20 Feb 2018, 00:00
Benjamin Wehrmann Julian Wettengel

Energiewende "depends on efficiency"- econ min / Price rise in auction

Clean Energy Wire

Germany’s energy transition can only become a success if the country does not neglect efficiency, the second important pillar of the Energiewende besides renewables expansion, said acting German Economy Minister Brigitte Zypries at the annual kick-off conference of the German Industry Initiative for Energy Efficiency (DENEFF). “The more efficient use of energy is not only a necessity, but a chance for companies to open up new business segments,” Zypries told industry representatives in Berlin. Germany is currently at risk of missing the European Union’s 2020 target of reducing primary energy consumption by 20 percent compared to 2008. This means that the country now ranks in the lower third in terms of the implementation of key EU climate and efficiency targets, said Environmental Action Germany (DUH) Executive Director Sascha Müller-Kraenner.
Germany’s would-be coalition partners, the conservative CDU/CSU alliance and the Social Democratic Party (SPD), had agreed on creating an “ambitious and cross-sectoral federal energy efficiency strategy” with “efficiency first” as its guiding principle, should they form the next federal government. Reiner Hoffmann, head of the German Trade Union Association (DGB), welcomed this provision, but told conference participants that proposals on concrete measures were still lacking. He said the budget allocated to the energy efficient modernisation of buildings was “significantly too small”.

For background, read the CLEW article Lagging efficiency to get top priority in Germany’s Energiewende, the dossier The Energiewende and Efficiency, and the article Govt energy transition commission calls for CO2 price, mobility action.

Clean Energy Wire

Germany will definitely miss its goal to reduce greenhouse gas emissions by 40 percent by 2020, which is a “bitter defeat for climate politicians,“ said Jochen Flasbarth, state secretary in the environment ministry, at the annual conference of the German Industry Initiative for Energy Efficiency (DENEFF). Even further measures, such as an accelerated shutdown of 7 gigawatts of coal power capacity as proposed during the coalition talks after the 2017 elections, would not have changed this fact, he said. 
“We won’t regain our international credibility by withholding or postponing things, only if we do those things correctly in the future that we’ve done wrong in the past,” said Flasbarth. Germany must close the action gap to reach its 2020 target as fast and as much as possible.
The coalition agreement between the conservative CDU/CSU alliance and the Social Democrats (SPD) is a “good basis” for this, said Flasbarth. During the coalition negotiations, the introduction of a CO₂ price was a moot point, he said. The Social Democrats and most of the conservatives would have agreed to a reform of the system of energy taxes and levies, for example by lowering the electricity tax, while putting higher taxes on conventional fuels in the transport and heating sectors. This did not happen, because the proposal ran counter to the interests of individual federal states, he said.

For background, read the CLEW article Germany may have to buy way out of EU climate goal - ministry paper, and the factsheet Climate, energy and transport in Germany's coalition agreement.

Federal Network Agency

A shorter implementation period has led to a rise of the average price offered in Germany’s latest auction for onshore wind power installations, the Federal Network Agency (BNetzA) says in a press release. The increase to 4.6 eurocents per kilowatt hour (ct/kWh) in the auction closed on 1 February, compared to 3.8 ct/kWh in the previous auction in November 2017, “shows that the earlier tenders that did not require a license beforehand and had an implementation period of 4.5 years were based on different assumptions in terms of technology and price developments,” BNetzA head Jochen Homann says. The latest auction for onshore wind installations stipulates implementation within 2.5 years and does not feature special provisions for citizens’ energy projects, which previously were granted longer implementation periods and did not have to obtain a construction license before submitting their bid. Contrary to earlier auctions, the tendered volume of 700 megawatts (MW) was only marginally oversubscribed, showing that “wind power installations are not automatically hot sellers at auctions,” Homann says. In a parallel solar auction, prices dropped to 4.33 ct/kWh, showing that “solar power tenders as a price-finding mechanism do work,” Homann argues.

Find the press release in German here.

See the CLEW factsheet High hopes and concerns over onshore wind power auctions for more information.

Federal Network Agency

The German Federal Network Agency (BNetzA) has launched the first joint tender for onshore wind and solar power. The auctioned capacity is 200 megawatts (MW), the agency says in a press release. “The technologies directly compete for the lowest cost in power production,” the agency says about the renewable power auction that will conclude on 1 April. The BNetzA has capped the maximum support rate at 8.84 eurocents per kilowatt hour (ct/kWh), and included a “distribution grid component” to facilitate the distribution of new installations in line with existing grid capacities. Installations that are supposed to be built in grid expansion areas receive minus points in the auction due to the higher costs that would result from connecting them to the grid. This would rank them lower vis-à-vis installations in areas where no grid expansion is required. There will be no special provisions for citizens’ energy cooperatives, meaning that all tendered projects must obtain a construction license before they can enter the auction procedure, the BNetzA says.

Find the press release in German here.

