Degree of reliance on imported energy:
German dependence on energy imports is higher than the average EU-27, despite the significant amounts of domestically produced energy. Both primary energy supply and domestic production demonstrate a reasonable degree of fuel diversity, with the dominance of oil in the former and solid fuels in the latter. Oil is the main import and to a less significant degree gas and solid fuels; Russia is a significant source for all fuels.
Main sources of Energy:
Germany is the largest economy in Europe, and the largest consumer and producer of electricity. Despite not too favourable natural conditions, Germany is rightly considered as a frontrunner country in renewable electricity, thanks to the extremely rapid development of RES-E during the last 15 years. Due to the relatively scarce large hydro resources, Germany started from a very low share of RES-E, which was only 3.1 % in 1990. According to the data provided by Entso-e, the RES-E share has reached 16.7% in 2010, (23% in 2012).
Electricity generation is based primarily on coal and nuclear energy, with growing shares of natural gas and renewable sources. The German government decided in May 2011 to close down its 17 nuclear plants by 2022 at the latest in the wake of the nuclear disaster in Fukushima, Japan.
Extent of the network:
The German electrical grid is about 1.74 Million kilo-meters long. There are four voltage levels: Extra High, High, Distribution and Low. It is operated and divided by four transmission network operators.
At present, transmission infrastructure carrying power from northern Germany to the south is increasingly congested, and likely to become more so. The geographic concentration of large volumes of wind power, as much as 25 GW by 2030, in northern Germany, a region with low electricity demand, and the need to transport it to the industrial south where demand is will place further strain on the networks. Major power flows in Central Europe, including loop flows, originating in Germany, in the north-south direction through the Czech Republic and Poland, are among the drivers of the need for enhanced operational co-ordination, financial settlement and infrastructure investment in Central Europe.
As most renewable electricity generation is connected to the distribution system, rather than the transmission system, large investments are also required in the country’s 870 distribution systems.
Potential for Renewable Energy:
Germany’s average solar irradiation is somewhere between 975 and 1,200 kWh/m², which is less than many southern European countries or North Africa (cf. 2,200 kWh/m²).
An UBA study concludes that 49,361 km², or 13.8% of the country’s territory, are in principle suitable for wind energy use. This area potential would allow the installation of turbines with a total capacity of 1,188 GW and an annual power output of around 2,898 TWh. As expected, the biggest potential is in the northern German federal states, although a major potential was also calculated for the central and southern parts of Germany. In contrast, significant differences were noted in the median full load hours of the reference turbines as placed, with a national average amounting to 2,440 full load hours. Whilst with 2,621 and 2,540 full load hours respectively, the average capacity of wind energy plants in northern and central Germany is above average, only 2,108 full load hours are achieved in the south. However, this is still considerably higher than the median capacity utilisation of 1,700 full load hours over the past five years in Germany.
The Federal Environment Ministry believes biomass to be the “most important and multifunctional source of energy for Germany.” Regarding the land availability there are about 17 million hectare of agricultural spaces (approximately 12 million hectare of agricultural crop land and approximately 5 million hectare of grassland). There is also another 11 million hectare of woodland area.
By far the most important natural resource is wood. One third of Germany’s landscape is forest. About one quarter of all wood lumbered is used for energy generation. The other three quarters are utilized to create building and commercial materials. Coming along are recycled material, which are also used for energy generation. The Federal Ministry for Forest Affairs (Johann Heinrich von Thünen Institute) believes that there also is extra potential and reserves (13-35 million m³/ year) for sustainable forest harvesting.
The potential for agricultural biogas production was estimated on 19.7 – 20.6 bn m3, from the landfill biogas – 2.2 – 2.3 bn m3, and from wastewater treatment plants – 1.1bn m3.
The agricultural biogas production is regarded as having the largest development potential: out of a total technical potential of 417 PJ from sewage gas, landfill gas and agricultural biogas, the latter could provide 77-85%, according to Poeschl et al. In the same report it is estimated that only 10% of the total technical potential for biogas production is currently utilised.
