Our most important findings

Key Questions

  1. 1

    From 2019, a “Lusatia Structural Change Fund” should be established within Germany’s federal budget.

    The aim of the fund would be to strengthen the region’s economic attractiveness and its desirability as a place to live. It should help to: preserve the region’s industrial character, strengthen innovation among its businesses, support its academic institutions, equip it with an up-to-date transport network and digital infrastructure, and foster a lively civil society that retains local residents while also attracting new ones.

  2. 2

    The Lusatia Fund should be endowed with 100 million euros per year for 15 years, to be divided equally between four key pillars: business development, academia, infrastructure, and civil society.

    In each of these areas, it should be possible to use the available funds in a flexible manner (i.e. to shift funding between areas), and funds that are not withdrawn should not expire (i.e. funding should be transferable to subsequent years).

  3. 3

    Regional stakeholders from the spheres of business, academia, politics, and civil society should play a key role in awarding of funds.

    The federal government should only play a monitoring and coordinating role, as part of a steering committee; decisions on funding priorities should be made by stakeholders from the region.

  4. 4

    The funds assigned to the civil society pillar should be administered by a new “Lusatia Future Foundation.”

    Raising the attractiveness of a region means more than just promoting its economy, academic institutions and infrastructure. Ultimately, the vibrancy of a place depends on art, culture, lived traditions and the quality of civil society. These factors require ongoing support, which can be guaranteed in the short term through the Structural Change Fund and in the long term through developing a foundation with a strong endowment.

From study : A Future for Lusatia
  1. 1

    The sustainable energy transition in the heating sector is currently lagging and buildings sector goals are unlikely to be met by 2030.

    Reducing emissions from the current level of 130 million tons of CO2 to between 70 and 72 million tons in the next 11 years will require ramping up all available technologies across the board. These include insulation, heat pumps, heat networks, decentralized renewable energy and power-to-gas. Cherry-picking the various building technologies is no longer an option because of past shortcomings.

  2. 2

    Energy efficiency in existing buildings is a prerequisite for technology neutrality.

    Ensuring adequate competition between various energy supply options such as renewable energy, heat pumps, synthetic fuels and decarbonized heat networks requires reducing final energy consumption by at least a third before 2050. The more efficient a building is, the more realistic any necessary expansion on the generation side will be.

  3. 3

    Power-to-gas can only complement aggressive efficiency policies in the buildings sector, not replace them.

    Synthetic fuels are a significant component of energy supply in all 2050 climate protection scenarios. But their contribution by 2030 is only limited, and even between 2030 and 2050 they are considerably more expensive than most energy efficiency measures in the buildings sector. In addition, the bulk of generation from power-to-gas may be allocated to other markets (industrial processes, shipping, air travel and transport by truck).

  4. 4

    To successfully implement the heating transition, we urgently need a roadmap for promoting energy efficiency in buildings by 2030.

    To this end, a package of policy measures is needed, including changes to relevant laws, regulations and energy tax laws, as well as an overhaul of funding programs. The heating sector goals for 2030 and 2050 can only be met if the installation rate of all building-related climate protection technologies is quadrupled.

From study : Building sector Efficiency: A crucial Component of the Energy Transition
  1. 1

    A power system with a 95 percent share of renewables has the same or even lower costs than a fossil-based system under most assumptions for future fuel and CO₂ prices.

    A coal-based system would only be significantly less expensive if extremely low CO₂ prices are expected in 2050 (20 euros/t). Similarly, a natural gas-based system would only be significantly less expensive if gas prices are low and CO₂ prices are not high (i.e. below 100 euros/t).

  2. 2

    A renewables-based system insulates the economy against volatile commodity prices, as the costs of fossil-based systems heavily depend on fuel and CO₂ price trends.

    Variable costs (largely for fuel and CO₂) account for 30 to 67 percent of the total costs of the fossil-based systems. By contrast, variable costs represent just 5 percent of costs in the renewables-based systems.

