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9 APPENDIX A - INTERNATIONAL CASE STUDIES - GERMANY
9.1 Introduction
9.1.1 We placed a particular focus on Germany as an international case study of best practice as the success and efficiency of support programmes and delivery mechanisms for energy efficiency and microgeneration in Germany have been highlighted by a number of consultees and survey participants. It was mentioned that the German support mechanisms for energy efficiency and microgeneration are very transparent and that initiatives such as the "100,000 roofs initiative" and the "Feed-in tariff" are very effective schemes that encourage the installation of microgeneration technologies and facilitate industry development.
9.1.2 In addition to that, financial support is available through one central development bank, the "Kfw-Förderbank" which offers low-interest loans and in some cases small grants for a variety of projects including energy efficiency and microgeneration to the domestic, commercial and public sectors.
9.1.3 Details on the key players in the German energy efficiency and microgeneration market as well as information on a number of support schemes in Germany that are considered to be very efficient and effective are discussed in the following sections.
9.2 The key players in the German Energy Efficiency Market
9.2.1 The energy efficiency and microgeneration support and advice delivery mechanism in Germany is implemented on three different levels: Bund (federal), Land (regional) and Kommune (community).
9.2.2 The main governmental player that is responsible for the national environmental policy and national strategies related to energy efficiency and renewable technology is the Bundesumweltministerium ( BMU) (Federal Ministry for Environment). Furthermore, the Bundesministerium für Wirtschaft und Technolgie ( BMWi) (Federal Ministry for Economics and Technology) plays an important role in the administration of the support database and the funding of important informational services to make sure that the information on available programmes and the most recent energy news are clear and transparent.
9.2.3 The German government spends €1.4 billion per year on the energy improvement (retrofit) of buildings through installation of energy efficient measures which is around €17 per inhabitant.
9.2.4 On the federal level, there is one major competence centre for energy efficiency support and renewable energy which is funded by the German government ( BMU) and also works in partnership with other organisations: the Deutsche Energie-Agentur (dena) which is the German Energy Agency. Its objectives include the environmentally friendly production, conversion and use of energy, and the development of sustainable energy systems with a greater emphasis on renewable energy sources. To this end, dena initiates, coordinates and implements innovative projects and campaigns at a national and international level. It provides information to end consumers, works with all social groups active in politics and the economy and develops strategies for the future supply of energy. Its shareholders are the Federal Republic of Germany and the KfW Bankengruppe (KfW Banking Group). It finances its projects primarily by means of Public Private Partnerships ( PPP).
9.2.5 Furthermore, the BINE Information agency is an essential agency for publishing and communicating important energy related information and documents. It is funded by the BMWi and transfers specific energy related knowledge from energy research to a broad range of sectors who can then apply the theory in practice. BINE cooperates closely with many companies and institutions which develop the latest energy efficiency and renewables technologies.
9.2.6 There are two key players for the delivery of financial support programmes on the federal level:
- Kreditanstalt für Wiederaufbau (KfW-Förderbank) - a promotional bank for reconstruction which is the main federal credit institution and offers loans at very low interest rates for projects in the areas construction, energy efficiency, environmental and climate protection, infrastructure and education. Sometimes small grant incentives are provided as well.
- Bundesamt für Wirtschaft und Ausfuhrkontrolle ( BAFA) - the federal office of economics and export control offers financial support in form of grants for detailed energy assessments of old buildings, as well as for the installation of biomass and solar collector installations. It is part of the Federal Ministry of Economics and Technology.
9.2.7 On a regional level, most of the regions have their own programmes in addition to the federal programmes, delivered by various institutions such as banks that normally finance the purchase and construction of properties. In addition to that, the regional energy suppliers offer promotional programmes for their region.
9.2.8 On a community level, some communities offer local support for energy efficiency projects. However, most do not run their own programmes, but apply for federal or regional programmes and implement projects financed through those programmes in the community.
9.2.9 There is a huge amount of available programmes on all levels, but the structure is very clear. On a federal level, households, businesses, public organisations and communities can all apply to the main federal credit institution KfW-Förderbank for low interest loans (with possible grants) if they want to improve energy efficiency in a building through new installations (such as insulation, but also microgeneration) or to BAFA for grant support if they want to use renewable energy in a building or require a detailed energy assessment. Support for energy efficiency and renewable installations is integrated within the construction sector that offers support for purchasing or constructing new properties or buildings.
9.3 Strategic documents
9.3.1 There is no specific separate strategy for energy efficiency, but it is included in the German Climate Protection Programme (Klimaschutzprogramm) which was published by the Federal Ministry for Environment and was updated in 2005 (former version 2000). It includes strategic plans and targets for energy efficiency improvements and renewables.
9.3.2 Furthermore, Germany has an Energy Saving Decree, the EnergieeinsparungsVerordnung (En EV) which is updated on a regular basis and the latest version came into effect on 1 October 2007. It sets out a number of important regulations for energy efficiency such as the required energy efficiency level for new buildings and the compulsory use of an "energy certificate" which is a certificate that includes essential details about the energy efficiency and consumption levels in the building and also recommendations for further energy efficiency improvements. This certificate is compulsory from 1 October 2007 for every newly constructed or retrofitted building, all public buildings and all properties that are sold, leased or rented out to a new occupant. The use of energy certificates provides a high level of clarity and transparency in relation to the energy efficiency levels of the building and possible further efficiency improvements.