In Germany, 4,350 MW have so far been installed from hydro power - more than twice the amount (10,040 MW) would be possible. If one considers the possible volume of electricity that could be produced by hydro power stations in Germany, the gap would even grow wider: the presently installed hydro power stations generate about 16,300 GWh of electricity per year. Yet 37,650 GWh would actually be possible. At present, Germany also has some 30 power stations with a pump capacity of 7 GW; the storage output amounts to approximately 7 GW. Pumped storage power plants can be controlled very flexibly; they are able to react to grid fluctuations within seconds.
Potential for Energy Efficiency:
As of 2011, the residential, transport and industry sectors contributed most to German final energy consumption (25.4%, 24.5% and 24.9% respectively). Primary and final energy consumption in Germany decreased by 12% and 8% respectively in 2011, compared to 1990 levels. The buildings sector in Germany is regarded as the key to improving energy efficiency, in both residential and industrial contexts, and numerous programs are in place to improve the energy performance of German building stock. These include a climate neutral building standard to be met by 2020, and increases in the market incentive program for renewable heat generation in buildings. Overall energy efficiency targets for the country under the EU Energy Efficiency Directive amount to 60 Mtoe primary energy saving in 2020, based on a 2007 scenario.
According to the second National Energy Efficiency Action Plan of Germany, an indicative energy savings target of 748 PJ is achievable by 2016. Calculated forecasts of actual energy savings in the period from 2008 to 2016 are significantly higher at 3,123 PJ, indicating Germany will be able to achieve this target with ease.
Electricity is generated by an increasingly diverse group of producers. A significant number of power plants are owned and operated by the four incumbent operators, namely RWE, E.ON, EnBW and Vattenfall Europe. In addition, independent producers and self-suppliers, as well as renewable electricity units (such as wind power plants and solar power generation facilities) add to the diversity of power generators. As network operators are required to purchase and feed in electricity generated from renewable energy sources or from combined heat and power facilities, power generation from such facilities plays an increasing role. Accordingly new players arise on the markets for power generation, direct sales and balancing power, aggregating decentralised units within virtual power plants.
Transmission networks are operated by the legally unbundled entities Amprion, TenneT, EnBW Transportnetze and 50Hertz Transmission, originally spun off from the four incumbent operators RWE, E.ON, EnBW and Vattenfall Europe. In order to comply with commitments offered to the EU Commission in the context of antitrust investigations, E.ON sold its power grid to the Dutch company TenneT and Vattenfall sold its transmission grid to Elia, the Belgian grid operator (60%), and the Australian Industry Funds Management (40%), operating the transmission grid under the company name 50Hertz Transmission. RWE sold its majority shareholding, but still holds 25.1% in Amprion. EnBW still owns its formerly integrated transmission grid as an independent operator.
Regional or local distribution networks are operated by a large number of vertically integrated utilities, in many of which the four large-scale suppliers RWE, E.ON, EnBW and Vattenfall hold shares. However, the Federal Cartel Office has in the recent past blocked acquisitions of interests by large-scale operators in regional players, stating that such acquisitions would strengthen dominant market positions. Now, municipalities and large public utility companies, the so called ‘Stadtwerke’, not only remain to control local network operators, but continue to increase their shares in the generation and network operation markets based on independent or cooperative acquisitions with other public utility companies.
Structure / extent of competition:
Historically, German energy policy led to regional monopolies of a limited number of utility companies, including the markets for generation, transmission and distribution as well as the supply of energy. Since the initial liberalisation and deregulation of the German power markets in 1998, driven by the implementation of the Electricity Directive, the diversity within the group of energy producers has continuously increased.
Unlike many other European countries, German local authorities play an important role in the transmission and distribution of electricity but less in generation market, traditionally dominated by private sector stock companies. After the set up of EU liberalization policies in electricity, the share and role of municipal energy companies began to shrink (they gave up or sell minority shares of their assets – grids and power plants – to the four major private and semi-private operators). More recently, a growing numbers of municipalities begun to buy back assets or to establish new facilities, or to expand existing ones, or to take back the operation of local grids when long term concession contracts expired, sometimes by setting up inter-municipal Stadtwerke (e.g. Bergkamen case). Still, regional and local companies ensure the supply with little competition. In the context of the closing of nuclear power generation, it is expected that the role of local level power generation of the energy saving and renewable will become important.
