Decentralised, Resource-Saving, Efficient: Building Blocks for a Sustainable Energy Supply

Now that policy-makers have reached swift agreement on the need for an “energy turnaround”, which mechanisms have the potential to make it a reality by 2050? Which priorities should be set and which policies put in place at an early stage? The Oeko-Institut (Institute for Applied Ecology) has explored these issues in a newly published study commissioned by Robert Bosch GmbH: Link to Executive Summary (PDF)

If Germany is to manage the transition from a nuclear- and fossil-fuelled energy system towards meeting at least 80% of its energy needs from renewables, a comprehensive restructuring of the power market is required. This applies not only to heat and power generation but to energy use in all sectors.

Policy-makers must create an enabling environment

Can this restructuring of the energy industry be achieved within the envisaged timeframe? That will largely depend on whether an enabling environment is created by policy-makers.

The new study focuses on four strategically relevant technology fields – “Buildings of the Future”, “Energy Efficiency of Industrial Applications”, “Power Generation from Wind and Photovoltaics” and “Energy Storage” – and assesses their scope for development within a timeframe to 2030. It identifies the following types of instruments as being available to policy-makers to create an enabling environment for these four technology fields:

  • a change in market design through appropriate regulation
  • creation of financial incentives
  • regulatory requirements.

As regards the energy upgrading of buildings, for example, the report argues that in addition to even more stringent minimum targets, the funding volume for loans and investment should be increased to a minimum of €10 billion annually. Tax incentives for this type of investment should also be re-introduced as a matter of urgency. In the interests of social justice, these should take the form of tax credits rather than tax write-offs.

The German Government should also create a permanent market for energy services that does not depend on the vagaries of government budgets. The approach would be to require suppliers of energy to end-users to carry out efficiency measures for the benefit of their customers, amounting to 1.5% of the company’s final energy sale each year. Greater flexibility could be created with the introduction of a “white certificate” scheme. The German Government should drop its opposition to this type of solution in the current negotiations in Brussels on the draft Energy Efficiency Directive.

As regards the payments for photovoltaic installations under the Renewable Energy Sources Act (EEG), a one-off reduction in the feed-in tariff in line with price trends in the market is the right approach in principle, with further monthly reductions in future. However, the German Government’s current proposals discriminate against medium and larger PV installations to a disproportionate extent and should therefore be reviewed as a matter of urgency. Instead of the option of short-term adjustment of feed-in tariffs through the enactment of ordinances, the existing “flexible ceiling” should be retained.

In the medium term, however, it is essential to switch to a “smarter” system of payments, particularly for PV. The new scheme should continue to offer investors a reliable basis for their financial planning but should also take account of the latest price signals from the power market. This would create an incentive for smart operation of installations, including their associated storage facilities.

The energy scenario: the starting point

The proposals are based on an energy scenario which maps projected future energy supply and demand trends. The results indicate that an average reduction of energy demand across all sectors of around 43% by the year 2050 is feasible, with potential for a full 60% reduction in the buildings sector, while retaining the current standard of living and positive economic development.

“The report describes a ‘moderately decentralised’ approach to the further development of the energy system in an ‘energy turnaround’. The decentralised option is always given priority if the centralised alternatives do not offer clear economic or ecological benefits,” explains project leader Christof Timpe.

Potential in the four key technologies:

  • Technology field 1: “Buildings of the Future”
    Residential and commercial buildings must be upgraded more quickly and intensively to make them more energy-efficient. To that end, the renovation rate must increase to 2.5% per annum, with the passive building standard being adopted as the target state from 2020. Buildings should also be fitted with highly efficient heating and air-conditioning technologies, based as far as possible on renewable energies.
  • Technology field 2: “Energy Efficiency of Industrial Applications”
    German industry has the potential to reduce its energy demand by around a quarter by 2030. Generic technologies such as engines and pumps, compressed air systems, lighting and cooling offer major potential here.
  • Technology field 3: “Power Generation from Wind and Photovoltaics”
    The further expansion of wind power, especially from repowering, in northern Germany and the construction of new installations in southern Germany will help to achieve the German Government’s expansion targets for renewable energies. The residential electricity price and the generation costs of photovoltaic energy including decentralised storage capacity can be brought to a similar level by 2020, enabling a high degree of own (internal) consumption to be achieved.
  • Technology field 4: "Electricity Storage"
    One of the key challenges for the future energy system is how to balance out the time lag between power generation and demand. This can be resolved using a smart combination of storage facilities, decentralised capacity dispatching, demand-side load management and grid expansion.

Further information

"Decentralised, Resource-Saving, Efficient: Building Blocks for a Sustainable Energy Supply – Executive Summary “ [Executive Summary]