Scenarios provide important decision-making basis for energy concept

In the Coalition Agreement for the 17th legislative period, the Federal Government announced its plans to adopt an ideology-free and market-oriented energy policy that is open to technology. Guidelines for a clean, reliable and affordable energy supply by the year 2050 are to be outlined in an energy concept. The aim of the energy concept is to provide a road map towards the era of renewable energies. In future, Germany aims to rank amongst the world’s most energy-efficient and environmentally friendly national economies, offering competitive energy prices and a high level of prosperity. This explains why today’s energy supply structures need to be completely revamped. The energy concept will help to pave the way for Germany continuing to be a competitive industrial location in the long term and enable it to play its part in international climate protection. At the same time, it is a matter of consistently tapping the huge potential for innovation, growth and employment when energy systems are restructured. As such, nuclear energy will act as a bridging technology until it is certain that renewable sources of energy can cover the country’s power needs.

It is obvious that any such ambitious task requires a scientific basis. This is why the Federal Government commissioned a study to model nine scenarios that would outline the ways forward for the energy sector of the future. The scenarios not only consider electricity, but focus simultaneously on the heating market and on transport which combined account for the lion’s share of energy supply in Germany at 60 %. Above all, Germany, at the very heart of Europe, is integrated into the European energy network with imports and exports. This role as “Europe’s energy hub” is steadily gaining momentum.

The research institutes prognos, Basel, ewi, Köln (Energiewirtschaftliches Institut an der Universität zu Köln - Institute of Energy Economics at the University of Cologne) and gws, Münster (Gesellschaft für Wirtschaftliche Strukturforschung - Institute of Economic Structures Research) commissioned to carry out the study have just presented their estimates and calculations. These results represent one of the foundations on which the

Federal Government will shape its energy concept. Although the authors of the study comment on the impacts of a number of variants regarding extended operating lives of nuclear power plants, it is ultimately up to the Federal Government, not the experts, to draw the relevant conclusions.

All in all, nine scenarios were modelled.

The reference scenario describes Germany’s future energy scenario if there is a continuation of current trends. In this scenario, no changes have been made to the present energy law regime, according to which nuclear power plants can continue being operated until 2022. Energy efficiency increases are assumed to be moderate, without major technological progress. In this reference scenario, greenhouse gas emissions will be reduced by 62 % by 2050 compared to 1990. This means the Federal Government’s targets of reducing greenhouse gas emissions by 40 % by 2020 and by at least 80 % by 2050 will not be achieved unless further measures are taken.

By contrast, eight target scenarios outline an alternative future for the energy sector that is characterised by renewable energies and the leveraging of huge efficiency potential. They also examine the effects extending the operating lives of existing nuclear power plants for a varying number of years would have. The scenarios differ in their assumptions, particularly in relation to the length of the extension period. These scenarios indicate the technical and economic trends that are likely to emerge and highlight the challenges and scope for political manoeuvre.

The authors of the study opted for a broad approach. They considered the economy and society as a whole and all sectors (households, industry and transport) rather than just the electricity industry.

A number of assumptions model what role nuclear energy could play as a bridging technology. They consider extending the operating lives of nuclear power plants for between 4 and 28 years as well as the various costs that would inevitably be incurred if all of the existing 17 nuclear power plants that are currently in operation were upgraded.

The authors of the study confirm that the road map towards the era of renewable energy by 2050 is both feasible and realistic yet they highlight the fact that this will call for major private and public investment.

All target scenarios lead to the Federal Government meeting its ambitious climate protection targets, reaching reductions in greenhouse gas emissions of 40 % by 2020 and of at least 80 % by 2050 (compared to 1990 levels). In some scenarios, even greater reductions were achieved. In the view of the authors of the study, all things considered, this in conjunction with extending the operating lives of nuclear power plants would be beneficial for the national economy and would have a restraining effect on electricity prices in the medium term. Compared to the reference scenario, economic growth is higher in all target scenarios (with the average growth rate amounting to 0.6 percentage points by 2050). Employment is due to rise by 100,000 up to 2050.

In this regard, energy efficiency is the key to success. Efficient use of energy would halve overall energy consumption by 2050, with a modernisation offensive for buildings accounting for the lion’s share of savings. In the various scenarios, the authors of the study assume that energy efficient renovations of all buildings could reduce energy consumption by no less than 80 % by 2050.

Coal, crude oil and natural gas will be used less and less in future. This will greatly reduce Germany’s dependency on imports of fossil fuels.

If more efficient use was made of energy, power consumption of households and the manufacturing industry could be reduced by between 25 % and 28 %. This would be a substantial contribution toward climate protection.

Any such fundamental restructuring process takes time and money and calls for creativity and new technologies. It also requires heavy investments to be made in modernising the present infrastructure. New electricity grids, energy storage devices and gas pipelines would need to be planned and installed. The modernisation of the infrastructure is the key to generating efficiency gains.

The necessary modernisation would require all sectors to invest heavily. However, these costs would certainly be offset by noticeable benefits since the use of efficient technologies has the potential to greatly reduce energy consumption.

Electricity prices are falling steadily both for households and wholesale customers. In the target scenarios that are oriented to climate protection and assume that the operating lives of nuclear power plants will be extended, electricity prices are always lower than the level of prices in the reference scenario that makes no provision for further measures.

In the view of the authors of the study, over time electricity imports and exports will become more important for Germany, located at the very heart of Europe. Another finding of the study is that Germany will increasingly depend on net electricity imports due to cheaper generation options in other European countries. Depending on the scenario, imports in 2050 will amount to between 94 and 143 TWh. This would amount to 21 % to 31 % of electricity demand. However, greater energy efficiency and the expansion of renewable energies on the home market could greatly reduce dependency on energy imports.

This report provides a basis for Germany’s energy concept which is to be adopted by the cabinet on 28 September 2010.