Historically, a limited number of utility companies enjoyed regional monopolies in their respective areas. These companies supplied energy and also operated the networks. By implementing Directive 2003/54/EC, Germany required market operators to comply with legal, functional and account unbundling requirement. Germany has so far objected to the introduction of ownership unbundling of transmission network operators in connection with the EU's this liberalization package, as long as either the ISO (independent system operator) or ITO (independent transmission operator) requirements are met.
Existence of an energy framework and programmes to promote sustainable energy:
Second Energy Package (Energiewende)
Following the Fukushima Daiichi nuclear accident in March 2011, a political decision which enjoyed extensive public support was taken to accelerate the phase-out of Germany’s nuclear fleet by 2022 starting with the immediate closure of the eight oldest plants. This decision, combined with the political target to further progress towards a low-carbon energy sector, had a major impact on the German energy policy outlook, which resulted in the adoption of a second package of measures, needed to accelerate the energy transition. This second Energy Package, which completed what is commonly known as the Energiewende, contained seven legislative measures to support renewable energy and grid expansion, promote energy efficiency, fund the reforms and reverse the previous decisions to extend the lifetime of the nuclear plants.
In the context of the Energy Concept (Energiewende), the German government has confirmed a GHG reduction target of 40% below 1990 levels by 2020 and set additional reduction targets of 55% by 2030, 70% by 2040 and 80% to 95% by 2050, each relative to 1990. Additional measures, however, may be required to meet the 40% reduction target by 2020 in the absence of a sustainable Europe-wide emissions trading scheme.
Energy efficiency is an important pillar of the Energiewende and the country has set a target of 20% reduction in primary energy consumption by 2020 and 50% by 2050 when compared to 2008. To date Germany has made good progress and has implemented a broad sweep of programmes across all sectors. Nonetheless, there is much to be done if Germany wishes to meets its 2020 targets and a comprehensive assessment of the energy saving potentials and targets for the individual sectors is needed, notably, in the industry and transport sectors.
Together with energy efficiency improvements, large-scale deployment of renewable energy is at the heart of the Energiewende. Since its inception in 2000, the Renewable Energy Sources Act (EEG) has proven very effective in introducing renewable energies; notably electricity generation from biomass, wind energy and solar photovoltaics (PV). This policy instrument has also proven successful in bringing costs down, as reflected in particular in the decrease in feed-in tariffs (FITs) for PV as a response to the rapid growth in take up of the technology over the past four years.
Energy Research Programme
The federal government published its new Energy Research Programme in August 2011 which promotes research and development activities to achieve the policy targets contained in the Energy Concept. Accordingly, the federal government has been increasing its research and development, and the budget funding will increase from EUR 1.9 billion over the period 2006-09 to EUR 3.5 billion for the period 2011-14. This commitment to energy-related research, development and deployment (RD&D) activities and encouragement of the federal government to further increase in spending on energy RD&D is very welcome.
Current energy debates or legislation:
The Energy Sources Act (EEG). The EEG has come under renewed criticism because of the high costs for consumers owing to the fixed FIT payments to operators of renewable power plants and a decreasing amount of chargeable energy consumption to which costs can be allocated. In February 2013, the Federal Minister of Economics and Technology and the Federal Environment Minister presented a joint proposal for a short-term amendment of the EEG to claw back the rising EEG surcharge and expressed their will to fundamentally alter the EEG in the long term.
