The Energy Concept and its accelerated implementation

Faster expansion of renewable energies

The central component of the energy supply of the future will be the continued and rapid expansion of renewable energies. To achieve this we are laying the foundations for an electricity market that will be increasingly based on renewable energies. This calls for optimised coordination of conventional power plants with electricity generation from renewables (market and system integration).

Renewable energies must be more able to generate electricity according to demand and to provide system services to ensure grid and supply security. At the same time, storage facilities and an increasingly flexible fleet of conventional power plants will make fluctuating electricity generated from renewables more stable.

Integration of renewable energies into the overall energy system

Renewable energies can make a growing contribution to security of supply. We have set ourselves the target of increasing the share of renewable energies in gross electricity consumption from the current 17% to 35% by 2020. By speeding up grid expansion, improving market and system integration and increasing the use of storage facilities, we plan to gradually bring renewable electricity production more in line with demand.

The Energy Concept envisages a 10% reduction in electricity consumption by 2020. This also contributes to security of supply.

With the amendment to the Renewable Energy Sources Act (EEG) the German government is continuing the dynamic expansion of renewables, making them more cost-effective and improving market and system integration, in particular with the following measures:

• The basic principles of the EEG are retained, thus creating planning and investment security.
• The amended EEG improves tariffs that are currently inadequate, for example those for offshore wind power, hdyropower and geothermal energy. At the same time, excessive support and windfall profits are restricted. For instance, the new EEG stipulates a half-yearly adjustment of degression rates for photovoltaics (flexible cap), drastically simplifies the tariff system for biomass and restricts windfall profits for the green electricity privilege.
• The introduction of an optional market premium and a "flexibility premium" for demand-based electricity generation from biomass provides targeted incentives for market and system integration of renewable energies. For the first time, this gives all operators of renewable energy installations the opportunity to market their electricity themselves and to create additional revenues by developing optimised processes for demand-based generation. Improving feed-in management promotes grid integration of photovoltaic systems.

Central component: wind energy

The "Offshore Wind Power" programme of the Kreditanstalt für Wiederaufbau (KfW) supports the establishment of the first 10 offshore wind farms with a total of 5 billion euros, in order to gain valuable experience in the field.

It is important to invest in these technologies now. In this way the huge cost reduction potential can be quickly exploited.

In addition, with an amendment to the Offshore Installations Ordinance (Seeanlagenverordnung), the German government is significantly simplifying and accelerating the approval procedure for installations in the German exclusive economic zone (EEZ).

Amending construction planning legislation will improve the options for exchanging old wind installations with new, more efficient turbines (repowering). Installing photovoltaic systems on buildings will also be made easier.

The designation of suitable sites is particularly important for onshore wind energy. The German government will cooperate closely with the Länder on this issue in the government-Länder initiative on wind energy.

In addition, the government and the Länder plan to commission an analysis of wind energy potential. This study is to be taken as a basis to jointly develop criteria for designating suitable new sites for onshore wind farms.

General "rigid" limitations on proximity and height are to be replaced with national criteria, developed jointly by government and Länder, for applying appropriate distance and height limits on a case-by-case basis.

More information on wind energy:

• Offshore wind energy
• Onshore wind

Cost efficiency

To guarantee affordable electricity prices, the expansion of renewables must be cost-efficient. Renewables must evolve from a niche market into a volume market. The sooner this happens, the stronger the growth dynamic arising from the switch to renewable energies will be.

It is important to tap existing cost reduction potential. Wind energy is the sector with the greatest potential for a swift and cost-efficient expansion of electricity generation from renewables.

Around one million people working in energy-intensive industries play a vital role in the value added of our country. For electricity-intensive companies the German government has therefore laid dwon comprehensive provisions to balance higher electricity prices due to emissions trading with support of up to 500 million euros from the Energy and Climate Fund, as well as from the federal budget. This is to be firmly underpinned at European level. In addition, the special equalisation provision in the EEG for easing the burden on energy-intensive companies has been made more flexible and more generous.

Expansion of the electricity grids

The amendment to the Energy Industry Act (Energiewirtschaftsgesetz) has created the first mandatory and coordinated grid expansion plan for the main electricity transmission grids and long-distance gas lines (10-year grid development plans).

The aim of grid development plans is to facilitate the necessary level of grid expansion and raise public acceptance for line construction through comprehensive consultations with stakeholders. On this basis the legislator will make the need for grid expansion legally binding through a requirement plan act (Bedarfsplangesetz).

Furthermore, the framework conditions for planning the low-loss high voltage direct current lines (HVDC) have been improved.

Grid expansion is of central importance for the expansion of renewable energies. With the Grid Expansion Acceleration Act (Netzausbaubeschleunigungsgesetz, NABEG), the German government has created the conditions for swifter expansion, in particular of electricity transmission grids, which essentially deliver the wind-generated electricity of the North to the consumption centres of the South. The public is ensured broad participation rights from an early stage.

