Boon or bane? Germany's energy policy

Hausarbeit, 2013

58 Seiten, Note: 1,3


Table of Contents

Executive Summary

Table of Figures

Table of Abbreviations

1 Introduction

2 Analysis of the energy sector
2.1 Current Energy Situation
2.1.1 Energy Sources
2.1.2 Power generation
2.1.3 Distribution of electricity
2.1.4 Power consumption
2.2 Market structure
2.2.1 Industry structure analysis
2.2.1 Electricity producer
2.2.2 Electricity suppliers
2.2.3 Market regulation
2.3 Formation of prices
2.3.1 European Energy Exchange
2.3.2 Price sharing - Households
2.3.3 Development of prices for households

3 Germanys Energy Policy
3.1 Concept of sustainable energy policy
3.1.1 Economic efficiency
3.1.2 Security of supply
3.1.3 Environmental compatibility
3.2 Targets of German energy policy
3.3 Ways to succeed the “Energiewende”
3.3.1 State interventions
3.3.2 Economic efficiency EEG Governmental subsidies for fossil fuels
3.3.3 Security of supply Economics Grid expansion Grid stability Power plants
3.3.4 Environmental impact
3.4 Status quo Deutscher Energiewende-Index (DEX)

4 Conclusion


ITM Checklist: 360 Degrees Analysis

Executive Summary

The availability of natural resources is decreasing. Because of the current living standards in industrial countries and also the high energy consumption for the production of goods the worldwide natural resources of 1.4 earths are used every year. There has to be a change in the usage of natural resources all over the world. Between the demand for electricity and the offer there must always be a balance. The higher the demand, the more power plants have to produce energy. The costs are entirely dependent on the insert type of power plants.

Germany follows the ambitious target to become the world´s most energy-efficient and environmental friendly economy by generating 80% of its electricity with re- newable energy sources in 2050. In 2011 Germany was already able to produce 20% of its energy with renewable energy sources. This is not only good for the en- vironment but also helps to decrease the costs for imports of fossil energy sources. In order to achieve the ambitious goal and to become a role model for all other countries Germany has to invest in infrastructure dramatically. Further it takes time and coordination efforts to succeed. However an alternative doesn’t seem to be at hand looking at the availability of worldwide resources. Another important side ef- fect of using renewable energy sources are of course the reduction of the so called green house gases and in the same time avoiding the risk of nuclear energy disas- ters such as in Chernobyl and Fukushima.

Although fulfilling the steps towards Germany’s energy policy seems to be complex and costly at first the long term goal is worthwhile pursuing. It should be in everyone’s interest and in the interest of future generations to have a long term energy policy. Germany can set the rules and play a vital role worldwide in the future. We just have to make sure that the process is fair for all stakeholders.

Table of Figures

Figure 1: Worldwide reserves of non-renewable energy sources

Figure 2: Gross Power Generation 2011 in Germany

Figure 3: Transmission System Operator

Figure 4: Net Power Consumption 2000-2011

Figure 5: Biggest Energy producers in Germany

Figure 6: Capacity distribution and total feed 2009

Figure 7: Price Sharing - Households

Figure 8: Price development for households

Figure 9: Aim triangle of German energy policy

Figure 10:Shares of renewable & conventional energy sources in 2011 and 2050.