There is also debate regarding the allocation of the costs of the Energiewende with some arguing that household consumers carry a disproportionate share of the burden. Under existing arrangements, large consumers of electricity that use more than 10 GWh of electricity per year pay a reduced surcharge (EUR 0.0005 per kWh) on 90% of the electricity they consume with the full surcharge payable on the remaining 10%. Electricity-intensive industries that consume more than 100 GWh, and whose electricity bills represent more than 20% of total costs, may pay the lower surcharge on all of their consumption. These large energy users also benefit from lower wholesale electricity prices brought about by the growth in renewables. Large numbers of producers, who have erected solar PV systems and connected to the distribution system, receive a revenue stream via the EEG. While these producers deliver significant benefits in terms of energy output, they also impose costs on the system, in terms of developing the distribution system and may sometimes act as a disincentive to reduce energy consumption.
Major energy studies:
European Energy Network
Germany is member of the EnR, which is a voluntary network of European energy agencies which aims at promoting sustainable energy best practices. EnR also strengthens cooperation between members and other key European actors on all sustainable energy issues (energy efficiency, sustainable transport and renewable energy). The French Environment and Energy Management Agency (ADEME) holds the presidency of the network for 2013.
Role of government:
Various federal ministries are involved in reshaping Germany’s energy policy:
Federal Ministry of Economic Affairs and Energy (BMWI)
The Federal Ministry of Economic Affairs and Energy has the lead responsibility for the formulation and implementation of energy policy.
Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU)
The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) sets policy for climate protection and the development of renewable energy. It is also in charge of radioactivity exposure and nuclear reactor regulations.
Federal Ministry of Transport, Building and Urban Development (BMVBS)
The Federal Ministry of Transport, Building and Urban Development (BMVBS) is in charge of energy efficient buildings and cities, transportation policy, and the use of cutting edge technologies in the transport sector.
Government agencies in sustainable energy:
DENA German Energy Agency
The German Energy Agency (DENA) is the centre of expertise for energy efficiency, renewable energy sources and intelligent energy systems. Dena's mission is to generate economic growth and maintain prosperity with ever lower energy inputs.
DENA was established in the autumn of 2000 with its head office in Berlin. Shareholders in DENA are the Federal Republic of Germany, KfW Bankengruppe, Allianz SE, Deutsche Bank AG and DZ BANK AG.
DENA is a performance- and profit-oriented company and was established with a mission to operate at the interface between politics and business. Consequently it finances its projects with the help of a large number of partners from the public and private sectors.
DBU - Die Deutsche Bundesstiftung Umwelt
On 24 October 1989 the Federal Parliament took up the suggestion of the then Finance Minister Dr. Theo Waigel the principle decision to use the proceeds from privatising the former steel group Salzgitter AG for an environmental foundation. DBU is one of Europe's largest federal foundations that promotes innovative and exemplary environmental projects in the field of environmental technology.
Federal Environment Agency (UBA)
The Federal Environment Agency (UBA) is Germany’s central authority on environmental matters. The UBA mainly provides scientific support for the Federal Government, implements environmental laws and informs the public about environmental protection questions.
Energy planning procedures:
Since Germany’s demand centres are located in the Midwest and the South, where the largest parts of generation were built before liberalisation and decarbonisation, the existing transmission network infrastructure requires massive upgrades to accommodate these new electricity flow patterns. According to particular research (Netzentwicklungsplan (NEP), 2012), the existing transmission network, comprising of roughly 35,000 km will have to be adapted with 5,700 km of upgrades in existing AC lines, 2,700 km in new AC lines and 2,100 in new DC lines. These upgrades will be required by 2022 to accommodate the anticipated electricity flows. Several of these projects are already in the siting process and according to one study (BNetzA, 2011), a significant amount of projects is already delayed due to missing local acceptance and fragmented responsibilities within the siting process.
Regarding the already identified delays and the significant function of the transmission network, the German government has reformed the need-determination framework (planning), land-use and siting process to enhance acceptance and to streamline approval procedures. To enhance acceptance, the land use and siting approval process will now be directly linked to the planning process for new infrastructures. Early, open, transparent and extensive consultation throughout the whole process is sought to ensure the highest accuracy and acceptance from all sides.
