The German Energy Transition and Policy

Dr. Karoline S. Rogge SPRU, University of Sussex & Fraunhofer ISI

February 17, 2016 in Helsinki

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Overview • Quick history of the German Energiewende • Deep dive: Electricity Supply & Renewables

• Unfolding Transition towards Renewables • Manufacturers, Innovation and Policy Mix

• Outlook

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Quick history of the German Energiewende

What Fukushima has to do with the German Energy Transition

Timeline Energiewende (1) • 1974: The Federal Environment Agency is founded • 1980: Publication of study entitled “Energiewende”

(Öko-Institut) • 1983: Green Party enters the German national parliament • 1986: In Chernobyl (Ukraine), a nuclear power plant melts

down. Five weeks later, the Federal Ministry of the Environment, Nature Conservation, and Nuclear Safety is founded (BMU)

• 1987: German Chancellor Helmut Kohl (CDU) speaks of the “threat of grave climate change from the greenhouse effect” in the German Parliament

• 1991: The Feed-in Act is adopted under Kohl’s coalition

Timeline Energiewende (2) • 2000: Renewable Energy Sources Act (EEG)

(Chancellor Schröder + Green Party) • 2002: Decision on nuclear phase out by 2022

(Chancellor Schröder + Green Party) • 2010: Decision on the exit from the nuclear exit and ambitious targets

for decarbonisation, renewables and energy efficiency (Chancellor Merkel + Liberal Party)

• 2011: Fukushima (March11-16)

Shutdown of 8 nuclear power plants

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Then: Exit from the exit from the exit

Source: http://www.spiegel.de/flash/flash-24364.html

• June 2011: decision to phase out remaining 17 nuclear power plants by 2022 (Chancellor Merkel + Liberal Party, cross-party support)

• March 27, 2011: Merkel’s party looses elections in Baden-Württemberg - Green Party gets 24.2%, leads federal government

Nuclear phase-out path (2000-2022)

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Source: Morris and Pehnt (2014)

Targets of the Energy Concept

9 BMWi 2014: Fortschrittsbericht / First progress report– english summary, p. 5.

Transition of the German electricity system

Focus on electricity supply and renewable energies

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Unfolding Transition towards Renewables Analyzed through the lense of the multi-level perspective

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Landscape pressures and other influential factors • Strong anti-nuclear movement • Climate change • Proportional voting system • Manufacturing nation/ engineering

expertise • Liberalization of the electricity sector • Financial and economic crisis • Environmental concerns • Tech development: Green ICT,

electrification of heating and mobility

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Source: Rogge, K.S.; Friedrichsen, N. and Schlomann, B. (2015): Regime analysis of the German electricity system. Country report 1 of Deliverable D2.2: ‘Analysis of stability and tensions in incumbent socio-technical regimes’. PATHWAYS project “Exploring transition pathways to sustainable, low carbon societies”. Fraunhofer ISI, Karlsruhe. http://www.pathways-project.eu/output

Policy Strategy: RE targets

• Increasing ambition of expansion targets (EEG 2000-2012) • Introduction of long- and medium-term targets (EEG 2012/14):

80% RES generation by 2050 (ca. 33% in 2015)

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Installed electricity generation capacity from renewable energies

14

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Inst

alle

d ca

pacit

y in

MW

Onshore Wind Offshore Wind Solar PV Bioenergy Source: BMWi 2015

Who has been driving this? A look into ownership shares (EEG 2012)

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Private persons34.9%

Agriculture11.2%Banks/Fonds

12.5%

Project developers

13.8%

Contracting companies

0.2%

Commercial14.4%

International utilities

2.2%

Other utilities3.5%

Regional generator

1.3%

"Big 4" utilities4.9%

Others1.0%

• ca. 47% citizens and coops

• ca. 41% institutional and strategic investors

• ca. 12% energy suppliers

Source: Agora Energiewende, 2013a, p. 12

Source: Morris and Pehnt, 2014: German Energy transition.

