Benefits of Energy Efficiency on the German Power Sector

Final report of a study conducted by Prognos AG and IAEW

  • Study
Final report of a study conducted by Prognos AG and IAEW

Public debate on the energy transition is dominated by questions surrounding costs. Yet with increased energy efficiency, the energy transition can be implemented much more cost effectively. This is a sorely neglected issue. The value of savings that could be achieved through greater efficiency in the power sector has not been previously quantified. Accordingly, this issue was examined in detail in the study by Agora Energiewende, the European Climate Foundation (ECF), and the Regulatory Assistance Project (RAP). Specifically, the study shows the extent to which the costs of electricity can be reduced through greater energy efficiency in conventional and renewable generation as well as in transmission and distribution grids, with remarkable and quite surprising findings.

The new German government is faced with the task of implementing decisive policies to promote the energy transition. Especially in the case of energy efficiency, there is pressure to take action in order to ensure the achievement of long-term goals: namely, to reduce primary energy consumption 50 percent by 2050 and to reduce power consumption 10 percent by 2020 and 25 percent by 2050. Thus, the study should be understood in part as a plea to appreciate the importance of energy efficiency in the electricity sector, and as a call to grant efficiency a prominent role in the current energy policy debate. With the implementation of the European Energy Efficiency Directive into national law and the National Energy Efficiency Action Plan in Germany’s listed in the coalition agreement, the need for greater attention to this issue is all the more pressing.

Project management

Core results

  1. 1

    Improving energy efficiency would significantly lower the costs of the German electricity system.

    Each saved kilowatt-hour of electricity reduces fuel and CO2 emissions, as well as investment costs forfossil and renewable power plants and power grid expansion. If electricity consumption can be lowered by10 to 35 percent by 2035 compared to the Reference scenario outlined in the study, the costs for electricitygeneration will reduced by 10 to 20 billion euros2012.

  2. 2

    Improvements in the energy efficiency of the electricity sector can be achieved economically.

    One saved kilowatt-hour of electricity would lead to reduced electrical system costs of between 11 to 15euro cents2012 by 2035, depending on the underlying assumptions. Many efficiency measures wouldgenerate lower costs than these savings, and would therefore be beneficial from an overall economicperspective.

  3. 3

    Reductions in future power consumption mean a lower need to expand the power grid.

    A significant increase in energy efficiency can significantly reduce the long-term need to expand thetransmission grid: between 1,750 and 5,000 km in additional transmission lines will be needed by 2050,down from 8,500 km under the “business as usual” scenario.

  4. 4

    Reducing power consumption would reduce both CO2 emissions and import costs for fuel.

    Reducing power consumption by 15 percent compared to the Reference scenario would lower CO2 emissionsby 40 million tonnes and would reduce spending on coal and natural gas imports by 2 billion euros2012 in2020.

Bibliographical Data

  • Authors

    Ruth Offermann, Friedrich Seefeldt, Karsten Weinert, Inka Ziegenhagen (Prognos AG) David Echternacht, Julian Lichtinghagen, Dr.-Ing. Ulf Kasper, Univ.-Prof. Dr.-Ing. Albert Moser (IAEW)

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