The provision in Germany’s coalition agreement that the country will source 65 percent of its power consumption from renewables by 2030 is likely to make power prices “more volatile and lower” than previously thought, Aurora Energy Research says in an analysis of the treaty agreed by the conservative CDU/CSU alliance and the Social Democrats (SPD). Compared to the initial goal of 50 percent renewables by the end of the next decade, the new goal will “depress” prices, and could lead to a 20 percent reduction of coal-fired power production by 2030, the researchers say. Aurora argues that Germany can reach its 2030 climate target by pursuing this policy, but would become a net power importer again by 2025. According to the analysis, Germany is expected to close its first coal plants in the 2020s, and the very last plant will likely be shut down between 2040 and 2045.

See the CLEW interview with government energy policy advisor Andreas Löschel for more information.

Tageszeitung (taz)

A referendum in Hamburg, Germany’s second largest city, seeks to ban the use of coal power for heating and electricity generation by 2030, Sven-Michael Veit writes for the Tageszeitung (taz). “We in Hamburg have to take the coal exit in our own hands,” says Wiebke Hansen of the anti-coal alliance Tschüss Kohle. The reason for this bottom-up approach is a dispute between the city and the utility Vattenfall, as the latter wants to use its coal plant at Moorburg to supply district heating for Hamburg even though in a 2013 referendum the local citizens voted to re-municipalise the city’s district heating system. The alliance fears that a new senate in the city could overturn this vote and calls for a second referendum aimed at making climate protection an automatic priority for all infrastructure-related decisions taken in the city. “Our aim is not to quickly shut down the Moorburg coal plant,” Hansen says, but to “fight against the global rise in temperatures as well as air pollution at local level.”

Find the article in German here.

Süddeutsche Zeitung

Daimler AG CEO Dieter Zetsche likes to dress up “like the guy from next door”. He has changed his outfit from business attire to sneakers and washed-out jeans in recent years, but even with this makeover “he remains the highly paid head of a listed company that made billions in profits again last year,” Thomas Fromm writes in a commentary for the Süddeutsche Zeitung. “It’s a bit like with the cars they’re selling,” Fromm says: Daimler talks a lot about its “big e-car attack,” but in reality the company sells more and more highly-emitting SUVs every year. The same goes for competitor Volkswagen, which “would love to talk about autonomous cars and smart traffic solution,” but instead has to explain why it tested diesel emissions on monkeys, he writes. “A new company culture cannot be put on like a pair of colourful sneakers,” and recent revelations that Daimler could be a lot more involved in the dieselgate emissions scandal is proof of this, Fromm says. 

Read the commentary in German here.

Frankfurter Allgemeine Zeitung

The Economy Minister of Germany’s most populous state North Rhine-Westphalia (NRW), Andreas Pinkwart, has called for compensation payments from the federal budget if Germany accelerates its coal exit, the Frankfurter Allgemeine Zeitung reports. “The coalition agreement has changed many of our plans, especially in terms of renewable energy and grid expansion,” Pinkwart argues. NRW heavily relies on lignite and hard coal, which is why the plan announced by Germany’s would-be coalition parties, the conservative CDU/CSU alliance and the Social Democrats (SPD), to present a coal exit date soon “will be especially burdensome for NRW,” where about 30,000 jobs directly depend on the coal industry, the article says. Pinkwart says his state “is ready to make its necessary contribution to climate protection,” but “we need an adequate share of federal funds for that.”

See the CLEW factsheet Coal in Germany for background.

Der Aktionär

German utility RWE could turn out as “one of the winners of the expected grand coalition” between the conservative CDU/CSU alliance and the Social Democrats (SPD), Maximilian Völkl writes in the business magazine Der Aktionär. Researchers like Manuel Frondel from the RWI say that “the abandonment of the 2020 climate target has done away with the idea of a quick coal exit,” which directly benefits the RWE, Völkl writes. While erratic policy makes it more difficult for companies to ensure secure planning, a recent study conducted by investment bank Goldman Sachs shows that RWE’s shares have gained in attractiveness and have now been upgraded to “conviction buy” status, Völkl says.

Find the article in German here.

Check the CLEW dossier Utilities and the energy transition for background.

Zeit Online

The United Kingdom has reduced its carbon emissions from coal-fired power production by 50 percent within five years - “a reduction that Germany can only dream of,” Niels Boeing writes for the Zeit Online. “What has happened here?,” he asks. Germany’s Renewable Energy Act (EEG), which came into force in 2000, has been emulated by many countries around the world, while the UK “relied on a different support system that did not bear any fruit for a long time,” Boeing says. Britain’s “secret of success,” however, has been its carbon price floor, introduced in 2013, which “dramatically increased the price of coal power,” he argues. The result is that the UK now uses a significantly larger number of gas-fired power plants, which emit a lower amount of CO2, and at the same time the country is expanding its renewable power capacity at a significant rate, Boeing writes. Germany reduced its emissions from power production by four percent between 2012 and 2016, compared to 47 percent in the UK, which offers a lesson to the Germans: “You can achieve a lot with the tool CO2 price.”

Find the article in German here.

See the CLEW factsheet Germany’s greenhouse gas emissions and climate targets for background.

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