Figure 11: Properties of EEG-allocation 2012

Figure 12: Distribution of the industrial privilege according to branches

Figure 13: Properties of EEG-allocation 2013

Figure 14: Shares in the growth of EEG-allocation 2012-2013

Figure 15: Accumulated governmental subsidies 1970 - 2012

Figure 16: In society as a whole electricity costs 2012

Figure 17: Greenhouse gases emitted in 2010

Figure 18: German Energy Turnaround Index 3. Quarter 2012

Table of Abbreviations

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1 Introduction

It is no secret that the availability of natural resources is decreasing. Because of the current living standards in industrial countries and the high consumption for the production of goods the worldwide natural resources of 1.4 worlds are used every year.1 If we don’t adapt our living and production standards we will need an addi- tional 2 to 4 earths to cover our needs for energy resources. 26 years after the dis- aster in Chernobyl in 1986 another disaster happened in Fukushima in 2011. No one really thought that disasters like in Chernobyl would happen again but now after Fukushima the threat of nuclear disasters are real again. Fukushima was the trigger for the current change in Germanys energy policy. People went on the streets to demonstrate against the energy production from nuclear power plants. There have been demonstrations before, but after Fukushima even more people protested. This increased the pressure on the German government, which lead to a reconsideration of the policy. The government decided that there will be an exit out of the nuclear power generation in 2022. This was the start for the century project „energy turnaround“ (“Energiewende”).

This assignment tries to give an answer to whether the current policy will be a boon or a bane for Germany. The topics discussed herein refer only to the electricity sec- tor. Chapter one describes the current situation in Germany and the energy sources used to generate electricity. Chapter two gives an overview regarding the market structure and the formation of prices as well as the development of the en- ergy prices for households. In chapter three the targets of the German energy poli- cy are described. The assignment closes with a conclusion in chapter four.

2 Analysis of the energy sector

2.1 Current Energy Situation

In this chapter we will discuss the current energy situation in Germany. We will look into the energy sources used in power plants and discuss the renewable and nonrenewable energy sources available to mankind. Furthermore we will discuss the energy production, its distribution and consumption.

2.1.1 Energy Sources

Our day to day power used in households as well as in the industry or other facili- ties including even power plants is mainly produced in Germany. However some parts of it are bought from our European neighbours as part of the power trade within the European Community. Although one cannot identify which energy source actually is currently used at home, there are many differences where it comes from and which impact it has on the overall economics as well as our environment. Most of the energy sources currently being used are non-renewable therefore finite. It is common knowledge that one day in the future there won’t be any oil or coal left, which one could use to produce energy. Let alone the impact of the CO2- Emmisions. Much more interesting however are energy sources, which are availa- ble infinitely as far as our short human life is concerned anyway. As long as the sun shines, the wind blows and the water runs through river beds, we won’t have any issues with producing sufficient energy. However the downside of these renewable energy sources is that they aren’t available constantly. Therefore it is important where the energy is produced, how it can be delivered to our doorstep and how it can be stored for later usage. Although mankind made a huge leap forward in re- gards to production of energy out of renewable energy sources in the past years, there is still room for improvement. So for the time being we are dependent on non- renewable energy sources. Non-renewable energy sources, also known as fossil fuels, used for energy production are coal, oil, and natural gases. For power gener- ation out of non-renewable energy sources in Germany mostly hard coal and brown coal are used.

The overall brown coal production in Germany in 2011 amounted to 176.5 million tonnes.2 In Germany brown coal -also known as lignite- is produced mainly in 4 mining regions with the Rhenish mining area being the biggest, which contributed with 54% to the overall lignite production in 2011. The second biggest coal mining area was Lusatia, which contributed with 34%, followed by mining fields in Central Germany with 11%. The fourth mining field worth mentioning and with approximate- ly 1% a minor contributor to the overall lignite production in Germany was the Helmstedt mining area. Out of the 176.5 million tonnes, approximately 90% were used by power plants providing our daily power.3 In regards to lignite Germany is self-sufficient and is not dependent on imports. In 2011, 22,770 people were em- ployed in brown coal mining regions in Germany.

