For the first time DNV, the independent energy expert and
assurance provider, has applied its independent Energy Transition Outlook
model - incorporating the latest technology trends and policy developments - to
Germany.
The inaugural German Energy Transition Outlook (ETO) report
finds that Germany is on track to electrify nearly half of its electricity
demand by mid-century, yet it will fall short of its 2045 climate neutrality
target.
One of the main advantages for Germany is, that its energy
mix by supply will shift dramatically. Imports, which currently make up 70% of
Germany’s primary energy, will fall to 27% by 2050 making Germany much less
energy import dependent. Imported coal and oil will decline by 99% and 79%
respectively.
Moreover, by mid-century natural gas and hydrogen will be
equal, with one-third of the hydrogen produced domestically.
While Germany is making major progress in reshaping its
energy landscape, emissions are forecast to drop by 89% by 2045 and 95% by 2050
compared to 1990 levels, leaving policymakers with a challenge to plug the
remaining gap.
The study found that by 2050, 46% of Germany’s energy
demand will be electrified - more than double today’s 19%.
The electrification is driven by declining cost of new
technologies such as batteries and heat pumps and policy drivers such as carbon
price. Electricity production is expected to double from today to reach 1,000
TWh by 2050 - 90% of which will be renewable.
Remi Eriksen, group president and CEO, DNV,
said: “Germany has long been a front runner in the
energy transition and has established a national target to achieve a net zero
energy economy by 2045. Our investigation finds that Germany will miss this
target — but by a narrow margin. We forecast that emissions will fall by 95% by
2050.
“That is a very big step towards decarbonisation and is
largely facilitated by a more than doubling of electricity use across the
country in the next 25 years. Overall, we forecast that Germany will achieve a
very much more sustainable energy system while not sacrificing the other two
corners of the energy trilemma: affordability and energy security.”
Underpinning this transition will be €3.3trillion in
energy infrastructure investment over the next 25 years, primarily split
between market-exposed assets centered on renewables, hydrogen, and storage;
regulated assets such as electricity transmission and gas/hydrogen networks;
and end-user fixed assets like installing new heating equipment and rooftop
solar PV. However, this will require long-term stable regulations, targeted
subsidies, and efficient de-risking measures to drive investment.
Claas Hülsen, German ETO project manager and director in region Northern Europe, energy systems at DNV, said: “Germany
is building a more sustainable energy system while maintaining a balance
between affordability and energy security. The same principle applies globally:
renewable electricity is expanding rapidly because it makes economic as well as
environmental sense. This transition won’t be straightforward, but by building
out domestic renewables, Germany can secure a cleaner and more resilient energy
future.”
DNV projects that alongside renewables growth, energy
efficiency improvements will be substantial. By 2050, the energy intensity of
the German economy (i.e. energy use per unit of GDP) will almost halve, while
energy use per capita will drop by over 50%.
Crucially, energy prices will not place German industry at
risk, though energy-intensive sectors will require support to adapt their
business models to prioritize energy efficiency, electrification, and CCS. In
the short term, these industries will also benefit from falling electricity and
natural gas prices, following historic highs.
Prajeev Rasiah, executive vice president and the regional director, Northern Europe, energy systems at DNV concludes: “As
the largest economy in Europe Germany’s role in the European energy transition
is pivotal, and its progress and policies have a major effect across the
continent.
"As our ETO report highlights Germany is transforming its energy
landscape by increasing renewable energy sources and phasing out nuclear and
coal power. This shift will lead to cleaner, more abundant electricity powering
a larger share of the economy. Additionally, Germany will enhance energy
efficiency, reducing overall consumption and emissions. These combined efforts
in electrification and efficiency will drive decarbonisation.”