Paradoxon of the Energiewende: Renewables and CO2-emissions up

16

Sou

rce:

BM

Wi,

2014

b (o

wn

tran

slat

ion)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Nuclear

Lignite

Hard coal

Gas

Renewable energiesOthers

Mineral Oil

Fundamental changes in generation regime (with knock-on effects for grid)

Significant cracks and tensions in regime, leading to reconfiguration: • Pressures from landscape: mainly anti-nuclear and climate change

• High niche momentum: mature niches wind (and PV) grow into emerging sub-regimes 17

Electricity generation

REGIME

Gas Nuclear Lignite Coal

Centralized, large-scale fossil-nuclear electricity generation

More decentralized, smaller-scale renewables-dominated electricity generation

Bio

Mature niches

PV Wind Gas Nucl. Lignite Coal Bio PV Wind

Contested sub-regimes Emerging sub-regimes

LANDSCAPE

Climate change

Anti-nuclear

Liberalization

Established sub-regimes

Energy security Economic crisis

Electrification

ICT

Manufacturing base

Political system Climate change

Anti-nuclear

Liberalization

Energy security Economic crisis

Electrification

ICT

Manufacturing base

Political system

Recent past Expected development

Renewable energy manufacturing base Findings from a company survey of German manufacturers

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Company innovation survey • CATI of German manufacturers

of renewable power generation technologies

• Questionnaire builds on CIS, but new questions for policy mix

• Conducted: April-Juli 2014 • Response rate: ca. 36%

(n=390)

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For details, see Rogge 2015, available at www.project-gretchen.de

Which instruments support RES most?

• Nuclear phase-out supports the expansion of renewable energies the strongest

• Public R&D/ innovation funding, training of skilled workers and the EEG are considered equally important instruments

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Support of the expansion of renewable electricity generation through:

9%

7%

11%

8%

10%

20%

34%

32%

8%

19%

19%

22%

24%

33%

28%

31%

13%

30%

26%

29%

39%

31%

20%

21%

20%

21%

21%

24%

19%

11%

11%

10%

28%

16%

14%

11%

5%

22%

6%

9%

6%

40% 20% 60% 0% 80% 100%

5

4

3 3

EU Emission Trading System ( EU ETS) 4

2 Ø=2.9 (n=309)

Ø=3.3 (n=378)

Ø=2.3 (n=365)

Ø=2.3 (n=371)

Ø=2.5 (n=301)

Ø=3.3 (n=340)

Ø=3.4 (n=360)

Ø=4.2 (n=385)

3 5 4 6 (fully supports) 2 1 (no support at all)

Phase-out of nuclear energy by 2022

Public R&D/innovation funding

Promoting the training of skilled workers for the renewable branch

Renewable Energy Sources Act (EEG)

Energy Industry Act (EnWG) and other policy initiatives to expand the grid

Federal Nature Conservation Act and its implementation

Policy framework conditions for fossil electricity generation

How innovative are German RE manufacturers (2011-13)?

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18% Product Innovations

n = 349 Process Innovations

n = 347

Yes

No

24.9%

75.1%

No

66%

34%

Yes

Innovation activities n = 371

Yes

No

82%

18%

What drove their innovation activities?

• Policy mix drives innovation by generating demand • Domestic and foreign demand pull instrument influential (today‘s

and expected), but equally important also 2025 targets and credible commitment to Energiewende (more than R&D support)

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20%

21%

28%

24%

26%

22%

33%

45%

15%

17%

13%

17%

19%

23%

19%

27%

13%

21%

20%

16%

18%

16%

27%

20%

15%

23%

14%

15%

13%

13%

11%

16%

14%

7%

30%

17%

15%

15%

15%

14%

8%

8%

26%

13%

12%

15%

13%

14%

5%

6%

4%

4%

100% 0% 60% 40% 20% 80%

Ø=2.6 (n=310)

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Other supportive laws and regulations in Germany

R&D or innovation funding for renewables from DE and EU Ø=2.8 (n=312)

Expected future support under the amended Renewable Energy Sources Act (EEG 2.0) Ø=3.1 (n=315)