The framework conditions for the construction of cross-border power lines and the use of underground cables in the 110 kV range have been optimised.

The connection of offshore wind farms to the grid has been made easier by allowing cluster connections to be used instead of costly individual connections.

The incentive regulation allows municipalities to agree financial compensation with grid operators for long-distance power lines running through their territory.

• More information on grid planning

Smart grids and storage facilities

Smart distribution grids are vital for the expansion and system integration of renewable energies. The focus must be on gradually creating conditions for the market-driven development of these grids which can guarantee data protection and security, ensure decentralised generation and load management, achieve optimum integration of renewables and increase the energy efficiency potential for consumers.

Developing and using new storage technologies to stabilise fluctuating energy generation from renewable energies is equally important; we also need further progress in the deployment of renewables in Germany and Europe and their efficient combination.

The amendment to the Energy Industry Act (EnWG) strengthens the foundations for smart grids and storage facilities. The latter are essential for integrating fluctuating renewable energies. Therefore, new storage facilities are exempt from the usual grid charges.

Restructuring the fossil power plant park

The fossil-fired power plants currently under construction must be completed by 2013. As an additional safeguard, new build of up to 10 gigawatts guaranteed capacity is to be in place by 2020 to supplement the gas- and coal-fired power plants currently being built. An act to accelerate planning procedures (Planungsbeschleunigungsgesetz) will ensure rapid development of the necessary capacities.

The German government is setting up a new funding programme for power plants to promote the necessary construction of highly efficient and flexible power plants. This will also help improve supply security and meet the climate protection targets. To enhance the competitive situation of smaller providers (e.g. municipal utilities), the support will be restricted to power plant operators with a share of less than 5% in Germany's generation capacities.

The German government will make more efficient use of the funds for supporting combined heat and power plants (CHP), in order to significantly strengthen energy generation and to continue it beyond 2016. CHP support will be further advanced this year through an amendment to the CHP Act.

Energy efficient buildings

In the building sector economic incentives and the requirements of energy saving legislation will remain key elements of the strategy to increase energy efficiency and for climate protection.

Ambitious standards aim to raise efficiency in buildings. In particular, the Energy Saving Ordinance (EnEV) stipulates that from 2012 to 2020 standards for new buildings are to be gradually brought into line with the future European standard for nearly zero-energy buildings, as long as this is economically acceptable based on a balanced consideration of the burdens for owners and tenants. The German government is leading the way: from 2012 all new government buildings will conform to the standard for nearly zero-energy buildings.

The energy-related modernisation of buildings saves CO2 and energy. From 2012 to 2014, funding for the CO2 Building Rehabiliation Programme will be raised to 1.5 billion euros per year (2011: 936 million euros). Additional depreciation options for the buildings sector will also be introduced. Moreover, the German government plans to review whether a budget-neutral solution (e.g. white certificates) can be applied from 2015.

A modernisation roadmap has been drawn up for existing buildings. This includes recommendations for action and gives building owners guidance on which renovation measures can be taken to achieve the nearly zero-energy standard by 2050. Economic incentives for energy-related building modernisation are geared to the roadmap. Federal buildings are to set an example in reducing energy consumption.

• More information on energy-related modernisation of buildings

Efficient procurement

Compliance with stringent energy efficiency criteria have been made legally binding as a key criterion for public procurement through amendments to the Ordinance on the Award of Public Contracts (Vergabeverordnung). As a general principle, products and services with the highest performance and the highest energy efficiency must be procured.

European initiatives for energy efficiency

At European level the German government supports an ambitious and binding package of measures to increase energy efficiency. In particular the European product standards and energy labelling should be revised according to an advanced technological standard. They should be based more closely on best available technology and regularly updated (so-called top runner approach).

• More information on increasing energy efficiency

Monitoring

The landmark decisions on energy policy provide the frame for restructuring our energy supply. The German government will monitor this process to ensure that the energy policy goals of supply security, economic efficiency and environmental compatibility are met without the decision to phase-out nuclear power being called into question.

The German government will review the implementation of the programme of measures each year with in-depth monitoring. To this end, it will instruct a number of competent institutions (including the Working Group on Energy Balances, the Federal Statistical Office, the Federal Network Agency, the Federal Environment Agency, the Federal Cartel Office and the Federal Office of Economics and Export Control) to submit expert opinions on key energy issues each year.

The Federal Minister of Economics will report on grid and power plant expansion, replacement investments and energy efficiency. The Federal Environment Minister will report on the expansion of renewable energies. The German government will use these reports as a basis for informing the Bundestag and make any necessary recommendations.