Published on April 3rd, 2013 | by Thomas Gerke2
My Energy Outlook For Germany 2025
April 3rd, 2013 by Thomas Gerke
Below is my energy outlook for Germany 2025. But before delving into that, let’s take a quick look at where many forecasts go wrong.
The Art Of Getting It Wrong
Every year we are being bombarded with dozens of studies and reports that show how our energy supply will change over the course of the coming decades. Some proclaim that oil and gas will remain the top energy source for decades to come, and that there’s no change in sight. Other studies (usually those not commissioned by oil corporations) tell us that renewable energy could become our main source of energy.
In the past, most predictions by institutions like the International Energy Agency (IEA) have turned out wrong because they either underestimated the price hikes of conventional energy sources or played down the potential of renewable energy sources. A few well established methods that are commonly used in the quest of getting energy predictions systematically wrong are:
- plotting out linear developments despite exponential trends
- ignoring socio-economic developments
- ignoring the mid-term effects of policy
- ignoring technological developments
But all of this is pretty common knowledge. So, without further ado…
Here is my “conservative” Energy Outlook for Germany 2025, the second decade of the energy revolution. I won’t claim that my assumptions are based on solid science and I don’t expect everything to come true, but I will explain the reasoning behind the predictions and hope that you’ll enjoy it.
It’s About Final Energy, Stupid!
When discussing the transition to renewable energy sources, it’s more important to look at final energy consumption (technical usable energy) than current primary energy consumption (fuel sources needed to meet final energy demand). This is important because switching to renewable energy sources also involves transforming our energy consumption patterns in order to run more efficiently on the new energy source. In simple terms: today we use the internal combustion engine because it works with our current fuel source, not because it’s the most efficient engine.
The implementation of energy efficiency and the broad introduction of certain technologies (EVs, heat pumps, etc.) will change the final energy demand of a country dramatically.
As you can see, I expect the biggest changes to occur in HVAC (heating, ventilation, air conditioning, and cooling) and the composition of the electricity supply.
- HVAC — I expect that the speed of improvements of energy efficiency in buildings will pick up significantly over the coming years. Mainly because in Germany it is common knowledge that space heating energy savings of up to 90% are possible and fuel prices have skyrocketed. Existing policy already supports these efforts and I expect even more political support since these improvements already represent macroeconomic benefits and thus economic growth (jobs, avoiding energy imports, regional value creation, etc.).
- Transport — Since this is a conservative outlook, I did not yet include a massive introduction of electric vehicles, so the slight decline in energy demand in this sector is mainly due to current fuel efficiency improvements.
- Electricity — I expect a modest decline of electricity consumption due to efficiency increases and due to the rising share of renewable energy sources in the electricity supply. More renewables like wind and solar reduce consumption because thermal power stations actually consume a significant amount of the electricity they produce (5-10%).
The increases in the share of renewable energy sources represent the continuation of current developments. There would have to be a massive and “successful” political rollback against renewables to prevent these changes. Since the powerful state governments have shown no interest in slowing down the deployment of renewables, and since the worst anti-renewable zealots in federal politics will most likely be weakened after the next election (September 2013), I don’t see such a successful pushback happening any time soon.
The expected decline of influence by politicians representing the interests of energy corporations is also the reason why there are suddenly many extreme and hasty calls to alter the successful renewable policy frameworks.
Changes That Will Hurt Big Energy
The changes I’ve mentioned above, as well as the phase out of nuclear power and technical necessities until 2022, will have a significant impact on the total primary energy consumption of Germany. Understanding the underlying developments will also help to address common myths about Germany (e.g. the myth that less nuclear = more coal).
- Other Renewables – This is mainly bioenergy, but also stuff like solar thermal energy and geothermal. All of them are set to grow, and their enormous untapped technical-ecological potential allows this to happen.
- Hydro, Wind & Solar – The capacity of wind and solar PV will probably more than double in the coming decade. Solar PV could reach anything between 70–120 GW, including several GWh of decentralized battery storage. This is no wishful thinking, but the result of a 120,000-employee solar industry changing its business model and solar PV having passed grid parity for households, commercial, some industrial “consumers.” Additionally, according to a 2012 survey by the Chamber of Commerce, almost 1/4 of all businesses plan to invest in renewable energy generation.
- Nuclear – Considering that nuclear energy made up approximately 14% of Germany’s primary energy consumption in 2000, you might wonder where all those PJ have gone. This is a classic example of the importance of NOT thinking in terms of primary energy consumption (energy content of the fuel) when talking about a transition to renewable energy sources. While nuclear energy provided only electricity, the theoretical heat content of the nuclear fuel is being added into the primary energy consumption statistic (nuclear electricity generation x 3). That way 620 PJ (170 TWh) of nuclear electricity become a mighty 1850 PJ of primary energy. Trying to replace the 1850 PJ (515 TWh) instead of the 620 PJ with wind or solar is a typical disinformation argument used by “experts” all the time. It usually concludes that it’s no use because it would take up “too much” space. 😉
- Hard coal & lignite – The decline of coal has to do with the above-mentioned technical necessities. In a simplistic world that many commentators and false “experts” seem to live in, it doesn’t make a big difference whether you have 25% nuclear (baseload) energy or an additional 25% renewable (mainly variable) energy in the electricity mix. In reality, it’s simply impossible that inflexible, baseload lignite power will be able to stay on the grid 24/7 despite the further rise of solar PV and wind power.
- Natural Gas – The overall consumption of natural gas will decline slightly, mainly due to reduced demand for space heating. However, the share of natural gas in electricity generation will rise to about 20-30% (14% in 2012). A significant amount of this electricity generation will come from commercial and industrial CHPs. Combined with heat storage, those CHPs form combined power plants with on-site renewable energy sources. This doesn’t only make economic sense already, but I also expect more policy incentives to be put in place after the current survival struggle of the baseload-paradigm has been overcome.
- Oil – As you can see, oil consumption has already declined by approximately 18% since 2000 and I expect a further decrease (even without the EV revolution) till 2025. This has once again to do with the heating sector and overall efficiency improvements. The consumption of light heating oil represents 18% of the total demand of oil-based products, and most oil-based central heating systems are already 25-40+ years old. Since using oil for space heating has become incredible expensive, there is a very high economic incentive to change the fuel or increase energy efficiency over the coming years, leading to a reduction in demand.
All of this might not exactly happen by 2025, but it will happen at some time in the 2020s in Germany. And perhaps the EV revolution will kick-start stronger than currently anticipated, which would further decrease oil consumption significantly.
What this change means goes beyond a simple decline in consumption of fossil fuels. It’s a structural change that removes significant amounts of market share from the old guard of energy corporations that have dominated our energy supply for the past century. This will not only affect their annual sales, but also the profitability of their entire centralized infrastructure. From coal harbors to power plants and oil refineries, some parts of the very long supply chain aren’t paid for and they will have to be written off.
If they are unable to slow this change down significantly, or diversify quickly, this might very well be the end for energy giants like RWE or E.ON. As mentioned before, they will not go down without a fight, and they are already launching wave after wave of media campaigns. They certainly don’t want anyone abroad to understand the implications of what’s happening here in Germany, and especially not how this transition is affecting them.
So, my advice to everyone: Prepare for a lot of disinformation about the developments in Germany to head in your direction, and enjoy the show.
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