Review of German energy policies calls for cost reductions, investment in networks and closer regional co-operation
24 May 2013
In a review of German energy policies launched today, the International Energy Agency commended Germany for its commitment to developing a low-carbon energy system over the long term – in particular its comprehensive energy strategy, ambitious renewable energy targets and plans to reduce energy consumption. The report noted that Germany has successfully implemented a broad suite of robust energy policies across all sectors notably in energy efficiency and climate change.
Nonetheless, the scale of Germany’s energy policy ambitions, coupled with the size and energy intensity of its economy, and its location at the heart of Europe’s energy system, mean that further policy measures are necessary if the country’s ambitious energy transformation, or Energiewende, is to maintain a balance between sustainability, affordability and competitiveness.
To date, German consumers have absorbed the costs of the Energiewende, but the debate over the social and economic impacts of the Renewable Energy Sources Act (EEG) has become more prominent as the share of renewable energy has continued to grow alongside rising electricity prices. The transition to a low-carbon energy sector requires public acceptance, and, therefore, retail electricity prices to remain at an affordable level.
“The fact that German electricity prices are among the highest in Europe, despite relatively low wholesale prices, must serve as a warning signal,” said IEA Executive Director Maria van der Hoeven as she presented the report, Energy Policies of IEA Countries – Germany 2013 Review.
At the same time, the IEA said that energy policy is based on long-term investment decisions, and the framework conditions in Germany for a policy consensus in favour of large-scale deployment of renewables have never been better. The Executive Director added, “The German government should maintain its policy course based on a predictable and stable regulatory framework while actively seeking means to reduce the costs. Sudden changes can undermine investor confidence and will drive up costs in the long term: Any form of retroactive tariff cuts – even if applied for only a short period – must be avoided.” Furthermore, there is a need to develop a mechanism to ensure that costs can be distributed more equitably. What has worked in the past may not be a blueprint for the future.
There is a need to develop suitable mechanisms to manage the cost of incremental renewable energy capacity via cost-effective market-based approaches, which will support the forecast growth of variable renewable electricity generation and brings new capacity closer to market needs, supports investments in appropriate locations and complements planned network expansion.
Among the key recommendations, the report calls for:
Germany must also develop structural co-operation at regional level, and within existing European mechanisms, in order to enhance security of supply at reasonable cost, especially under extreme weather conditions or periods of prolonged high demand. Furthermore, decisions on German energy policy inevitably have an impact far beyond the country’s borders and should be considered within the context of a broader European energy policy framework and in close consultations with its neighbours.
To read the Executive Summary of Energy Policies of IEA Countries – Germany 2013 Review, please click here.
To read the Executive Summary of Energy Policies of IEA Countries – Germany 2013 Review in German, please click here.
To read IEA Executive Director Maria van der Hoeven's English-language remarks at the launch, please click here.
To see the English-language slides for the presentation given at the report’s launch, please click here.
To read IEA Executive Director Maria van der Hoeven's remarks in German at the launch, please click here.
To see the German-language slides presented at the report’s launch, please click here.
Energy Policies of IEA Countries – Germany 2013 Review is on sale at the IEA bookshop. Accredited journalists who would like more information or who wish to receive a complimentary copy should contact firstname.lastname@example.org.
About the IEA
The International Energy Agency is an autonomous organisation which works to ensure reliable, affordable and clean energy for its 28 member countries and beyond. Founded in response to the 1973/4 oil crisis, the IEA’s initial role was to help countries co-ordinate a collective response to major disruptions in oil supply through the release of emergency oil stocks to the markets. While this continues to be a key aspect of its work, the IEA has evolved and expanded. It is at the heart of global dialogue on energy, providing reliable and unbiased research, statistics, analysis and recommendations.
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