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Toward a Zero-Carbon World

Can Renewables Deliver for Germany?
June 29, 2012 by Frank Klose, Holger Rubel, and Gunar Hering
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For European governments, meeting the European Union’s long-term target for greenhouse gas emissions—a reduction of 80 percent from 1990 levels by 2050—will demand bold moves. Germany’s government is the first to have released a detailed road map for reaching the target. Its Energy Concept for an Environmentally Sound, Reliable and Affordable Energy Supply, first published in September 2010 and promulgated in several individual bills in August 2011, sets forth an expansive vision for transforming all aspects of the country’s energy system, with emissions and/or efficiency targets specified for each sector.

A defining feature of the plan is its emphasis on renewable-energy sources. The government seeks to fully double the power sector’s renewable-generation capacity by 2020. And it will push to drive the sector’s share of gross electricity consumption met by renewables steadily higher over time, from a targeted 35 percent in 2020 to 50 percent by 2030, 65 percent by 2040, and 80 percent by 2050.

Can Germany’s plan work, and is it economically viable? This report attempts to answer these questions. The first section looks at the plan’s technical feasibility and the challenges that the large-scale use of renewables would pose to an integrated power system. It also identifies what we consider optimal levels of key renewable-energy sources for Germany’s purposes. The second section examines the plan versus potential alternatives from the perspective of cost (in terms of total cash outlays), emissions reduction potential, and other critical metrics. The third section discusses the implications for key stakeholders, namely utilities and policymakers, of a portfolio centered on renewables.

Our main findings: Germany’s plan should indeed allow the country to meet its emissions-reduction objectives and is, despite its cost premium compared with other options, an attractive way forward for the country. Germany should be able to reach its target of satisfying 80 percent of its electricity demand with renewable sources by 2050, provided it supplements its local renewable-generation capacity with the selective use of such levers as energy storage, demand-side management, and imports of renewable energy.