Hard coal however is a different story. It is mainly produced in 5 mines in Germa- ny. Those are: Saar, Ibbenbüren and in the Ruhr region: West, Prosper-Haniel and Auguste Victoria.4 The Ruhr region contributed with 8.7 million tonnes, Ibbenbüren with 2.0 million tonnes and Saar with 1.4 million tonnes to the overall hard coal pro- duction of 12.1 million tonnes in Germany in 2011. In hard coal mining 20,925 peo- ple were employed in 2011. 10.1 million Ton of Coal Equivalents (TCE) were used by power plants. A Ton of Coal Equivalent is the unit equivalent to the energy gen- erated by burning one metric ton of coal.5 In regards to hard coal Germany is not self-sufficient and depends on imports from abroad. The hard coal used in Germa- ny comes from different sources all around the world. The import in 2011 was 44.9 million tonnes. Approximately 66%, were imported from Columbia, Russia and USA/Canada. Other countries and regions Germany imports the hard coal from are Australia, Poland and South Africa to name a few.6

Natural uranium is the raw material, which is used in nuclear electric power plants to produce energy. Between 1954 and 1991 the former GDR used to mine approximately 231,000 tonnes of uranium (tU) in the SDAG Wismut mining facilities with up to 45,000 em- ployees. Around that time Germany was the number 4 uranium producer in the world.7 Since the facilities were shut down, Germany has been dependent entirely on imports from abroad in regards to natural uranium. According to data provided by the Euratom Supply Agency (ESA) the top three natural uranium supplier coun- tries in 2011 were Russia, Canada and Kazakhstan with 59% of the overall imports of 17,832 tU to the European Union (EU).8 However, natural uranium itself needs to be enriched and progressed into fuel rods before it can be used by nuclear electric power plants. The only uranium enrichment facility in Germany is run by Urenco and is located in Gronau near the Dutch/German border in North-Rhine-Westphalia with a capacity of 4,200 tonnes separative work per annum (tSW p.a.).9 Separative Work is the effort necessary to separate U235 and U238. 10

Enriched uranium then is converted into pellets, which are loaded into fuel rods and dispatched to nuclear power stations. This fuel fabrication in Germany is undertak- en by the company Areva in Lingen. Areva has also subsidiaries in Karlstein and Duisburg, in which component parts are produced for nuclear fuel fabrication. Are- va has 640 employees in Germany involved in fuel fabrication. In the Lingen facili- ties 650 tU per annum can be converted into fuel rods.11 Since the enrichment of uranium and fuel fabrication is executed in Germany, nuclear energy is seen as a local energy source according to international conventions. Although nuclear power energy is environmental friendly, if it comes down to CO2-Emmisions, there is a huge issue ahead of mankind in regards to radioactive waste, which is an unavoid- able by-product of nuclear energy. Furthermore the risk of nuclear energy produc- tion is of course very well known to all of us of after the recent catastrophe in Fuku- shima.

The worldwide uranium resources will approximately last for some decades, which make uranium a scarce resource.12

Another scarce energy source, which is used for energy production is natural gas. In 2011, 3,572,522 terajoule (TJ) of the natural gas used in Germany was imported from countries such as Russia, Norway and The Netherlands. A minor part was delivered by Denmark and the United Kingdom. Only 418,627 TJ were produced in Germany.13 The main natural gas production sides in Germany are located in Low- er Saxony with 94.90%, Schleswig-Holstein with 3.31% and Saxony-Anhalt with 1.52% of the overall natural gas production in Germany.14 According to a study provided by the “Deutsche Rohstoffagentur”, even as the worldwide demand is in- creasing, natural gas resources will be able to cover the demand for the coming decades.15 However this still doesn’t change the fact that natural gas resources are finite.

Another finite energy source is crude oil. Mainly used for transportation and heat- ing, it is also used in lesser amounts in fuel power stations. 98% of the crude oil used in Germany was imported from countries such as Russia with 39%, followed by the United Kingdom, Norway, Kazakhstan, Nigeria and Azerbaijan with a total of 40% of the imports.16 In Germany crude oil is mainly produced in 3 different areas: Schleswig Holstein contributed with 54.95%, Lower Saxony with 36.01% and Rhineland-Palatinate with 6.33% to the overall inland production of 2,685,461 t in 2011.17 Crude oil doesn’t play a significant role in regards to the power production in Germany.