Since 2011, an amended version of the Energiewirtschaftgesetz has led to an amended transmission network planning process. Previously, the four Transmission System Operators in the German network (50Hertz, Amprion, TenneT and TransnetBW) were in charge of network planning completely; now, they collaboratively develop initial drafts of the network development plan (Netzentwicklungsplan), which is then published for consultation with a variety of stakeholders, including the general public. The national regulator, the Bundesnetzagentur, then creates final versions of the drafts based on the consultation, and submits them to the federal government to be transposed to federal law. This process takes place every three years, with two drafts being required for consultation before final submission. The four TSOs are also required by law to take existing offshore energy development plans and European network plans into account when creating the network development plans.
A significant number of measures are in place to aid in the development of renewable electricity under the country’s National Renewable Energy Action Plan, including the EnLAG law (Gesetz zum Ausbau von Energieleitungen), for the development of power lines, which is designed to accelerate grid extension to renewable energy sources by identifying urgent requirements for new power lines. Low-interest loans from the state-owned KfW development bank are also available under the NREAP. Regional planning laws also obligate the federal and state governments to encourage environmentally-friendly energy provision, including renewable energy sources. Planning approval for renewables projects, however, is under the jurisdiction of local authorities or individual states.
Energy regulator Date of creation:
The main sector regulator is the Federal Network Agency, based in Bonn. Furthermore, competition is safeguarded by the Federal Central Office, where a specialised unit deals with the energy sector. Also located in Bonn, it applies antitrust law primarily to electricity supply, electricity generation and mergers.
Degree of independence:
All regulatory authorities are completely independent of the regulated business. Both the Federal Network Agency and the Federal Cartel Office are in the portfolio of the Federal Ministry of Economics. Within the agencies, the various decision-making chambers maintain a certain degree of autonomy.
Regulatory framework for sustainable energy:
A key objective of German electricity regulation is to ensure effective and undistorted competition, as well as reliable and efficient networks. In addition, German policy has moved further towards renewable energy and environmental protection. The legal framework for renewable energy mainly consists of the:
- Renewable Energies Act (EEG).
- Renewable Energies and Heat Act (EEWärmeG).
- Combined Heat and Power Act (KWKG).
In addition, the costs for network access and feed-in tariffs (FiTs) for green energy are born by the four transmission system operators. These costs are allocated to the majority of electricity consumers in Germany through the Renewable Energies Act Levy (EEG-Umlage), in accordance with the Compensation Mechanism Regulation (AusglMechV). Renewable energy markets are mainly characterised by a priority third-party network access and fixed FiTs, as well as a cost allocation system. The Federal Cartel Office therefore continues to refuse to include renewable electricity markets in any (conventional) electricity sector inquiries.
The Federal Network Agency (Bundesnetzagentur)
- enforces the regulated network access provisions and monitors system operators with regard to cost regulation and network access conduct to ensure the efficient operation of energy supply networks on a long-term basis;
- sets regulatory standards for new markets, such as balancing power or technical requirements for the integration of renewable power plants.
Role of government department in energy regulation:
Both the Federal Network Agency and Federal Central Office are independent government departments, and no other government agency takes an active role in energy regulation.
The German legal framework provides favourable conditions for the connection of RES-E plants. Though there are practical barriers that make the grid connection process one of the most difficult steps when developing RES-E projects it should be considered that there have been thousands of RES-E systems that were installed in the last years to the German grid. The vast majority of RES-E installations were connected to the grid without serious conflicts and in a standardized manner. Therefore, when comparing the situation in Germany with many other EU countries, the existing barriers have so far not seriously hindered the deployment of RES-E installations. It goes without saying that this assessment differs depending on the specific RES-E technology, the particular size of the RES-E installation, the involved actors and many other factors. The connection process of offshore wind plants, to give an example, has been quite problematic for a long time. In 2009, though, new procedures have been introduced that have solved many of the problems and that could be regarded as benchmark for other European countries. With hindsight to the extremely positive development of RES-E in the past 20 years and the quick reaction to identified barriers, the grid connection of RES-E plants is still positively evaluated. Because of the existing purchase obligation for electricity from renewable sources, the framework regulating the operation of the grid provides favourable conditions for the deployment of RES-E installations.
