Energy Policies of IEA Countries - Germany 2013 Review

Since the IEA last reviewed Germany's energy policies in 2007, the country has taken two fundamental policy decisions that will guide its energy policy in coming decades. In September 2010, the federal government adopted the Energy Concept, a comprehensive new strategy for a long-term integrated energy pathway to 2050. Following the Fukushima Daiichi nuclear accident in March 2011, Germany decided to accelerate the phase-out of nuclear power by 2022 starting with the immediate closure of the eight oldest plants. This decision resulted in the adoption of a new suite of policy measures, determined renewable energy as the cornerstone of future energy supply, a set of policy instruments commonly known as the Energiewende. In order to achieve the ambitious energy transformation set out in the Energiewende, by 2030 half of all electricity supply will come from renewable energy sources; Germany must continue to develop cost-effective market-based approaches which will support the forecast growth of variable renewable generation. Furthermore, the costs and benefits need to be allocated in a fair and transparent way among all market participants, especially households. Renewable energy capacity must expand alongside the timely development of the transmission and distribution networks. In addition, a stable regulatory system is necessary to ensure long-term finance to network operators. Furthermore, close monitoring of Germany's ability to meet electricity demand at peak times should continue in the medium term. Energy policy decisions in Germany inevitably have an impact beyond the country's borders and must be taken within the context of a broader European energy policy framework and in close consultation with its neighbours. This review analyses the energy-policy challenges facing Germany and provides recommendations for further policy improvements. It is intended to help guide the country towards a more secure and sustainable energy future. Read more... Energy Policy ENERGY POLICIES OF IEA COUNTRIES - 2013 GERMANY REVIEW 1 Table of contents 5 1. Executive summary and key recommendations 11 Executive summary 11 Steady progress 11 Controlling the costs 13 Getting the grids right 15 Generation adequacy 16 A future for gas 17 Key recommendations 18 PART I POLICY ANALYSIS 19 2. General energy policy 21 Country overview 21 Economy 22 Supply and demand 22 Supply 22 Demand 25 Institutions 26 Key policies 27 Integrated energy and climate programme of August 2007 27 The Energy Concept 2010 28 The Energy Package 2011 29 Taxation 30 Energy security 31 Oil and natural gas 31 Electricity 32 Assessment 32 Recommendations 36 3. Energy efficiency 37 Overview 37 Final energy use 37 Final consumption per sector 37 Energy intensity 39 Institutions 39 Policies and measures 40 European Union Policies 40 Domestic Policies 41 Cross-sectoral policies 42 Buildings 43 Transport 45 Industry and Services 46 Appliances 46 Assessment 47 Recommendations 50 4. Climate change 51 Overview 51 Targets and objectives 51 Energy-related CO2 emissions 52 Sources of CO2 emissions 52 CO2 intensity 54 Trends and projections 55 GHG emissions 55 Institutions 56 Policies and measures 56 INtegrated Energy and Climate Programme 57 The energy concept 58 EU Emissions Trading Scheme (EU-ETS) 59 Measures in the transport sector 59 Eco-tax reform 59 Vehicle taxes 61 Other measures and initiatives 62 International measures 62 The Energy and Climate Fund 62 International Climate Finance 63 Other measures 63 Other initiatives 64 Assessment 65 Recommendations 67 PART II SECTOR ANALYSIS 69 5. Natural gas 71 Overview 71 Supply and demand 71 Supply 71 Imports and exports 72 Demand 72 Natural gas infrastructure 73 Transmission and distribution 73 Cross-border connections 74 Gas grid development plan 2013 74 Liquefied natural gas 76 Storage 76 Market structure 76 Wholesale market and natural gas trading 77 The gas hubs 78 NetConnect Germany (NCG) 78 Gaspool 78 Proposals for a single gas hub 79 European Energy Exchange 79 Competition Concerns 80 Retail market and prices 81 Natural gas security of supply 84 Interruptible contracts 85 Fuel switching 85 Risk assessment 85 Data quality 86 Assessment 87 Recommendations 89 6. Oil 91 Overview 91 Supply and demand 91 Production, imports and exports 91 Refining 93 Demand 94 Industry structure 95 Competition concerns 95 Refining 96 Oil supply infrastructure 96 Ports 96 Pipelines 97 Storage capacity 97 Emergency preparedness and organisation 97 National Emergency Sharing Organisation (NESO) 98 Emergency Oil Reserves 99 Oil demand restraint 99 Other oil emergency response measures 100 Assessment 100 Recommendation 101 7. Coal and carbon capture and storage 103 Overview 103 Supply and demand 103 Supply 103 Imports and exports 104 Demand 105 Industry structure 105 Hard Coal 105 Lignite 107 Subsidies for the coal industry 108 Carbon capture and storage 109 Policy Overview 109 Regulatory Framework 109 Stakeholder engagement 109 Storage potential 110 CCS projects – Pilot scale 110 Assessment 111 Recommendations 112 8. Renewable energy 113 Overview 113 Supply and demand 113 Electricity generation 114 Institutions 115 Financing of renewable