.

6. What action can each individual take to organise their day-to-day routine more energy efficiently and conserve energy in the long term?

   One thing that is important is to use economical electric devices, if possible those rated in energy performance class A++. It is quite easy to prevent devices from wasting energy while left on stand-by with a plug multiplier that allows several devices to be switched off at once. Energy can also be conserved by changing heating habits. The heating costs in a property can be cut by approximately six percent if the thermostat is turned down by one degree.

7. What measures will the German government itself take to contribute to greater energy efficiency, e.g. within the administration?

   The German government will act as an exemplar when it comes to the management of both its existing and new buildings. The amount of heat required in Federal Government properties should fall 20 percent (compared to 2010 levels) by 2020. Germany's stock of public buildings is to be almost climate-neutral by 2050. The Energy Conservation Programme for Federal Government Property will be continued. As of 2012, all new buildings constructed for the German Federation will have to comply with what is known as the nearly zero-energy building standard. One example is the construction of the new Federal Ministry for the Environment, Nature Conservation and Nuclear Safety in Berlin. Since the summer of 2011, the Ministry has been the first federal authority to work in a nearly zero-energy, passive building. This is a model project because most of the passive buildings that have been built up until now have been detached houses on greenfield sites.

8. Will federal ministers set a good example and save energy personally as well, something that will require them to switch over to electric official cars in the long term?

   The German government is setting a good example: its current vehicle fleet will gradually be replaced with electric vehicles. As of 2013, ten percent of its new vehicles will emit less than 50 grams of CO₂ per kilometre.

9. What energy sources (wind, solar, water, geothermal, gas, coal etc.) are available for the transformation of the energy system?

   In principle, all energy sources for electricity generation - with the exception of nuclear power - are available for the transformation of the energy system. However, the transformation of the energy system has to be in line with the German government's ambitious climate objectives, as adopted in the Energy Concept of 28.09.2010. These state that climate-relevant greenhouse gas emissions are to be reduced by 40% by 2020, 55% by 2030, 70% by 2040 and between 80 and 95% by 2050 (in each case compared with 1990). At present, some 80% of energy-induced greenhouse gases are emitted during the combustion of fossil fuels. Even with simultaneous total replacement of nuclear energy, the climate protection objectives are feasible given speedy and rigorous implementation of the measures set out in the Energy Concept and the energy shift decisions of summer 2011: we need new generating facilities on the basis of renewable energy sources and substantial progress with exploiting energy efficiency potential - these are the key positions of the transformation of the energy system. Compared with 2008, primary energy consumption is to be down 20% by 2020 and 50% by 2050. The renewable energy share of electricity consumption is to rise from 20 percent in 2011 to at least 35 percent by 2020. By 2030 the figure is to be 50 percent and by 2050 at least 80 percent. In future the greater part of our electricity supplies will come from wind energy (both onshore and offshore) and solar energy. These are the sectors that have shown the fastest growth in recent years. But biomass and - to a lesser extent - geothermal energy and hydro power will also contribute to electricity generation in 2050. Fossil fuel power plants will still be needed in future to fill the remaining gap. In particular, highly efficient and flexible gas power plants (power-led co-generation, gas-and-steam power plants, gas turbines) are likely candidates for balancing the fluctuations in energy production from renewable energy sources. In future, however, these can increasingly be run on hydrogen or methane produced on the basis of renewable energy sources.

10. When will it be possible to do without fossil fuels entirely as a result of the planned transformation of the energy system?

    The driving forces behind the transformation of the energy system - apart from the risks involved in the peaceful use of nuclear energy for generating electricity - are climate protection, the need to reduce our heavy dependence on energy imports, and the acceleration of technological innovations. In order to achieve our ambitious climate objectives (a 40-percent reduction in greenhouse gas emissions by 2020 and a reduction of between 80 and 95 percent by 2050, compared with 1990), we aim to raise the renewables share of electricity supply from 20 percent in 2011 to at least 35 percent by 2020 and at least 80 percent by 2050. In addition, we aim to increase energy productivity by an average of more than 2 percent per annum and to halve Germany's total energy requirements by 2050. The necessary restructuring of the electricity supply system will bring marked changes in the established energy mix and the existing infrastructure (grids, storage). Energy sources that occupy a dominant position today will increasingly be used "merely" to balance the fluctuations in energy generated from renewable sources. For this purpose we will continue to need highly efficient and flexible gas power plants (power-led cogeneration, gas-and-steam power plants, gas turbines). In future, however, these can increasingly be run on hydrogen or methane produced on the basis of renewable energy sources.