  3. 3

    A power system with a 95 percent share of renewables reduces CO₂ emissions by 96 percent their 1990 levels at CO₂ abatement costs of about 50 euros/t.

    A renewables based energy transition can thus be considered efficient climate policy, as CO₂ damage costs are estimated a lot higher (80 euros/t over the short-term, and at 145 to 260 euros/t over the long term).

From study : Renewables versus fossil fuels – comparing the costs of electricity systems
  1. 1

    Deutschland und Frankreich stehen vor dem Hintergrund des Wachstums der Erneuerbaren Energien vor gemeinsamen Herausforderungen bei der Restrukturierung des bestehenden Kraftwerksparks.

    Beide Länder werden die Erzeugung von Wind- und Solarstrom bis 2030 deutlich erhöhen müssen, um ihre Ausbauziele für Erneuerbare Energien zu erreichen. Zur Vermeidung von Stranded Assets ist eine damit einhergehende schrittweise Reduktion konventioneller Kapazitäten unerlässlich.

  2. 2

    In Frankreich bergen der geplante Zubau der Erneuerbaren Energien und die Investitionen zum Erhalt von über 50 Gigawatt Kernkraftkapazität ein großes Risiko von Stranded Assets im Stromsektor.

    Zu wachsenden Stromexporten Frankreichs würde es bereits kommen, wenn das Land mehr als 40 Gigawatt Kernkraftwerke im Jahr 2030 in Betrieb hielte. Zudem würde Frankreich sein Ziel, den Kernenergieanteil im Strommix auf 50 Prozent zu reduzieren, erst nach 2030 erreichen können. Selbst wenn eine Steigerung der französischen Stromexportkapazitäten um 60 Prozent, eine Verdopplung der Interkonnektoren innerhalb der Europäischen Union und eine CO2-Bepreisung von 30 Euro pro Tonne CO2 angenommen werden, wäre die Wirtschaftlichkeit eines Kernkraftwerksparks mit einer Kapazität von über 50 Gigawatt bis 2030 gefährdet.

  3. 3

    Wenn Deutschland seine Klimaziele erreichen will, muss es bis 2030 seine Stromerzeugung aus Kohle halbieren und den Anteil der Erneuerbaren Energien am Stromverbrauch auf 60 Prozent erhöhen.

    In diesem Fall wäre die Bilanz für den grenzüberschreitenden Stromhandel zwischen Deutschland und seinen Nachbarländern ausgeglichen. Die geplante Erhöhung des Anteils der Erneuerbaren Energien auf 65 Prozent des Bruttostromverbrauchs im Jahr 2030 wird dazu beitragen, eine unerwünschte Importabhängigkeit Deutschlands trotz des Kohleausstiegs zu vermeiden.

  4. 4

    Frankreich und Deutschland sollten ihre nationalen Strategien für den konventionellen Kraftwerkspark schnellstmöglich festlegen. Für die Umsetzung der Energiewende auf bilateraler, regionaler und europäischer Ebene sind enge Konsultationen und gemeinsame Maßnahmen zur Bewältigung der grenzüberschreitenden Herausforderungen notwendig.

    Initiativen für den Ausbau der Erneuerbaren Energien und der Interkonnektoren sowie zur CO₂-Bepreisung sollten koordiniert werden.

From study : Die Energiewende und die französische Transition énergétique bis 2030
  1. 1

    With the growth of renewable energy, France and Germany are facing common challenges regarding the restructuring of their conventional power plant fleet.

    With a renewable electricity target of 40% in France and 65% in Germany by 2030, the two countries will significantly increase their production of wind and solar energy. Their conventional power plant fleet will have to be resized accordingly to avoid stranded costs.