As far as the non-renewable energy sources are concerned, Germany is dependent on imports from abroad. Only in regards to brown coal Germany is self-sufficient and does not rely on imports. Apart from being dependent on other countries, huge side-effects of using non-renewable energy sources are the damages mankind is causing on the environment in terms of CO2-Emmisions, the catastrophes caused by accidents such as in Chernobyl and Fukushima, the environmental damage oc- curring during the production process as well as the radioactive waste which needs to be stored safely for many centuries to come. As the name suggests, the non- renewable energy sources are finite, therefore some day there won’t be any left to produce energy from. According to the Federal Institute for Geosciences and Natu- ral Resources the resources on natural uranium, crude oil and natural gas will last for some decades. Only lignite and hard coal will last for some 200 years (see Fig- ure 1).

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Figure 1: Worldwide reserves of non-renewable energy sources18

The scarcity of the resources will have an increasing impact on prices. So it seems the shift to renewable energy sources is not a bad idea after all. The renewable energy sources will be discussed in the next chapter.

2.1.2 Power generation

As already discussed, brown coal is the biggest contributor to the energy mix in Germany. The brown coal gross power generation in 2011 amounted to 153 Terawatt Hours (TWh), which was 25% of the overall power generation totalling 614.5 TWh. The second biggest contributors were the renewable energy sources with 20% totalling 122 TWh, followed by hard coal, nuclear energy, natural gas and with the minority share of 5% crude oil, pump storage and others (see Figure 2). The power generation using renewable energy sources in the first half of 2012 has already increased to 24%.19 The renewable energy sector in Germany employed approximately 382,000 people in 2011. This number is believed to increase to 500,000 in 2020. On the international market Germany is second to none in the renewable energy sector. Germany is the leading country in regards to installed capacity of photovoltaic systems and holds the second place in wind energy pro- duction. Germany is also technological leader and exported plants and technology approximately worth 12 billion Euros in 2008.20

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Figure 2: Gross Power Generation 2011 in Germany21

With 22,297 wind energy plants in operation and with the capacity of 46.5 TWh, wind energy was the biggest contributor to energy produced with renewable energy sources in 2011. 101,080 employees worked in the wind energy sector in 2011. These numbers will increase in the near future given the fact that further onshore as well as offshore wind parks are either in planning or already in the development phase. In the first half of 2012 further 416 wind energy plants with the capacity of 998.62 megawatt (MW) were installed in Germany.22 The top 5 regions of wind energy production are Lower Saxony with 15%, followed by Berlin with 10%, Saxo- ny-Anhalt with 8%, Schleswig-Holstein with 7% and North Rhine-Westphalia with 6%.23

Biomass energy plays a vital role within the renewable energy sources mix as it is available constantly and is therefore seen as an all-rounder among renewable en- ergy sources. Biomass energy is produced out of raw materials such as energy crops, wood, straw, organic waste or slurry. In 2011 the biomass energy production out of solid, liquid and gaseous biomass materials increased to 36.9 TWh and con- tributed with 5% significantly to the overall energy production. Around 124,000 em- ployees were engaged in the biomass energy production. Furthermore, biomass energy production is not just good for power generation, it is also used for heating as well as for fuel in transportation. In 2011 approximately 126.5 TWh were pro- duced for heating. Additional 3.6 million tonnes of fuel were produced in 2011.24

The energetic use of water has been known to mankind since the very early days. It was used in ancient Egypt and the Roman Empire for corn mills and in medieval times for saw and paper mills. Since the end of the 19th century water has been used for power generation and it still continues to be one of the most frequently used renewable energy sources worldwide. The technology for water power gener- ation is fully advanced and developed, so only minor improvements can be ex- pected.

However, water power is equally important as other energy sources such as biomass energy, since it is available all the time and therefore plays a vital role in today’s energy mix and will continue to do so in the future. Water power has contributed to the overall gross power generation with 19.5 TWh in 2011.