11. How can the basic supply of energy be ensured?

    Electricity supply is assured, and will continue to be so even after the seven oldest nuclear power plants and the Krümmel nuclear power plant are shut down. In the past we have increasingly tended to produce more electricity in Germany than we ourselves can consume. Germany's exports of electricity have therefore increased in recent years. Some of the electricity exported has come from German nuclear power plants. Thus there is no cause for concern if some of these power plants remain permanently shut down. There is still adequate capacity to replace the eight decommissioned nuclear power plants by making use of reserves that already exist today. In the years ahead, the remaining nine nuclear power plants will gradually be replaced by 18 fossil-fuel power plants currently under construction, the increase in renewable energy, and additional highly efficient and flexible gas power plants (power-led cogeneration, gas-and steam power plants, gas turbines).

12. Electricity supplies are to remain assured in the future. Can we completely discount the risk of power cuts during the winter?

    The supply of electricity is assured, and will remain so. The German government takes the issue of supply security very seriously and is continuously monitoring the situation. The Federal Network Agency is in constant contact with the operators of grids and power plants. There is currently adequate power plant capacity throughout Germany. In the next few years (up to 2015) more power plants will come into service (12 GW) than are shut down (6 GW). In the south of Germany there is currently a shortage of locally available generating capacity, but supplies are assured. The development of the grids between the north and south of Germany will bring a structural improvement in the situation in southern Germany, as this will provide full access to the capacity in northern Germany for southern Germany as well. For the transitional period the grid operators have contracts with reserve power plants under instructions from the Federal Network Agency. These are old coal-fired and gas-fired power plants which are to be maintained in a serviceable condition for generating electricity. In the years ahead the remaining nine nuclear power plants can gradually be replaced by the fossil-fuel power plants currently under construction, energy efficiency measures, load management, the increase in renewable energy, electricity storage facilities, new CHP plants, electricity interchange within the EU interconnection system, and a number of new and additional highly efficient and highly flexible gas power plants. If we save more energy, this brings a corresponding reduction in the need for additional power plants and an automatic increase in the share due to renewable energy.

13. What is the Federal Government doing in order to reduce burdens on electricity-intensive industry?

    The approximately one million persons employed in Germany's electricity-intensive sector make an important contribution to value creation in our country. And it is clear that Germany needs to remain an important industrial centre that offers competitive electricity prices. The Federal Government plans to make use of the opportunity, as of 2013, to compensate electricity-intensive industries, in competitive international markets, for electricity-cost increases resulting via emissions trading. Such compensation is allowed by the European Emissions Trading Directive, in Art. 10a (6). The European Commission has agreed to enlarge the pertinent environmental aid framework, a move that is a prerequisite for any national compensation payments. What is more, the amendment of the Renewable Energy Sources Act (EEG) that entered into force in 2012 will expand the special compensation arrangement (Besondere Ausgleichsregelung - BesAR) aimed at easing the burdens on electricity-intensive companies. This will be applied for the first time in 2013. A reduction in the threshold figures for annual electricity consumption from 10 GWh to 1 GWh and for electricity intensity from 15 to 14 percent will substantially enlarge the number of parties potentially benefiting from the BesAR. Small and medium enterprises in particular will profit from this.

14. Germany is phasing out nuclear energy and is the first major industrialised country to make the shift towards renewable energy sources. How will this decision change Germany?