Credible political commitment to the Energiewende Ø=3.2 (n=316)

Existing and expected foreign support for renewable energies Ø=3.2 (n=308)

Political expansion targets for renewable energies for 2025 Ø=3.2 (n=317)

Existing support under the German Renewable Energy Sources Act (EEG) Ø=3.3 (n=317)

Demand for innovations from customers Ø=4.5 (n=322) 3

Ø=2.1 (n=302) EU Emission Trading System (CO2 price)

6 (very strong influence) 4 5 3 2 1 (absolutely no influence)

Influence of demand and political factors on innovation activities in the RE branch (2011-13)

Innovation impact of policy mix • Regression analysis indicates that the following aspects of the

policy mix play a statistically significant role for the level of innovation expenditure by manufacturers of renewable energy power generation technologies:

• Changes in domestic and foreign demand (stimulated by various demand pull instruments)

• Public R&D funding of previous years (from DE and EU)

• Alignment of political instruments with expansion targets (policy mix consistency)

• Credible political commitment to the Energiewende

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Source: Rogge and Schleich (2015): Do policy mix characteristics matter for (eco-) innovation?

Policy implications • Understand and design policy mix as a whole – backing only

one instrument will not achieve desired result • Aim for credible and internally consistent policy mix - strong

political will for green transformation clarifies future market developments needed for long-term investments in innovation

• Work towards greater supranational coordination of policy mix

as green change increasingly global process

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Outlook

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Conclusions (1) • German Energiewende as long-term transformative change process

(but so far largely limited to electricity generation) • Landscape shocks can make a difference (Chernobyl, Fukushima) • Institutional change key (UBA, BMU, BMWi; EEG, market design) • Proportional voting system as enabler of green niche formation

(green party & EEG/phase out) • Policy mix (initially) targeted towards new entrants (incl. private

investors) to work around vested interests of incumbants • Economic benefits as key argument, particularly due to strong

manufacturing base (e.g. regional development, jobs, export), but also consider international competition (e.g. PV/China)

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Conclusions (2) • Even with unfolding transition concrete pathway in flux (e.g. who

invests?, which RE technology?, how decentralized?) • Constant political struggles, change remains contested and

difficult to predict, surprises and resistance need to be managed • Requires adaptive policy making (policy learning, institutional

capacity) • Importance of firm political will (perceived credibility) and efforts on

making policy mix consistent • Huge policy management challenge across regimes (e.g.

generation & grids)

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www.smartenergytransition.fi

Thank you!

References GRETCHEN • GRETCHEN report available at project

website: „Green change: renewable energies, policy mix and innovation“

• All publications available online: www.project-gretchen.de

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References PATHWAYS • Rogge, K.S.; Friedrichsen, N. and Schlomann, B. (2015): Feasibility of

tranition pathways in German electricity system. Country report 1 of Deliverable D2.3: ‘Integrated analysis of the feasibility of different transition pathways’. PATHWAYS project “Exploring transition pathways to sustainable, low carbon societies”. Fraunhofer ISI, Karlsruhe.

• Rogge, K.S.; Friedrichsen, N. and Schlomann, B. (2015): Regime analysis of the German electricity system. Country report 1 of Deliverable D2.2: ‘Analysis of stability and tensions in incumbent socio-technical regimes’. PATHWAYS project “Exploring transition pathways to sustainable, low carbon societies”. Fraunhofer ISI, Karlsruhe.

• Rogge, K.S.; Bödeker,P.; Dallinger, D.; Fleiter, T.; Friedrichsen, N.; Klobasa, M.; Lehmann, J.; Michaelis, J.; Pudlik, M.; Ragwitz, M. and Wietschel, M. (2014): Green niche-innovations in the German electricity system. Country report 1 of Deliverable D2.1: ‘Analysis of green niche-innovations and their momentum in the two pathways.’ PATHWAYS project “Exploring transition pathways to sustainable, low carbon societies”. Fraunhofer ISI, Karlsruhe.

• Access to project deliverables: http://www.pathways-project.eu/output

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