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  • Title: Prospects for Geothermal Energy in Germany

  • Speaker: Parliamentary State Secretary Astrid Klug
  • Occasion: European Geothermal Congress
  • Date/Location: 30 May 2007, Unterhaching

Mr Hüter,
Mr Knapek,
Ladies and Gentlemen,

it is no coincidence that the 2007 European Geothermal Congress is taking place in Unterhaching. On 18 January this year the second drilling of the geothermal project here in Unterhaching was successfully concluded. Like the first, this drilling yielded positive results. The initial test data has exceeded all our expectations. This is a major success for the project and for the use of geothermal energy in Germany! And I would like to congratulate all involved parties.

Policymakers were also very busy in January. On 10 January the EU Commission presented its energy package. This led to a truly historic decision in March: for the first time, heads of state and government in the European Council adopted a binding target of a 20% share of renewables in total energy consumption by 2020. This is remarkable, as we previously had no binding targets of this kind. It represents a boost for renewable energy development in Europe.

And we need this boost:

The three IPCC reports now published have shown that climate change is an undeniable fact. If we want to restrict its impacts to a tolerable level we must take decisive action now.

People are now also realising that climate protection policy is the more intelligent form of economic policy. It does cost money - but neglected climate protection will cost our national economies far more.

It is to the credit of former chief economist of the World Bank Sir Nicholas Stern that he not only studied this correlation empirically, he also brought it prominently into focus for the people of the world.

Both the EU and the European countries must act. Germany is setting an important example.

The German Government has placed 8 measures at the heart of its climate policy:

  • First: Reducing electricity consumption by 11 percent through the massive increase in energy efficiency (signifying a saving of 40 million tonnes CO2 by 2020).
  • Second: Modernising the power plant park through more efficient power plants (signifying a saving of 30 million tonnes).
  • Third: Doubling the efficient use of combined heat and power to 25 percent (signifying a saving of 20 million tonnes).
  • Fourth: Reducing energy consumption through building modernisation, efficient heating systems and in production processes (signifying a saving of 41 million tonnes).
  • Fifth: Increasing efficiency in transport and raising the share of biofuels from now 3.5 to 17 percent by 2020 (signifying a saving of 30 million tonnes).
  • Sixth: Reducing emissions of other greenhouse gases such as methane (signifying a saving of 40 million tonnes).

And last but not least:

  • Increasing the share of renewable energies in the heat sector from now 5.4 to 14 percent by 2020 (signifying a saving of 14 million tonnes).
  • Increasing the share of renewables in electricity generation from now 12.5 to over 27 percent by 2020 (signifying a saving of 55 million tonnes).

These last two areas are especially interesting for your sector. Geothermal energy already plays an important role in the heat sector. But Geothermal power plants can do more: they can also generate electricity. These two areas therefore form the framework for your activities and we are fully counting on your contribution to our ambitious targets!

Ladies and Gentlemen,

A good support policy is also a prerequisite for achieving our goals. We can draw on a number of instruments which have been very successful in Germany for several years.

The Renewable Energy Sources Act (EEG) has proven to be a highly effective instrument.

  • This Act supports the generation of electricity from all renewable energies - for example wind energy, biomass, photovoltaics, and geothermal energy - laying down fixed tariffs for a period of 20 years.
  • The Renewable Energy Sources Act offers planning and investment security, creates secure conditions for the purchase and feed-in of electricity from renewables into the grid and promotes technological development.

Our Market Incentive Programme supplements the Renewable Energy Sources Act by supporting the generation of heat from renewable energies:

  • This programme is the most important instrument for the market introduction of new technologies in the heat sector. Support in the form of grants or low-interest loans is provided for thermal solar installations, biomass boilers and geothermal power plants. Furthermore, the programme provides incentives for investment in district and local heating systems.
  • Since it was launched in 2000, the programme has supported around 625,000 projects with funds totalling 827 million euros, triggering an investment volume of 6.5 billion euros.

We also take research funding very seriously:

  • Our research programmes lay the foundations which facilitate support for innovative technologies, strengthen the competitiveness of companies and secure jobs.
  • Research funding has been significantly increased since 2005, to around 83 million euros. Research funding is to be raised further in the coming years. In 2009, 100 million euros will be available.

The results of our support policy speak for themselves: we will achieve our EU target for the electricity sector this year - well before the 2010 deadline. In total, we save at least 97 million tonnes of carbon dioxide every year through the use of renewable energies. And that is not all: More than 200,000 people have found work in the renewables sector in Germany, while the total turnover in the sector rose last year by around 20%, to 21.6 billion euros.

Where do we stand today in the use of geothermal energy?

In many countries, for example Iceland or Italy, there is already a long tradition of using geothermal energy in power plants. In Italy it dates back to 1913, when the world's first geothermal power plant was erected. Globally, a great deal of potential has already been tapped: installed electrical capacity for geothermal energy is currently around 9,000 MWs. Of the renewable energies, only hydropower exceeds this.