The sun, being an unlimited, free to use and environmentally friendly source, can be used to produce electricity and of course heat. Solar energy has contributed with 19 TWh to the gross power generation in 2011. This number might still seem to be low, however it is continuously rising. As of end of 2011, approximately 2.3 million photovoltaic and solar thermal systems were in use in Germany. This impressive number is the result of the Renewable Energy Sources Act being in place in Germany. Now everybody with a photovoltaic system on the roof of their houses becomes an electricity producer. The generated electricity is guaranteed to be bought by network operators for a fixed price.25

Electricity produced out of the Earth’s heat, known as Geothermal Power Genera- tion, currently plays a minor role within the energy mix in Germany. Approximately 27 million kilowatt hours (kWh) were generated from geothermic in 2010. Com- pared to other renewable energy sources this number is quite low, however a pos- sible power supply of 150 billion kWh is assumed by the Federal Ministry for the Environment. 26 The advantage of geothermal energy similar to biomass and water lies in its constant availability. Once the source is tapped the energy source will last as long as the Earth exists independent of weather, time of day and year.

2.1.3 Distribution of electricity

One of the biggest challenges of renewable energy is the availability around the clock. Wind and solar energy being not available all the time makes the supply with those energy sources unpredictable.

Furthermore the production of renewable energy in certain regions is more efficient than in other regions. Offshore wind parks currently in development or in planning phase are a great example of such phenomena. The energy produced in northern regions needs to be transported to regions further south. So there is a need to ex- pand the grid to fulfil these demands. The Federal Network Agency, among other duties, is the supervising agency responsible for the expansion of the grid in corpo- ration with the Transmission System Operators (TSO). In the energy sector, it is their duty to ensure a safe, inexpensive, consumer friendly, efficient and environ- mentally sustainable provision of the community. As such it is their responsibility to verify and approve the grid expansion plans provided by the TSOs. The grid ex- pansion and its consequences will be discussed later in chapter

The distribution of electricity from power plants to end customers is executed by various so called voltage levels. Low voltage grids are responsible for the delivery of electricity to local consumers such as households. On the regional level the elec- tricity is distributed via medium voltage power grids to consumers such as big cor- porations and industry. However the backbone of the distribution is fulfilled by the so called high voltage grids with a length of approximately 35,000 km provided by four TSOs. Those are 50Hertz, Amprion, TenneT TSO and TransnetBW. Besides being responsible for the transport of electricity, these TSOs connect the German grid with its neighbours, thus allowing the European power trade. The high voltage grid is traditionally divided into four separate regions. 50Hertz operates the grid in the north and east of Germany. Amprion is responsible for the distribution in the west and southwest. The distribution in Baden-Württemberg is mainly provided by TransnetBW. Last but not least, TenneT TSO is responsible for the distribution from the north all the way down to the south of Germany (see Figure 3).27

illustration not visible in this excerpt

Figure 3: Transmission System Operator

2.1.4 Power consumption

The net power consumption in 2011 in comparison to the power consumed in 2010 went down by -0.1% to 540.8 TWh overall. The biggest consumers being the industry, trade and commerce consumed 328.4 TWh with a minor increase of +0.5% compared to 2010. Power consumption in households went down by -1.4% to 139.7 TWh in total. The reason for this decline were the mild weather conditions in 2011 in comparison to the preceding year. There simply was lesser necessity for heating. Another important reason for the decline in energy consumption in households is for sure the increasing energy prices. The other sectors remained unchanged (see Figure 4). The consumption by power plants, pump power consumption as well as grid losses added up to a total of 67.7 TWh.

illustration not visible in this excerpt

Figure 4: Net Power Consumption 2000-2011 (Source: AGEB 2012)

The export surplus for cross border exchange of electricity continuously exceeded the imports during the past eight years. However after the moratorium of nuclear power plants in March 2012 the export surplus went down dramatically. In the first quarter of 2012 the export surplus was equally high as in the preceding year, how- ever the second and third quarters the import surplus increased. The export surplus in the fourth quarter of the past years was also very high. Although there was still an export surplus the numbers went down in comparison to the previous years. In 2011 Germany exported 56 TWh and imported 50 TWh of electricity from its neigh- bours. In comparison the export surplus in 2010 was 17.7 TWh.28

