Our most important findings
- Key questions
The German Energiewende is here to stay. Started in the 1990s, it is a long-term energy and climate strategy reaching as far forward as 2050.
It enjoys broad public support and is driven by four main political objectives: combatting climate change, avoiding nuclear risks, improving energy security, and guaranteeing competitiveness and growth.
Wind energy and solar PV are the backbone of the German Energiewende and flexibility is the new paradigm of the power sector.
Wind and solar energy are now cost-competitive with conventional energy sources for new investments. These technologies, however, impact power systems, making increased system flexibility crucial. Fossil power plants currently deliver the needed flexibility; increasingly other options (demand side management, storage,… ) will become more important.
The Energiewende requires a structural change in the German energy sector, bringing new challenges and opportunities.
Given the transformative nature of the Energiewende, investment, growth, and employment are shifting towards new low-carbon sectors. Renewable energy and energy efficiency are providing several hundred thousand jobs, while jobs in the nuclear and coal sectors are declining. A broad consensus on the phasing out of coal is needed to accompany this restructuring process.
The transformation of the power systems toward renewable energy is not only taking place in Germany but worldwide.
In 2014, for the third year running, worldwide investment in new renewable capacity exceeded investment in fossil-fuel power. Many other countries in Europe and beyond have set ambitious renewable energy targets. The challenges faced by Germany are therefore a preview of what is likely to occur in several other countries in the medium to long-term.
Initial EEG investments will begin to pay out in 2023: From then on, the EEG surcharge will fall despite increasing shares of renewable energy.
The main reason is that starting in 2023, EEG funding for renewable plants from the early years with high feed-in tariffs starts to expire, and new renewable energy plants produce electricity at a considerably lower cost.
If the expansion of renewables continues at its ambitious pace, electricity costs will rice by 1-2 ct/kWh until 2023, but then fall by 2-4 ct/kWh by 2035.
The sum of the EEG surcharge and wholesale electricity price, after being adjusted for inflation, will climb from around 10 cent per kWh today to 11 to 12 cents in 2023 and then sink to 8 to 10 cents by 2035.
In 2035, electricity will cost the same as today, but 60 per cent will stem from renewable sources.
According to the current law, the share of renewables in electricity use is to rise from today’s 28 per cent to 55-60 per cent in 2035. Yet, the electricity cost in 2035 will be on the same level as today.
Main factors driving the EEG surcharge in the future will be the wholesale power price, the level of power demand, exemptions for industry and the amount of self-consumption.
Since renewable energy plants have now become affordable alternatives for energy production, these drivers – not the costs and volumes of renewables – are essential for the EEG surcharge level.
Principle 1: Convening a ‘Round Table for a National Consensus on Coal’
Principle 2: Incremental, legally binding phase-out of coal power by 2040
The Coal Phase-Out in Germany’s Power Plant Fleet
Principle 3: No new construction of coal-fired power plants
Principle 4: Determine a cost-efficient decommissioning plan for existing coal power plants based on remaining plant lifespans, including flexibility options in lignite mining regions
Principle 5: No additional national climate policy regulations for coal-fired power plants beyond the phase-out plan
The Coal Phase-Out in Lignite Mining Regions
Principle 6: No additional lignite mines and no further relocation processes of affected communities
Principle 7: The follow-up costs of lignite mining should be financed with a special levy on lignite
Principle 8: Creation of ‘Structural Change Fund’ to ensure a sound financial basis for structural change in affected regions
Economic and Social Aspects of the Coal Phase-Out
Principle 9: Ensuring security of supply over the entire transformation period
Principle 10: Strengthening EU Emissions Trading and the prompt retirement of CO? certificates set free by the coal phase-out
Principle 11: Ensuring the economic competitiveness of energy-intensive companies and the Germany economy as a whole during the transformation process