The Energy Transition: Switch to the future

Germany sets the course for an environmentally friendly, secure and affordable power supply.

Installation of a wind turbine in Bitterfeld, Sachsen-Anhalt, Germany© Thomas Ebert

"Energiewende," the energy transition, is Germany's path to a secure, environmentally friendly and economically successful future. It is the decision to fundamentally reform our energy system: away from nuclear power, towards renewable energy sources. By the year 2050, 80 per cent of the country's electricity is to come from renewable sources. At the same time, we want to halve energy consumption by using energy more sparingly and more efficiently and to reduce greenhouse gas emissions by 80-95 per cent. These are ambitious targets, but they are achievable.

An economic and ecological success story

One thing is clear: reforming Germany's power supply system from the ground up is the task of a whole generation and a major economic and technological challenge. But the effort is worth it – it will help to protect the environment and the climate and reduces our dependence on imported raw materials. But the Energy Transition is meant to be not only an ecological but also an economic success story. As a driver of modernisation and innovation for industry, it can create growth and sustainable and secure jobs. Precisely that is what counts if we want to win over international partners for this unique project for the future. Other countries are watching the progress made in Germany closely. "It is important for Germany as an industrialised nation to show that the switch from fossil to renewable energy sources is possible", as Federal Minister for Economic Affairs and Energy Sigmar Gabriel just recently pointed out during a trip to the Gulf region.

And we have already achieved a lot along this path: in 2014 the renewable energies became the most important source of electricity for the first time, with a share of 27.8 per cent in gross electric power consumption. We are making headway in the field of energy efficiency, too: energy consumption is declining in a long-term trend. And we have managed to separate economic output from energy consumption: in 2014 less energy was consumed in Germany than ever before since re-unification, although the economy grew by 1.6 percent last year. By 2013, emissions of climate-damaging greenhouse gases had dropped by about 23 per cent compared to 1990 – more sharply than in any other EU Member State. According to initial prognoses, CO2 emissions from the energy sector were about another 5 per cent lower in the year 2014 than the year before.

Driving force for growth and employment – and new business areas

But the Energy Transition is not only good for the climate – it is also a driving force for growth and jobs. Investment in renewable energy installations in Germany alone added up to more than 16 billion euros in 2013; in the same year the expansion of the renewable energy offered employment opportunities for more than 363,000 people. At the same time, sustainable energy production and greater energy efficiency open up new fields of business areas with a promising future: German companies are playing an outstanding role on the newly emerging world markets.

The German public supports the Federal Government's energy-policy course. According to recent representative opinion polls, the Germans' approval rating for the "Energiewende" is around 70 per cent.

In a 10-Point Energy Agenda, the Federal Ministry for Economic Affairs and Energy has drawn up a precise roadmap defining the most important measures to be adopted during this parliamentary term and intermeshing them in terms of time and content.

The two pillars of the "Energiewende": renewable energy sources and energy efficiency

The Energy Transition is based on two pillars. The first is the generation of more electricity from renewable sources: thanks to more than 20 years of government funding, green electricity is no longer a niche product but the the mainstay of Germany's power supply. In 2014 the Renewable Energy Sources Act (EEG) was substantially reformed. On this new basis the expansion of the renewable energies will continue powerfully. But: it is being steered better and achieved with less expense. In parallel, the share of renewable energy in the heat market and in the transport sector, too, is to be increased further.

The second pillar is energy efficiency: in this context the Federal Government put forward an extensive work agenda, the National Action Plan on Energy Efficiency (NAPE) in December 2014. This comprises a large number of new and improved measures for using energy more efficiently. Here the principle is: "Supply information – Provide support – Demand action " – in that order. Particularly great potentials for improving energy efficiency are present in the building sector. This is where almost 40 per cent of all final energy is consumed – mostly for heating and hot water. For that reason, the Federal Government has set itself the target of achieving a virtually climate-neutral building stock by the year 2050.

Expanding the grid: the Achilles' heel of the energy transition

The shift in the electricity supply system towards more electricity from renewable energy sources means that the structure of the grid also needs to change: several thousand kilometres of power lines need to be built or upgraded if all of Germany is to be reliably supplied with low-cost electricity in the future, too. This is essential, because the Energy Transition is radically changing the electricity generation map. For many decades, nuclear and large conventional power plants in southern and western Germany have supplied most of the power to the large demand centers in those regions. Now the nuclear power plants are to be taken off the grid step by step by 2022. The electricity generated by local renewable energy sources is not enough to fill the gap. Large amounts of green electricity will have to be transported from the windy north to the south and west. But today's long-distance transmission lines were not designed for this and are coming up against their limits.

For this reason the Federal Government has established the statutory framework for the transmission grid operators to be able to extend and upgrade their electricity networks faster and in a more co-ordinated and transparent fashion. At the same time, a core concern of the regulations now in place is for the public to be more closely involved in all phases of planning. However, not only the electricity highways but also the local distribution networks need to be expanded, modernised and made more "intelligent" for the Energy Transition going forward. Here, too, the Federal Government is improving the policy framework so that the 800 or so distribution network operators can invest in good time.

A Green Paper for the power market

But it is not just a matter of grids and power lines – the energy transition as a whole is like a complex gearbox in which all the cogs need to engage with each other. This synchronisation task poses a number of challenges. What role should conventional power plants play in future? How to cope with the fluctuating generation of wind and solar power due to changing weather conditions? In a nutshell: how can we make the electricity market fit for the energy transition?

With its Green Paper "An electricity market for the energy transition", presented in October 2014, the Federal Ministry for Economic Affairs and Energy has put forward a number of measures and approaches for public consultation and kicked off a broad, solution-driven debate to make it possible to arrive at a sound political decision on the future design of the electricity market. In parallel, the Federal Government is holding talks with our neighbouring countries and the European Commission with a view to arriving at shared solutions in the context of the European internal energy market.

This is to be followed in summer by a White Paper specifying concrete proposals. After another public consultation, this will form the basis for the necessary legislative process, in which decisions will be taken to establish the terms of reference for the German power market in the years to come.

Energy research: fit for the future

New challenges call for new ideas and solutions. This also holds true for the energy transition. To make it a success, intensive research efforts are needed to spur on the development of innovative technologies. The Federal Government is helping businesses and research institutions to explore and develop new technologies for tomorrow's energy supply system. This gives rise to innovations that also open up new business opportunities. Funding is provided especially for innovations in the fields of energy efficiency and renewable energies.

Strengthening European and international cooperation

The international and European energy markets are converging more and more. That brings major advantages for electricity and gas customers: more choice, lower prices and a more dependable supply. Besides: CO2 emissions and climate change do not stop at national borders. So a successful energy and climate policy must not be conceived only at the national level. Germany sees its "Energiewende" as part of an ambitious European climate and energy policy and seeks to join forces with its European neighbours and international partners. Together we can master many challenges much more efficiently and cost-effectively than on a national scale. With this in mind, the Federal Government has also initiated numerous successful international energy dialogues and partnerships. Furthermore, it takes advantage of its membership of multilateral energy organisations and dialogue forums to actively advocate competitively structured, open and transparent markets, further growth of the renewables, and a global improvement in energy efficiency.

How the energy transition is set to become a success story worldwide is at the focus of the "Berlin Energy Transition Dialogue – towards a global Energiewende" to be staged by the Federal Government in the German capital on 26 and 27 March 2015.