Energy Efficiency

in Germany:

Experiences &
lessons learned

Dieter Seifried
ISES

Outline

1. Context
2. Measures
3. Lessons learned
 GNP, electricity generation and energy intensities
in Germany
1990 - 2000
1990 = 100
120

GNP

Electricity intensity of GNP

110
Energy intensity of GNP

100

90

80
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Sources: AG Energiebilanzen; Statistisches Bundesamt; VDEW; DIW.

CO2 emissions (1990 = 100)

105

100

95

CO2 Emissions
1990 = 100

90

85

80

75

70
90

91

92

93

94

95

96

l.

l.

l.

l.
or

or

or

or
19

19

19

19

19

19

19

v
97

98

99

00
19

19

19

20

So urces : AG Energ ieb ilanzen; Umwelt b und es amt; Deuts cher Wett erd iens t; Statis t isches Bund es amt ; DIW.
Goals of German Government

• 25 % less CO2-emissions by year 2005

• Doubel the share of renewable energy by
2010
• Reduction of Kyoto-climate gases: 21 % till
2008 - 2012

Energy efficiency policy measures

• Ecological taxation
• Institutional and informational approaches
• Loans
• Integrated Resource Planning
• Contracting
• Cogeneration
• Awareness and information
How the eco-
eco-tax works

energy gets more less less external cost (for

expensive environmental environmental and
damages helth- damages)
eco-tax
+ + +
labour gets less more employment less social cost (for
expensive unemployment)

= = =

same better social be-

amount of quality of nefits and
taxes life less social
cost

Ecological taxation (since 1999)

Environmental fiscal reform

– Excise duties on energy products
– Reduce pension insurance contributions
– Phasing-in over 5 years
– Some excemptions for high efficient /renewable
plants
– Tax reductions for industry in general (voluntary
agreement!) and specifically for energy-intensive
industries
Expected results
– Emission reduction of 2,5-3 % or 20-25 Mt per year
by 2010
– Employment effects due to reduced labour cost
(approx. 200 000 jobs / Unemployment in Germany
2001:
4 Million)
Institutional and informational approaches

Labelling and standards for appliances (1998)

Advisory services (continuously)

• Energy-audit programme for residential buildings and SME
• Consumer associations
• Energy Agencies (local, regional, national)

Energy Savings Ordinance (EnEV, 2001)

• Replacing older ordinances (since 1978)
• Efficiency potentials in residential buildings

Soft loans for modernisation of buildings (2001)

Label for appliances

Producer:

Model:

low electricity consumption

high electricity consumption

Electricity consumption in kWh/year: xyz

Institutional and informational approaches

Labelling and standards for appliances (1998)

Advisory services (continuously)

continuously)
• Energy-audit programme for residential buildings and SME
• Consumer associations
• Energy Agencies (local, regional, national)

Energy Savings Ordinance (EnEV, 2001)

• Replacing older ordinances (since 1978)
• Efficiency potentials in residential buildings

Soft loans for modernisation of buildings (2001)

The energy standards of buildings in Germany

Energy consumption
in kWh/m2,year
300

Room heating
250
hot water

electricity
200

150

100

50

Average WSV 95 New Energy Passiv Plus Energy

today Saving Houses Houses
ordinance
 The principle of Least-
Least-Cost Planning
• Consumers do not need electricity or fuels, they need
Energy Services.
• Energy Service is a combination of technical products and
electricity or fuel.
• Because of diverse obstacles (like lack of information,
financing potential) an economical combination of the
two
factors is usually not reached.
• If the competition between electricity (cost of a produced
kWh) and efficiency (cost of avoided kWh) does not work,
energy policy must make sure, that it does:
institutionalize
LCP/IRP
• Whenever energy conservation is cheaper than
production,
it should be made use of as a resource (“NEGAWatt”)

From IRP/LCP towards Contracting

• Invest in „negawatt“ instead of megawatt

plants
– City of Hannover: 34 % reduction of electricity
consumption possible
– Translated to whole Germany: saving potential
of 18 GW installed capacity (out of 100 GW)

• IRP/LCP to reduce electricity consumption

– Utilities on the community level
– 1996 = 85 utilities and 360 programmes
– 1998 = liberalisation of electricity market
• Contracting to reduce elec + heat
consumption
– Contractual service for building owner
– Investment risk taken by contractor
– Over 400 contracting companies
The changed situation in the German electricity
sector

Before 1998: Monopoly situation

LCP/DSM- lower consumption

meassures of kWh
lower cost per
energy-service
higher prices per
kWh
Customer have no posibility to change
supply-company
After 1998: Competition
Customer is looking for lowest prices per kWh

cost-reduction lower prices per

meassures kWh
Customer decides on basis of the
LCP/DSM- higher prices per kWh-prices to change supply-company
meassures kWh

Performance Contracting and possibilities to

finance it

user of an energy system ... Does not want to invest by himself,

does not want to run the system

Performance ....delivers the complete energy service

Contractor

planning financing building the running the

system system

own capital credit shareholder Leasing

company
 Financing via Performance Contracting

550.000
Energy and water costs for Energy costs without measures (baseline)
building before measures
500.000

Energy bill reduction for

450.000 Shared savings payback
building owner after
DM/year

rate for the investor (ESCO)

contract end
400.000

350.000 Energy and water costs for

building after measures

300.000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Investment by year
Contract signed end of contract
ESCO

Combined heat and power generation (CHP)

Cogeneration needed to meet German GHG

reduction commitment

• Target : - 250 Mt, of which CHP = -23 Mt CO2

• Higher energy efficiency of CHP:
Electricity w/o heat: 38 %
Combined heat and power generation: 80-95
%
• Need to protect CHP in liberalised market
Combined heat and power generation (CHP)

Since Liberalisation of the electricity market

(1998):

• Electricity prices for industrial customer are below

the long-run marginal cost

• Situation of dumping-prices against industrial

Combined Heat and Power (CHP) plants

• Many CHP plants have already been shut down

• Subsidy system established (since year 2000) to keep

the CHP plants in operation and to minimise the
societal cost and market distortion

Energy efficiency policy measures

• Ecological taxation
• Institutional and informational approaches
• Loans
• Integrated Resource Planning
• Contracting
• Cogeneration plants
• Awareness and information
Lessons learned

Considerable efforts and results but ...

– still existing a high potential for cost-effectiv efficiency

measures
– These potentials are not realized automatically

Energy efficiency needs “true” prices and public

support

– Regulatory framework needed

– Market introduction programmes are needed

Successful measures:

– ecological tax-reform
– LCP in a regulated electricity-market/Contracting in a
liberalized market
– Cogeneration

Sustainable energy
policies for sustainable
energy technologies