Energy Transition Worldwide

Energiewende Worldwide

The energy transition movement that started with Germany is now gathering support worldwide. However, it must be noted that the global rise of renewables (in the electricity sector) is not only attributed to Germany but is a combination of various programs implemented by different pioneering countries.

The movement is on its way, but it will take decades to change the energy economy – based on conventional energy since more than two centuries. Nonetheless, there are some tendencies towards a renewable future visible. In 2014, for the third time, worldwide investments in new renewable capacity exceeded investments in fossil-fuel power. Similarly, many European countries have also set ambitious renewable energy targets for their own energy transition.

At the end of 2015, at least 173 countries have set up some kind of renewable energy targets and estimated 146 countries had renewable energy support policies. In other countries, especially transit and developing countries like India, Indonesia and Vietnam, the energy systems are still relying on coal and continue to build more power plants in the coming years.

On the other hand, Chinas dependency on coal stagnating and, according to WWF and Agora Energiewende weltweit, instead of growing numbers of coal plants, only one third of the planed plants are realized since 2010. Technologies that proved to be mature in developed countries, new energy concepts and business cases for sustainable energy, and innovative support mechanisms give developing countries the opportunity to face the economic, climate, and social challenges.

German energiewende and implications for other countries

Germany with its energiewende can serve as a pattern for other countries to leapfrog their own energy transition. However, energiewende should not be seen as a fixed model but rather a dynamic strategy that should be adopted according to the country where it is implemented. Feed in tariffs, first introduced in Germany, is the most successful policy tool, with more than 110 jurisdictions at the national or state/provincial level who have enacted feed-in policies.

Similarly, the market support for renewables (via feed-in tariff), broad citizen participation as well as high level of support from domestic population along with strengthen R&D for renewables, have boosted the development of renewable energy technologies to reach global competitiveness by lowering manufacturing levels and improving efficiency levels. Thus, Germany has demonstrated the need for a long-term support policy to promote energy transition.

For more lessons learnt from German energiewende, click here.

In Germany the energiewende covers mostly the power, heat and transport sector. In the context of developing countries, there are other relevant topics in addition to these three sectors: mostly the development of a sustainable energy supply, and the fight against energy poverty worldwide. In the context of climate change, decarburization of the energy supply is a key issue. Energy access: around 1.1 billion people do not have access to electricity and 2.9 billion rely on traditional biomass for their energy needs therefore suffering from energy poverty. Energy demand increase: According to the IEA, energy demand will rise until 2040 by 40%; out of which around 90% will occur in developing and transitioning countries. The global energy transition is steered by international processes (UNFCCC climate process) and regulations (e.g. SDGs, Kyoto-Protocol, COP21 etc.) to combine the many different, individual transitions into one global process.

Along with exporting the German energiewende to the international community, we can also learn a lot from international experiences such as Danish experience with civic participation, the Italian experience in the area of smart meters and lessons on steering flexible loads from the United States.

Brazil

Brazil is the largest energy consumer in South America with hydropower supplying 80% of the total electricity generated in 2012. Brazil’s renewable energy targets are embedded in its Ten-year energy expansion (PDEE) plans, which are updated yearly. It aims for renewable energy to account for 42.5% of the country’s primary energy supply by 2023. The legal framework for the electricity system is the Electricity Law of 2004 ( Law 10848), which led to the creation of regulated markets via auctions of power purchase agreements (PPAs). The Brazilian National Development Bank (BNDES) also provides preferential financing for renewable energy projects that meet local content requirements. Regarding grid access, the renewable energy projects receive tariff discounts of at least 50% in the transmission and distribution. The Brazilian energy system, however, is subjected to contradictory regulations. The investment in new generation follows a competitive least cost approach (via energy auctions) while the final consumer price is determined by the government by directly intervening to control inflation. Thus energy is not regulated holistically and makes the energy market subject to other political issues in the country. For a list of all auctions till date, click here.

China

China has also made significant contribution to the solar sector by playing a central role in mass production of PV cells and modules, thus overcoming the scarcity of modules between 2004 and 2008. It is now a leading country in terms of investments in renewable energy; accounting for approximately 30% of worldwide investments in 2014. Support for renewable energy electricity generation is among the key policies that are driving the significant installations of solar and wind capacities in China. This can be supplemented by the support from regional and local authorities (e.g. in the form of favorable access to land). The Renewable Energy Law 2005 (amended in 2009) provides an umbrella framework for regulating renewables in China. In August 2013, China introduced Feed-in-tariffs (FITs) at both state and provincial levels to boost the growth of distributed solar rooftop installations. The National Energy Administration has also started to deregulate the electricity market for small distributed solar generation (including rooftop PV projects) such that, the solar projects below 6 MW capacity are exempt from applying for a power generation license. Regarding the wind energy, a national subsidy for distributed wind has been under development but has not been officially released. However, distributed wind is benefitting indirectly from a number of distributed PV support policies.

Costa Rica

In 2015, Costa Rica claimed to run 285 days only on renewable energy (with renewables supplying 100% of the electricity produced). The majority of renewables also came from hydropower with the rest coming from geothermal, biomass, wind and solar. The electricity market in Costa Rica is regulated by the government owned company Costa Rican Electricity Institute (ICE), which is the sole provider of electricity. However, the law authorizes private companies and persons to generate for auto-consumption but to distribute and sell electricity to third part, they have to sell the electricity to ICE under Act No. 7200, which will then sell to its affiliates. The electricity distribution is carried out by 8 companies, 2 government companies, 2 local government companies and 4 cooperatives. There are no specific policies or incentives to encourage the use of renewables in Costa Rica although the government has its goal of becoming carbon neutral by 2021. The Government has also acknowledged its dependence on hydropower and plans to reduce its dependency by investing in geothermal and wind. The government has also imposed tax exemption for equipment used in renewable energy generation. To promote distributed energy in Costa Rica, the government has implemented revised net metering in April 2016. For PV systems installed under this scheme, the owners can sell their surplus electricity to ICE but the owners using the net metering will be charged a grid fee of between $0.02 and 0.05) per kWh of meter movement backwards. Similarly, since 1989, majority of Costa Rica’s electricity has been generated by hydropower. The example of almost 100% renewables in Costa Rica in 2015 is an example that energy transition is possible. However, it should be noted that more than 90% of its electricity is derived from Hydropower and with changing climate patterns, it is important for Costa Rica to diversify its energy mix.