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Energy transition in Germany: a case study on a policy-driven structural change of the energy system

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  • Felix Christian Matthes

    (Oeko-Institut)

Abstract

The German energy transition (“Energiewende”), i.e., shifting the basis of the energy system from fossil and nuclear fuels to renewable energy constitutes a policy-driven structural change of the energy systems. The fundamental political decisions on nuclear phase-out and the deep decarbonisation of the energy system were based on specific risk considerations in German society, formed by political and learning processes over more than two decades, including the experiences made with the roll-out of renewable energies from 1990 to 2010 that created significant technology optimism in this field. The major challenges for the energy transition do not arise from technological issues or the system costs of a renewables-based system if the once-only investments in innovation are taken into account (that contributed significantly to the massive cost decrease of wind and solar energy at global level). Structural challenges arise first from the dominance of variable renewable energies, which changes generation patterns and shifts cost structures to high shares of capital and low or even zero marginal costs. This triggers the need for restructured power market design that enables price-based system coordination as well as the payback of investments in a low marginal cost environment and re-adjusts the cost allocation among the different consumer groups. Second, the increasing diversity in the power system brings in a broad range of new players and new economic appraisals (self-generation, etc.) that also requires—beyond new dimensions of coordination—structural changes in the regulatory framework. Third, the spatial patterns of the electricity system necessitate large-scale structural changes in the network infrastructures, which demand a sensitive reflection of public acceptance and network regulation approaches. A successful energy transition beyond its present stage requires stringent and holistic policy approaches that are based on four pillars: paving the way for clean energy, designing the exit game for the high-carbon assets, triggering the network infrastructures and making innovation work in time.

Suggested Citation

  • Felix Christian Matthes, 2017. "Energy transition in Germany: a case study on a policy-driven structural change of the energy system," Evolutionary and Institutional Economics Review, Springer, vol. 14(1), pages 141-169, June.
  • Handle: RePEc:spr:eaiere:v:14:y:2017:i:1:d:10.1007_s40844-016-0066-x
    DOI: 10.1007/s40844-016-0066-x
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    References listed on IDEAS

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    1. Cludius, Johanna & Hermann, Hauke & Matthes, Felix Chr. & Graichen, Verena, 2014. "The merit order effect of wind and photovoltaic electricity generation in Germany 2008–2016: Estimation and distributional implications," Energy Economics, Elsevier, vol. 44(C), pages 302-313.
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    Cited by:

    1. William Hongsong Wang & Vicente Moreno-Casas & Jesús Huerta de Soto, 2021. "A Free-Market Environmentalist Transition toward Renewable Energy: The Cases of Germany, Denmark, and the United Kingdom," Energies, MDPI, vol. 14(15), pages 1-27, July.
    2. Karoline S. Rogge & Elisabeth Dütschke, 2017. "Exploring Perceptions of the Credibility of Policy Mixes: The Case of German Manufacturers of Renewable Power Generation Technologies," SPRU Working Paper Series 2017-23, SPRU - Science Policy Research Unit, University of Sussex Business School.
    3. Rogge, Karoline S. & Pfluger, Benjamin & Geels, Frank W., 2020. "Transformative policy mixes in socio-technical scenarios: The case of the low-carbon transition of the German electricity system (2010–2050)," Technological Forecasting and Social Change, Elsevier, vol. 151(C).
    4. Jarosław Brodny & Magdalena Tutak, 2020. "Analyzing Similarities between the European Union Countries in Terms of the Structure and Volume of Energy Production from Renewable Energy Sources," Energies, MDPI, vol. 13(4), pages 1-37, February.
    5. Rogge, Karoline S. & Schleich, Joachim, 2018. "Do policy mix characteristics matter for low-carbon innovation? A survey-based exploration of renewable power generation technologies in Germany," Research Policy, Elsevier, vol. 47(9), pages 1639-1654.
    6. Cheung, Grace & Davies, Peter J. & Bassen, Alexander, 2019. "In the transition of energy systems: What lessons can be learnt from the German achievement?," Energy Policy, Elsevier, vol. 132(C), pages 633-646.
    7. Oei, Pao-Yu & Hermann, Hauke & Herpich, Philipp & Holtemöller, Oliver & Lünenbürger, Benjamin & Schult, Christoph, 2020. "Coal phase-out in Germany – Implications and policies for affected regions," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 196.
    8. Sarah Hafner & Olivia James & Aled Jones, 2019. "A Scoping Review of Barriers to Investment in Climate Change Solutions," Sustainability, MDPI, vol. 11(11), pages 1-19, June.
    9. Edler, Jakob & Köhler, Jonathan Hugh & Wydra, Sven & Salas-Gironés, Edgar & Schiller, Katharina & Braun, Annette, 2021. "Dimensions of systems and transformations: Towards an integrated framework for system transformations," Working Papers "Sustainability and Innovation" S03/2021, Fraunhofer Institute for Systems and Innovation Research (ISI).

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    More about this item

    Keywords

    Energy transition; Electricity policy; Decarbonisation; Renewable energy; Germany;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • N74 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: 1913-

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