Brown, Phillip (2013): European Union Wind and Solar Electricity Policies: Overview and Considerations. Available at:
http://www.fas.org/sgp/crs/row/R43176.pdf [Accessed 19th November]
DBU website: Principles of the foundation's work. Available at: http://www.dbu.de/360.html [Accessed 27th December]
DENA website: About Us. Available at: http://www.dena.de/en/about-dena.html [Accessed 27th December]
European Energy Network website: Available at: http://www.enr-network.org/ [Accessed 1st December]
GENI (2011): Is 100% Renewable Energy Possible for Germany 2020? Available at: http://www.geni.org/globalenergy/research/renewable-energy-potential-of-germany/Germany_Final_PBMfinal.pdf [Accessed 19th November]
ECLAREON (2012): Integration of electricity from renewables to the electricity grid and to the electricity market – RES-INTEGRATION Final Report. Available at http://www.oeko.de/oekodoc/1378/2012-012-en.pdf [Accessed 7th November]
Grezlack, Paulina et al. (2012): Potential of Biogas Production in Poland, Germany and Sweden. Available at:http://www.balticbiogasbus.eu/web/Upload/doc/Wakbrzych_3_July_2012/Grzelak.pdf [Accessed 24th December]
Engdhal, Kristina (2010): Biogas Policies, Incentves and Barriers. Available at: http://www.miljo.lth.se/svenska/internt/publikationer_internt/pdf-filer/exjobb%20imes%20Kristina%20Engdahl.pdf [Accessed 29th December]
IEA (2012): Executive Summary and Key Recommendations. Available at: http://www.iea.org/Textbase/npsum/germany2013SUM.pdf [Accessed 29th December]
I. Lütkehus, H. Salecker (2013): Onshore Wind Energy Potential in Germany. Available at: http://www.dewi.de/dewi/fileadmin/pdf/publications/Magazin_43/05.pdf [Accessed 27th December]
Practical Law (2013): Electricity Regulation in Germany: Overview. Available at: http://uk.practicallaw.com/5-524-0808?q=*&qp=&qo=&qe= [Accessed 29th December]
Research in Germany website: Available at: http://www.research-in-germany.de/dachportal/en/Research-Areas-A-Z/Environmental-Technology/Links.html [Accessed 26th December]
Climate protection and energy policy in Germany
Available at: http://www.umweltbundesamt.de/en/topics/climate-energy/climate-protection-energy-policy-in-germany [Accessed 27th December]
Getting the Deal Through (2013): Electricity Regulation 2014. Available at: http://www.osborneclarke.com/media/filer_public/de/78/de78999f-424d-4028-ace6-ac0268e35821/er2014_germany.pdf [Accessed 29th December]
www.voith.com: The Potential of Hydropower. Available at: http://www.voith.com/en/press/viewpoints/potentials-of-hydropower-19065.html [Accessed 26th December]
Volk, Dennis (2013): Electricity Networks: Infrastructure and Operations - too Complex for a Resource. Available at http://www.iea.org/publications/insights/insightpublications/ElectricityNetworks2013_FINAL.pdf [Accessed 26th December]
Green European Foundation (2012): 27 National Action Plans = 1 European Energy Policy? An analysis of six National Renewable Energy Action Plans. Available at: http://www.gef.eu/fileadmin/user_upload/GEF-10-06_NREAP_EN_web_final.pdf [Accessed 23rd January]
Weber, A. et al (2013): Long-term Power System Planning in the Context of Changing Policy Objectives - Conceptual Issues and Selected Evidence from Europe. Available at: http://renewables-grid.eu/fileadmin/SEFEP_grid_planning_June2013.pdf [Accessed 23rd January]
ODYSSEE-MURE (2010): Energy Efficiency Policies and Measures in Germany. Available at: http://www.isi.fraunhofer.de/isi-media/docs/x/de/publikationen/National-Report_Germany_November-2012.pdf [Accessed 23rd January]
IEA (2011): Country Energy Statistics - Germany. Available at: http://www.iea.org/statistics/statisticssearch/report/?&country=GERMANY&year=2011&product=Balances [Accessed 23rd January]