The State of Germany’s Energy Transition

The Environmental and Energy Study Institute (EESI) and the Embassy of Germany held a briefing showcasing how Germany has been successfully integrating renewable energy into its electrical grid and decoupling energy demand from economic growth. Indeed, Germany's energy policies have led to the creation of new, technologically advanced industries and the addition of about 350,000 jobs. High-level representatives from the public and private sectors on both sides of the Atlantic discussed parallels between the German and American economies and how the United States may benefit from energy policies Germany has developed and implemented over the course of its nearly 20 year-long national Energiewende ("energy transition") program.

Highlights

Thorsten Herdan, Director-General, Energy Policy, Heating and Efficiency, German Federal Ministry for Economic Affairs and Energy

• Herdan described Energiewende ("energy transition"), which is "Germany’s long-term energy and climate strategy." Germany’s transition to a clean energy economy is a combination of switching to renewable energy and increasing energy efficiency – both are necessary for a de-carbonized economy.
• Germany began its energy transition by addressing electricity first, deciding to “pay whatever was necessary” to make renewable energy projects viable. In Germany, the two most economically viable projects that emerged were wind energy (both on- and off-shore) and photovoltaics.
• Herdan discussed the need to phase out coal-fired power plants, while also noting that we cannot afford to leave power plants idle and that we must think about those employed by the coal industry – they need support.
• Herdan showed that in Germany, the peak of energy produced by photovoltaics fits almost perfectly with peak demand.
• Herdan explained that Germany does not need more baseload power generation (which is "poison" for its energy transition). Instead, Germany needs more flexibility in dealing with the intermittence of renewable energy. That flexibility can come from several sources, including interconnections with neighboring countries, demand management, power storage, etc... The market will choose the most cost-effective solution. Herdan stated that we need to create electricity markets where prices “tell the truth” and reveal information about the flexibility of each power source.
• Herdan emphasized that Germany has completely decoupled economic growth and energy demand.

Lisa Jacobson, President, Business Council for Sustainable Energy (BCSE)

• Jacobson began by describing BCSE's Sustainable Energy in America Factbook, which contains 150 of the most important energy facts they believe the public and policy makers should know.
• Jacobson stressed that the decoupling of energy consumption and economic growth is extremely important. Approximately 60 percent of this decoupling is attributable to the increase in policies promoting energy efficiency.
• Jacobson stated that sweeping changes have been taking place in the energy industry, which had not seen much change in the previous 90 years. For example, there has been a 38 percent reduction in coal consumption in the past 20 years.
• Jacobson noted that there are places in the United States where renewable energy technologies are now economically viable and competitive. Consumers are experiencing nearly record low prices for their electricity, thanks also to low natural gas prices.
• While power-related emissions are decreasing, transportation emissions are increasing.
• Jacobson expressed optimism when referring to corporate engagement in transitioning toward a clean energy economy, and identified specific corporations that are leaders in this field, including Apple, Google, and Kimberly-Clark.
• When asked a question about how utilities are dealing with an increase in extreme weather events, Jacobson responded that pre-mitigation strategies pay off in the long run.

Todd Thurlow, Senior Business Development Director, Distributed Energy Systems, Siemens

• While Herdan and Jacobson focused their presentations on de-carbonizing the energy system, Thurlow discussed its decentralization.
• Thurlow stated that the energy grid is becoming more complex. Energy is increasingly being generated closer to the source of consumption (e.g., rooftop solar panels). From a consumer perspective, this results in more options. From a system perspective, this increasing complexity can also be beneficial. Thurlow outlined these benefits, which include: increased reliability, reduced energy costs, improved grid resilience, reduced carbon footprint, and enhanced control.
• Thurlow outlined the three key benefits of a decentralized energy grid: economics, resiliency, sustainability.
• Thurlow explained that gas prices are decreasing and there is a continued decline in costs, making a decentralized grid more economically feasible. There currently also is a 30 percent tax credit on solar, which provides another economic incentive for a decentralized grid.
• Decentralized grids allow areas to be more resilient, and extreme weather events are causing consumers to examine their dependency on the grid.
• Corporations are looking to decrease their use of carbon, and a decentralized grid is potentially more sustainable.
• Thurlow also outlined four factors that contribute to a distributed energy system: regulations, capacity build-out, a shift in the fuel mix, and an increase in competitive new technologies.
• Thurlow’s key take-away: a de-centralized grid is beneficial and can smooth the transition to a clean energy economy.
• During the question portion of the briefing, Thurlow explained that different types of renewable energy make sense for different regions, and that the market should determine what types of renewable energy to invest in. For example, wind energy makes sense in the Midwest, while solar energy makes sense in the Southwest.

 

Germany has experienced a tremendous increase in its renewable energy generating capacity, from roughly six percent in 2000 to more than 35 percent today. The current German Government remains determined to pursue a path toward an even greater renewable energy share, with a goal of deriving 65 percent of the country's electricity from renewables by 2030. The growth of the offshore wind industry is the transition's most recent development, with the North Sea now home to the largest cluster of wind turbines in the world. The energy transition has been paired with innovations in efficiency and electricity usage practices, resulting in a nearly eight percent decrease in energy consumption between 2008 and 2018 while the economy grew by 14.8% at the same time.

Although power generated from sustainable sources was initially more expensive than power generated from fossil fuels, sparking ongoing political debates, German industries have continued to thrive.