  2. 2

    In France, the targeted development of renewable energy alongside the reinvestment in the nuclear fleet greater than 50 GW would pose a significant risk of stranded costs in the electricity sector

    A nuclear fleet exceeding 40 GW in 2030 would increase the national electricity export surplus and additionally postpone the achievement of the objective of reducing the share of nuclear power to 50% beyond 2030. The profitability of a nuclear fleet greater than 50 GW would not be assured in 2030, even when assuming a 60% increase in French export capacity, a doubling of interconnectors capacity in Europe and a CO2 price of 30 euros per ton of CO2.

  3. 3

    In Germany, achieving climate targets requires a halving of coal-fired power generation and an increase in the national renewable electricity target to at least 60% of electricity consumption in 2030.

    In this case, Germany’s electricity trade balance with its neighbours is balanced. The new planned target of 65% renewable energy in electricity consumption by 2030 will ensure that Germany will not depend on undesired electricity imports while phasing-out coal.

  4. 4

    France and Germany should rapidly define their national strategies regarding their nuclear and coal fleets, closely consult each other on cross-border consequences and initiate joint actions for the implementation of the energy transition at bilateral, regional and European levels.

    These joint actions could take the form of initiatives led by the two countries on the development of renewable energy, interconnectors or CO₂ pricing.

From study : The 'Energiewende' and the 'transition énergétique' by 2030
  1. 1

    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.

  2. 2

    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.

  3. 3

    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.

  4. 4

    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.

From study : Projected EEG Costs up to 2035
  1. 1

    Increased integration between the Nordic countries and Germany will become ever more important as the share of renewables increases. The more renewables enter the system, the higher the value of additional transmission capacity between Nordic countries and Germany will become.

    In particular, additional generation from renewables in the Nordics – reflected in the Nordic electricity balance - will increase the value of transmission capacity. There is a lot of potential for trade, due to hourly differences in wholesale electricity prices throughout the year.

  2. 2

    A closer integration of the Nordic and the German power systems will reduce CO2 emissions due to better utilisation of renewable electricity.

    This is caused by reduced curtailment of renewables, improved integration of additional renewable production sites and increased competitiveness of biomass-fuelled power plants.

  3. 3

    Higher integration will lead to the convergence of wholesale electricity prices between the Nordic countries and Germany. But even with more integration, the Nordic countries will see lower wholesale electricity prices if they deploy large shares of renewables themselves.

    In general, additional integration will lead to slightly higher wholesale electricity prices in the Nordics and to slightly lower prices in Germany. But this will be counteracted by the decreasing price effect that higher wind shares in the Nordics have on the wholesale power market.

  4. 4

    Distributional effects from increased integration are significantly higher across stakeholder groups within countries than between countries.

    This strongly impacts the incentives of market players such as electricity producers or consumers (e.g., energy-intensive industries) for or against increased integration. Distributiona leffects need to be taken into account for creating public acceptance for new lines and for the cross-border allocation of network investments.

From study : Increased Integration of the Nordic and German Electricity Systems (Summary)
  1. 1

    Increased integration between the Nordic countries and Germany will become ever more important as the share of renewables increases. The more renewables enter the system, the higher the value of additional transmission capacity between Nordic countries and Germany will become.

    In particular, additional generation from renewables in the Nordics – reflected in the Nordic electricity balance - will increase the value of transmission capacity. There is a lot of potential for trade, due to hourly differences in wholesale electricity prices throughout the year.

  2. 2

    A closer integration of the Nordic and the German power systems will reduce CO2 emissions due to better utilisation of renewable electricity.

    This is caused by reduced curtailment of renewables, improved integration of additional renewable production sites and increased competitiveness of biomass-fuelled power plants.22

  3. 3

    Higher integration will lead to the convergence of wholesale electricity prices between the Nordic countries and Germany. But even with more integration, the Nordic countries will see lower wholesale electricity prices if they deploy large shares of renewables themselves.

    In general, additional integration will lead to slightly higher wholesale electricity prices in the Nordics and to slightly lower prices in Germany. But this will be counteracted by the decreasing price effect that higher wind shares in the Nordics have on the wholesale power market.3

  4. 4

    Distributional effects from increased integration are significantly higher across stakeholder groups within countries than between countries.