    Germany will become one of the world's most efficient, most innovative and greenest economies. The way ahead is strewn with economic, infrastructural and technological challenges. But it offers us great opportunities - e.g. for the craft trades, the building industry, for energy providers that not only supply energy, but also offer their customers services for energy saving and for using renewable energy, and of course for companies who make equipment for the use of renewable energy and for improving energy efficiency. These are the emerging markets of the future in which Germany leads the field. Already these industries in particular are showpieces in Germany. Initial estimates indicate that in 2011 there were already around 380,000 jobs in the renewable energy sector in Germany. In 2011, investment in the construction of installations for the use of renewable energy came to around EUR 23 billion. This was the first time investment had fallen, following a record figure of EUR 27.8 billion in 2010. The reason was a fall in prices for photovoltaic systems: Despite a similar level of newly installed capacity to the year before, investment in photovoltaic systems was down by roughly a quarter, though at some EUR 15 billion it still accounted for by far the largest share. By contrast, there was an increase in investment in the wind energy sector. Revenue from operation of the installations for using renewable energy is increasing every year, rising to EUR 13 billion in 2011. Suppliers of systems for improving energy efficiency are also proving successful. A German turbine manufacturer provides a good example here: new gas turbines for a gas-and-steam power plant have an efficiency of 60 percent, something that would have been considered completely impossible in the power plant construction sector only a few years ago. This illustrates the value of basic research: without its results, we would simply not have the materials able to withstand the temperatures of 700°C and over and extremely high pressures. This example demonstrates the success of targeted research and development work and its practical implementation: Today the turbine is an export hit.

15. Isn't the transformation of the energy system a great risk for an industrialised country seeking to achieve economic growth as well?

    In view of the economic and political developments worldwide, it would in fact be a much greater risk to carry on as in the past. An "ostrich policy", i.e. burying our heads in the sand and waiting until the storm has passed, is certainly no help here. Asia is using more and more energy; energy prices are showing a marked rise in response to diminishing oil, gas and coal reserves; and secure supplies are dependent on an ever decreasing number of energy exporters. The first step in ensuring affordable, environmentally sound and secure energy is to reduce our energy consumption - Germany's opportunities for greater energy efficiency in all sectors are far from exhausted. After that, we need to meet our remaining energy requirements primarily by using geothermal energy, wind, biomass, hydro power and solar energy. This will give us technological and locational advantages and keep us at the top of the lead markets of the future. Climate protection is thus an important growth strategy for our country to ensure employment, prosperity and technological leads.

16. In part, the transformation of Germany's energy systems will hinge on the German public's willingness to invest in energy efficiency of buildings and to tolerate nearby wind farms. How is the Federal Government dealing with the challenges inherent in such dependence?

    The transformation of the energy system will only be successful if we can gain the approval of the general public. This means that industry and the public should of their own accord exploit the enormous efficiency potential that still exists, and thereby "kill several birds with one stone". Those who take part have the opportunity to
    • save energy costs,
    • reduce our dependence on energy imports,
    • ensure that value added in Germany stays in the country, and
    • relieve pressure on the environment and protect the global climate.
    The German government is therefore adopting a three-pronged approach: demand - support - inform. In the buildings sector, for example, this means: we will draw up a long-term roadmap for refurbishing all existing buildings and gradually raise the efficiency standards. At the same time we will increase the support under the CO₂ building refurbishment programme to EUR 1.5 billion a year and considerably step up the availability of advisory and information services.

17. Many people in other countries are asking whether Germany's transformation of the energy system can succeed. How positive has the reception for Germany's phase-out of nuclear power been in other countries?

    Needless to say, as a pioneering country, we are being watched very closely indeed. At the same time, being a pioneer in this area means being a country that sets standards and that enjoys market leadership in an industrial sector of central importance. What is more, the Member States of the European Union, and our partners in international co-operation, agree that every country has the right to choose its own energy-supply systems.

18. Is the German government pursuing long-term coordination on energy matters with our European neighbours?

    European cooperation is an integral part of our energy policy. Together with our European neighbours and the European Commission, the German government is working towards the completion of the single energy market in Europe, the expansion of renewable energy and power grids throughout Europe, and improvements in energy efficiency. To this end the EU agreed ambitious targets under the German Presidency: 20 percent renewables share by 2020, 20 percent improvement in energy efficiency by 2020, and a 20-percent reduction in greenhouse gas emissions by 2020 (compared with 1990).

19. How sure can we be that the transformation of the energy system will not come too late? For example, what do forecasts say about trends in CO₂ emissions?

    The planned measures will permit a reduction of at least 80 percent in CO₂ emissions by 2050. This is the minimum reduction for industrialised countries, to ensure achievement of the European Union's target of limiting global warming to a maximum of two degrees Celsius.

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