energy 116 Policies and support measures 116 Renewable Energy sources Act 116 EEG surcharge for 2013 118 The Energy Concept 119 Wind energy 120 National Renewable Energy Action Plan 120 Renewable Energies Heat Act 2009 120 Market Incentive Programme for Renewable Energies 121 Policies and measures in the transport sector 122 Biofuels Quota Act 122 Biofuels Sustainability Law 122 Government programme on electromobility 122 Electricty 122 Overview 122 Policy environment for renewable electricity 123 Economic attractiveness of renewable electricity 123 Grid and system integration 124 Dena study on the Integration of renewable energy sources 125 Solar energy 126 Wind energy 127 Hydropower 128 Biomass 129 Biogas in Germany 129 Heat supply 129 Biomass for heat 130 Solar thermal energy 130 Geothermal energy 130 Transport sector 130 Assessment 130 Costs of PV deployment 131 Reducing costs and policy stability 132 System integration 133 Heating and cooling 133 Capital costs 134 Recommendations 134 9. Electricity 135 Overview 135 Supply and demand 135 Electricity generation 135 Electricity consumption 137 Imports and exports 137 Institutions and legal frameworks 138 The Energy Concept (Energiewende) 139 Market design and structure 139 Market structure 139 Generating capacity 139 Transmission and distribution 141 Cross-border trade and transit 142 Loop flows in central Europe 142 Wholesale market 146 Market coupling in Central-Western Europe 147 Generation adequacy in Germany 149 Context 149 The capacity situation 150 Does Germany need a capacity market? 151 Transmission and distribution access 154 Network access 154 Transmission charging 154 Distribution access and charging 154 Network development and expansion 154 Ten-year network development plans 155 ENTSO-E Ten-Year Network Development Plan 156 Distribution network expansion 157 Distributed and variable renewable power integration 157 Smart grid developments 158 Demand-side measures 159 Combined heat and power 159 Electricity security 160 TSO security co-operation 161 Retail market and prices 162 The composition of end-user prices 162 Assessment 166 Wholesale markets 166 Generation adequacy 167 Investment in transmission and distribution infrastructure 169 Electricity prices 170 Recommendations 171 10. Nuclear Energy 173 Overview 173 Nuclear Industry Structure 175 Nuclear fuel sources 176 Radioactive waste management: low- and intermediate-level 176 Radioactive waste management: high-level 176 Regulation 177 Public awareness 177 Assessment 178 Radioactive Waste Management 178 Decommissioning 179 Human resource development 179 Recommendations 180 PART III ENERGY TECHNOLOGY 181 11. Energy Research, development and deployment 183 Overview 183 Institutions 184 Energy research priorities and funding 186 Funding 186 Evaluation 189 Interministerial research initiatives 189 International collaboration 191 Private-sector participation 191 Assessment 191 Recommendations 193 PART IV ANNEXES 195 Annex A: Organisation of the review 197 Review criteria 197 Review Process 197 Annex B: Energy balances and key statistical data 199 Footnotes to energy balances and key statistical data 200 Annex C: International Energy Agency “Shared Goals” 205 Annex D: Glossary and list of abbreviations 207 7 Annotation Since the IEA last reviewed Germany's energy policies in 2007, the country has taken two fundamental policy decisions that will guide its energy policy in coming decades. In September 2010, the federal government adopted the Energy Concept, a comprehensive new strategy for a long-term integrated energy pathway to 2050. Following the Fukushima Daiichi nuclear accident in March 2011, Germany decided to accelerate the phase-out of nuclear power by 2022 starting with the immediate closure of the eight oldest plants. This decision resulted in the adoption of a new suite of policy measures, determined renewable energy as the cornerstone of future energy supply, a set of policy instruments commonly known as the Energiewende. In order to achieve the ambitious energy transformation set out in the Energiewende, by 2030 half of all electricity supply will come from renewable energy sources; Germany must continue to develop cost-effective market-based approaches which will support the forecast growth of variable renewable generation. Furthermore, the costs and benefits need to be allocated in a fair and transparent way among all market participants, especially households. Renewable energy capacity must expand alongside the timely development of the transmission and distribution networks. In addition, a stable regulatory system is necessary to ensure long-term finance to network operators. Furthermore, close monitoring of Germany's ability to meet electricity demand at peak times should continue in the medium term. Energy policy decisions in Germany inevitably have an impact beyond the country's borders and must be taken within the context of a broader European energy policy framework and in close consultation with its neighbours. This review analyses the energy-policy challenges facing Germany and provides recommendations for further policy improvements. It is intended to help guide the country towards a more secure and sustainable energy future