„The fate of renewable energies“: Edenhofer speaks at German Association of Energy and Water Industries

07/13/2012 - Three core elements of sustainable energy politics were proposed by Ottmar Edenhofer, chief economist of the Potsdam Institute for Climate Impact Research (PIK) in a keynote lecture in Berlin. For an audience of more than a thousand listeners at the German Association of Energy and Water Industries (BDEW) congress, he explained that the key elements were a reform of the European emission trade system, a new form of support for renewable energies, and options for the integration of electricity from solar and wind power into the overall system. For the first time, he thereby framed comprehensively the institutional requirements for a success of the “Energiewende” in the long-term.
„The fate of renewable energies“: Edenhofer speaks at German Association of Energy and Water Industries

Emission trade had to be designed in a way that “enables us to actually find out the most efficient mitigation options – for Europe that means that all sectors have to be included,” Edenhofer said, like the so far mostly excluded transport sector. Furthermore, the European emission trade had to be enabled to connect with the correspondent systems in other countries – like the one in Australia, the one outlined in the current five year plan in China and others developing worldwide.

“We sure need a stimulation of renewable energies as well,” Edenhofer said. “Nonetheless, this is not only about the promotion of the technologies, but about insisting on cost efficiency.” To achieve that, a new market design was necessary “to find the most efficient integration options”, for example  an increased flexibility of demand, the supply of residual power by flexible fossil power plants, network expansion, storage technologies, more imports and exports between countries.

“The fate of the renewables will be decided on these options for integration,” Edenhofer emphasized. Energy production from sun and wind naturally fluctuate strongly – “this does not result in a problem of quantity, but in one of reliability”. The crucial challenge for the future is to generate prices for this reliability, and thereby creating  incentives for investmentsin the most cost efficient integration options. “I know, there´s still a lot of work to be done.”

The motto of this year´s BDEW congress was “Tomorrow´s markets – between competition and regulation”. “Because of the steady expansion of renewable energies and the dimming effect on stock exchange prices that comes along with it there are not enough price signals  to trigger investments in the billions at the moment, “ explained Hildegard Müller, Chairperson of the BDEW General Executive Management Board. Therefore, the existing energy-only-model on the market will not be enough in the future. “We will have to get to a model in which performance can be paid, too” Müller said. In the long run, renewable energies had to be integrated into the market step by step and merged with the market of conventional energy production to a perhaps completely new market design.

Weblink to the videos of the BDEW congress talks