    This strongly impacts the incentives of market players such as electricity producers or consumers (e.g., energy-intensive industries) for or against increased integration. Distributiona leffects need to be taken into account for creating public acceptance for new lines and for the cross-border allocation of network investments.

From study : Increased Integration of the Nordic and German Electricity Systems (Full Report)
  1. 1

    Germany is currently facing an Energiewende paradox: Despite an increasing share of renewable energy sources, its greenhouse gas emissions are rising.

    The reason for this paradox is not to be found in thedecision to phase out nuclear power – the decrease of nuclear generation is fully offset by an increasedgeneration from renewables. Rather, the paradox is caused by a fuel switch from gas to coal.

  2. 2

    Due to current market conditions, German coal-fired power plants are pushing gas plants out of the market – both within Germany and in neighbouring countries.

    Since 2010, coal and CO2 prices have decreased, whilegas prices have increased. Accordingly, Germany’s coal-fired power plants (both new and old) are able to produceat lower costs than gas-fired power plants in Germany and in the neighbouring electricity markets thatare coupled with the German market. This has yielded record export levels and rising emissions in Germany.

  3. 3

    If Germany is to reach its Energiewende targets, the share of coal in the German power sector has to decrease drastically – from 45 percent today to 19 percent in 2030.

    Sharp decreases in generation fromlignite and hard coal of 62 and 80 percent, respectively, are expected in the next 15 years while theshare of gas in electricity generation will have to increase from 11 to 22 percent. This goes in line with thegovernments’ renewables and climate targets for 2030.

  4. 4

    Germany needs a coherent strategy to transform its coal sector.

    Such a strategy – call it a coal consensus –would bring power producers, labour unions, the government and environmental groups together in findingways to manage the transformation.

From study : The German Energiewende and its Climate Paradox
  1. 1

    The expansion of renewable energy does not have to wait for electricity storage.

    In the next 10 to 20 years the flexibility required in the power system can be provided for by other, more cost-effective technologies such as flexible power plants, demand side management. New storage is required only at very high shares of renewable energies.

  2. 2

    The market for new storage technologies will grow dynamically.

    New markets for battery storage and power to gas technologies are expected to emerge, especially in the transport and chemical sector. Storage developed in these sectors can enable further flexibility for the electricity system as an additional service. Research and development as well as market incentive programs should maximize the system-supporting contribution of new storage technologies.

  3. 3

    Storage must receive equal access to markets for flexibility.

    Storage can already today deliver several ancillary services at competitive costs. Flexibility markets – such as the ancillary services or future capacity markets – should therefore be designed such that they are technology-neutral.

  4. 4

    Storage should become a tool in the toolbox of distribution system operators.

    In specific cases, storage that is used to support a grid can help to avoid grid expansion in the low-voltage distribution grid. The regulatory framework should enable such cost-efficient decisions.

From study : Electricity Storage in the German Energy Transition
  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.

From study : Benefits of Energy Efficiency on the German Power Sector
  1. 1

    Policy makers have a large scope of action in designing policies for the regional distribution of onshore wind and photovoltaics.

    Regional distribution of this renewable energy has little impact on the total cost of power supply.

  2. 2

    Finding the right balance is important in expanding offshore wind power.

    To promote technology development and reduce the cost of electricity for consumers, expansion should be continued, but on a lower level than current plans foresee.

  3. 3

    Grid expansion is an important prerequisite for the Energiewende.

    Solely in terms of cost, a few years of delays for the additional transmission lines foreseen in the German Grid Development Planning act would not be critical. Further expansion of renewables does not have to wait for these new transmission lines.

  4. 4

    A strong focus on battery storage systems combined with photovoltaic is currently not desirable.

    Only if cost of such systems drop by 80 % in the next 20 years would a renewable expansion path focusing on photovoltaics + storage be an economically viable option.

From study : Cost Optimal Expansion of Renewables in Germany

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