2.2 Market structure

The market structure for electricity has changed dramatically with the liberalization of the electricity and natural gas grid-bound energy in 1998. The current economy has a very versatile structure. Electricity markets are generally characterized by features that have an impact on the market and competitive processes. Unlike oth- er products, power is essentially not storable, so supply and demand must match at all times. Moreover, the demand for electricity is subject to strong diurnal and sea- sonal variations.29 With the European Energy Exchange a single electricity market has been existing in Germany since 2002 (see chapter 2.2.4).30 The Federal Cartel defines the production and marketing of renewable energies and the marketing of energy generation capacity as a rule rather than a part of the market. The main factor is the idea that the production and marketing of renewable energy is not market-orientated but is independent of demand and price signals because of spe- cific legal provisions.31

2.2.1 Industry structure analysis

To understand the context of the German energy market in a better way, the scien- tific background of an industry analysis is explained in the following excursion. The industry structure analysis following the five forces is an appliance in the strategic management to analyse the business planning.32 The results of this analysis are often incorporated as an environmental analysis into a SWOT analysis where the forces from the external environment are described which influence the enter- prise.33 SWOT refers to strengths, weaknesses, opportunities and threats.34 The basic idea is that the attractiveness of the market is primarily determined by the market structure.


1 Cf. Kopytziok (2009).

2 Cf. Statistik der Kohlenwirtschaft e.V. (2012a).

3 Cf. Maaßen & Schiffer (2012), p. 144 ff.

4 Cf. Gesamtverband Steinkohle e.V., (2012).

5 Cf. Business Dictionary (2012).

6 Cf. Statistik der Kohlenwirtschaft e.V. (2012b).

7 Cf. Wismut (2012).

8 Cf. Euratom Supply Agency (2012), p. 24 ff.

9 Cf. Urenco Deutschland (2012a).

10 Cf. Urenco Deutschland (2012b).

11 Cf. Areva Deutschland (2012).

12 Cf. Spiegel Online (2010).

13 Cf. Bundesamt für Wirtschaft und Ausfuhrkontrolle (2012), p. 4.

14 Cf. Wirtschaftsverband Erdöl- und Erdgasgewinnung e.V. (2012a).

15 Cf. Deutsche Rohstoffagentur (2011), p. 25.

16 Cf. AG Energiebilanzen e.V. (2012), p.11.

17 Cf. Wirtschaftsverband Erdöl- und Erdgasgewinnung e.V. (2012b).

18 Cf. Bundesverband Windenergie (2012a), p. 30

19 Cf. Nickel (2012), p. 3 ff.

20 Cf. Renewable Energies Agency (2012a).

21 Cf. Nickel (2012), p. 3

22 Cf. Deutsches Windenergie Institut (2012).

23 Cf. Bundesverband Windenergie (2012b).

24 Cf. Renewable Energies Agency (2012b).

25 Cf. Renewable Energies Agency (2012c).

26 Cf. Renewable Energies Agency (2012d).

27 Cf. Transmission System Operator (2012).

28 Cf. AG Energiebilanzen e.V. (2012), p. 25 ff.

29 Cf. Bundeskartellamt (2011), p. 5

30 Cf. European Energy Exchange

31 Cf. Bundeskartellamt (2011), p. 6

32 Cf. Porter (2008), p. 28

33 Cf. Porter (2008), p. 29

34 Cf. Kotler et al. (2010), p. 234

Ende der Leseprobe aus 58 Seiten


Boon or bane? Germany's energy policy
FOM Hochschule für Oekonomie & Management gemeinnützige GmbH, Köln
Master of Business Administration Economics
ISBN (eBook)
ISBN (Buch)
1629 KB
germany, energy policy, renewable energy sources, fossil fuels
Arbeit zitieren
Henning Wenzel (Autor:in)Andreas Förster (Autor:in)Hakan Sanlier (Autor:in), 2013, Boon or bane? Germany's energy policy, München, GRIN Verlag,


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