Efficiency

It is obvious that a lean and highly efficient energy system has many advantages. The challenge is to set the right incentives. This is the key to adapting future demand to fluctuating power generation.

 

The targets for the Energiewende include not only the expansion of renewable energies. Also for energy efficiency Germany has set ambitious goals: By 2020, the country’s electricity consumption reduced by 10 percent; and by 2050 by 25 percent compared to the 2008 level.

Especially with regard to climate protection, energy efficiency is an important lever: Without efficiency measures, renewable energy would need to be significantly expanded in order to achieve the same reduction in greenhouse gases. Increasing energy efficiency pays off on three l

  • for the economy as a whole,
  • for German businesses, and not least
  • for private households.

Domestic economic strength is also impacted: The less power consumed, the less gas and coal that have to be imported. In addition, energy efficiency increases domestic value added and creates jobs.

Moreover, the same amount of products produced or services provided with less energy reduces energy costs for the consumer. At the same time, the costs for the entire system sink because in a sleek, high-efficiency system less has to be invested in expensive power generation, electricity grids, storage, and backup capacity. From an economic perspective, investments in energy efficiency make sense as long as the investment costs of a saved kilowatt hour are lower than the investment cost of producing a kilowatt hour of electricity.

It’s a two-pronged strategy: Energy demand is reduced by significantly increased energy efficiency; the remaining share of demand will be largely provided by renewable energies. However, while the development of renewable energy in Germany is making excellent progress, the reduction of electricity consumption is currently lagging behind Germany’s original ambitions.

Although there are marketable efficiency technologies available today, Germany has not begun to take advantage of this large, highly profitable potential. Many energy service business models don’t pay off – at least not in the crucial, short-term perspective of capital markets. The reason: business models that focus on energy efficiency are usually associated with high initial costs and long payback periods. Moreover, the fragmentation of many efficiency measures assumes that many (private) actors take initiative simultaneously. It is the challenge of the future to create a market that provides such services in the most efficient manner.

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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.

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