In contrast to some other countries with favourable geological conditions, here in Germany the use of geothermal energy in power plants is still in its infancy. Only one plant is currently operating, in Neustadt-Glewe. Two other plants will go into operation this year - one of these being the geothermal power plant here in Unterhaching.

Nevertheless, as in many other countries, geothermal energy already has a firm role in heat supply in Germany. Thermal water is used especially in southern Germany - specifically here in the Munich region - in district heating systems and thermal baths. Furthermore, it is estimated that over 100,000 shallow geothermal systems with heat pumps have been installed in private households in Germany. Another 2,000 are added every month. The market volume for these systems doubled last year. This is undoubtedly also due to the funding for heat pumps in the support programmes run by the german Kreditanstalt für Wiederaufbau (KfW): the programme "CO2 Building Rehabilitation", the programme "Housing Modernisation" and the programme "Ecological Construction".
Theoretically speaking, Germany could cover its energy needs several times over using heat from deep underground. However, in practice this is currently only economically feasible in a few regions.

But there are many promising signs of larger growth in the future. This can be seen in the number of approvals for concession areas for geothermal power plants. The figures indicate that throughout Germany there are around 150 projects in the planning stage. The investment volume of these projects is estimated at 4 billion euros.

How can we improve the prospects of geothermal energy even further?

Existing support instruments in Germany will be improved and supplemented:

The progress report stipulated under the Renewable Energy Sources Act will be submitted this year. This will also include a review of the feed-in fees for the geothermal sector. At present the fee for installations up to 5 megawatts of installed capacity is 15 cents per kilowatt hour of electricity. This rate will be paid for 20 years. So far, market growth has fallen short of expectations. There are different reasons for this. In the first place, the high initial risk and the need for considerable capital is undoubtedly a factor. Secondly, price rises in oil and gas have led to high drilling costs and a lack of drilling personnel for geothermal projects. The economic viability of the projects has therefore declined. The progress report will take account of these constraints. The amendment to the Renewable Energy Sources Act will begin in autumn and the new Act is scheduled to enter into force at the beginning of 2009.

With regard to research, funding has focused on geothermal power plants since 2002. This will remain the case in the future. The share of geothermal research in the overall renewables budget is around 15%. Supporting pilot projects is an essential aspect of this research. For instance, funding has been given to the pilot projects Soultz-sous-Foretz, Groß-Schönebeck, Landau, Bruchsal and to the project here in Unterhaching.

In the Market Incentive Programme, geothermal plants and local heating systems are supported with low-interest loans and repayment grants by the KfW. Since the programme began in 2000, loans amounting to 23 million euros have been approved for a total of 9 geothermal power plants. Recently, local heating systems which obtain at least 50% of their energy from renewables also became eligible for support. Up to 5 combined heat and power installations are also supported.
In order to reduce the high initial risk of geothermal projects the Ministry for Environment is currently working on a project fund to provide security for the exploration risk. The fund is being developed in cooperation with the KfW and the insurance industry. However, the details of this fund are still in the development stage.

Strengthening the use of renewable energies in the heat sector will only succeed if we can create reliable framework conditions and investment security for plant constructors. Support programmes which depend on a state budget can only guarantee this to a limited extent. Therefore, the declared goal is to introduce a regenerative heat act in Germany. The terms of such an act are currently being discussed.

These national programmes are supplemented by the European Directive on Renewable Energies. The new EU Directive, containing differentiated national overall targets for the expansion of renewables, is expected to be submitted in autumn this year.

Ladies and Gentlemen,

I'm convinced that, in the field of renewable energies, we cannot do without a development of geothermal energy to be succesfull. Geothermal energy offers enormous potential for climate protection, innovation in industry, securing an energy supply which is viable for the future and creating lasting employment. What is especially interesting about geothermal energy is that it is base load energy. That is to say, all day and throughout the year, it can provide a constant supply of energy for a demand-based energy generation. Geothermal power plants can thus make an important contribution to the security of supply.

And that's why I'm happy that you have all come to this European Geothermal Congress. The great response shows that Geothermal Energy is becoming more and more important. You are the people and the community we need for the next important steps on the way to achieving sustainable energy production: scientists, entrepreneurs, politicians, students. We need your ideas, your visions, your knowhow, your decisions and your investments for more climate protection, for clean energy or let me say for a better future, especially for our children and our children's children.

So I would like to thank the organizers of this Congress, and all of you for coming, for your interest and your involvement in renewable energies, especially in geothermal energy. I wish this Congress every success. I wish us all interesting talks, I hope that you will make many useful contacts and in this sense I'm sure that this Congress will produce a decisive momentum to enable geothermal energy to take on a greater role in the future.

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