9.4 Supporting programmes and schemes
9.4.1 The most important federal programmes supporting energy efficiency and microgeneration are delivered by the KfW Förderbank and the BAFA in 3 different areas:
1.1.5 Energy efficient improvement of old buildings: The KfW offers the following main programmes for the energy efficient improvement of old buildings:
(a) CO2 Gebäudesanierungsprogramm ( CO2 Buildings Improvement Programme) The KfW offers low interest loans of €50,000 maximum repayable over 20 or 30 years for the support of a large scale, overall improvement of energy efficiency in the building. Grants of 15% are also available through this programme if the project results in major energy savings i.e. if an energy efficient level of a newly constructed building can be achieved through the retrofit (this level is defined in the En EV). This programme applies to all individuals.
(b) Wohnraum Modernisieren (Modernization of the living area) This programme also offers loans at low interest rates of max. €100,000 per living entity and is focussed on supporting single measures of energy efficiency implementation such as insulation, double glazing, new windows and heating systems. Renewable heating sources and CHP are also supported. The eligible group for this programme are households, housing associations, communities and public organisations.
(c) Kommunalkredit (Community loan) Communities can receive low interest loans to support investment in the community infrastructure such as social infrastructure (schools, hospitals), public administration, traffic, energy saving measures and the use of renewable technologies.
(d) BAFA Energy Efficiency Assessment. In addition to the KfW programmes, BAFA offers grants of 175-250€ per building to households, businesses and non-profit organisations for detailed face-to-face energy efficiency assessment and advice.
9.4.2 Energy efficient construction of new buildings
(a) Ecological construction (Ökologisches Bauen) The KfW offers cheap loans of up to €50,000 through the programme "Ecological construction" to support the construction of very energy efficient buildings. In addition to that, if heating from renewable sources is integrated within the new building, another loan of €50,000 is offered to cover the investment cost for the microgeneration technology.
9.4.3 The use of renewable energy in buildings
(a) KfW- Erneuerbare Energien Programm (Renewable Energy Programme) Under this programme, the KfW offers low interest loans to households, the private and public sector for biomass, thermal solar and ground source heating installations. As an incentive, the KfW offers a discount on the amount that needs to be repaid. For biomass installations this is for example 20€ per kW of heat generation installed.
(b) KfW - Solarstrom Erzeugen (Producing electricity through photovoltaics) The KfW offers low interest loan for up to 100% of the cost of solar photovoltaics installations (€50,000 maximum) repayable within 10 or 20 years. Eligible for this support are all households, communities, private and public organisations, not-for-profit organisations, self-employed and farmers.
(c) BAFA-Erneuerbare Energien Programm (Renewable Energy Programme) The implementation of solar water and heat installations and biomass installations in buildings are part-funded through grants by BAFA as part of this programme . The funding amount is provided per m2 of panel surface, for example 40€ per m2 are provided for solar panels installed for warm water and 70€ per m2 for combined power and heating.
1.1.6 Use of renewable material for insulation The Fachagentur für nachwachsende Rohstoffe (Agency for Renewable Resources) offers grants of 25-35€ per m3 for the use of renewable insulation material.
1.1.7 Erneuerbare Energien Gesetz ( EEG) (Renewable Energy Law) The "Renewable Energy Law" was introduces in April 2000 and supports the use of renewable energy for the production of electricity in the building through a feed-in tariff for all sectors.
9.4.4 Germany's feed-in tariff effectively subsidises all power production from renewable energy sources such as solar PV, wind, biomass and water by guaranteeing a premium price for all power produced by eligible plants. The feed in tariff is paid for a period of 20 years by the relevant local distribution company into whose grid the green power is fed. The tariff is fixed for all energy sources except of wind power where it is higher for the first 5 years. Feed-in tariffs are not target driven and therefore place no limits on the amount of capacity installed, since any plant that qualifies as renewable under the scheme is eligible for the feed-in tariff.
9.4.5 To give an example of the success of the feed-in tariff, wind capacity in Germany rose from 45 MW in 1990 to 4,500 MW in 2000, when the EEG (Feed-in Tariff Law) was introduced. Under the EEG, installed wind capacity rose to 14,609 MW at the end of 2003 (International Energy Agency, 2004). Compared to that, installed wind capacity in the UK increased from 10 MW in 1990 to 679 MW at the end of 2003.
9.4.6 The 100,000 roofs initiative was launched in Germany on 1 January 1999 with the aim to encourage the installation of solar photovoltaic installations and to develop the solar PV industry. The KfW-Förderbank supported the installation of solar PV panels through attractive low interest loans and at the end of the initiative, on 30 June 2003, a total of 54,958 solar PV technologies had been installed with a total funding of €1,346,834 and a total capacity of 260.67 MW.
9.4.7 The German feed-in tariff and the 100,000 roof initiative laid out a solid basis for the development of the PV industry as Germany is now the world's leading country in terms of installed solar PV capacity. Furthermore, the price of solar PV panels decreased by 5% per annum between 1999 and 2001. Between 1998 and 2004, the generation of electricity through solar PV, biomass and wind power increased from 7.3 TWh to 34.9 TWh.
9.4.8 The feed-in tariff is a revenue neutral way of making the installation of renewable energy technologies more appealing. The electricity that is generated form renewable energy technologies is fed into the grid and according to the feed-in law EEG (Erneuerbare Energien Gesetz), utilities are obliged to buy the green electricity and pay the consumer a " Verguetung" which is a usually fixed price per kWh for a period of 20 years and varies between technologies.
9.4.9 The green electricity is usually bought at above market prices and the difference between the retail price of electricity and the rate for electricity from renewable technologies is spread over all customers of the utility. It is simply added to all customers' bill and is called " EEG-Umlage". This effectively finances the feed in-tariff and makes the installation of renewable energy technologies more attractive as people receive a price for their green electricity above market prices which is meant to help them pay for their initial investment for installing the technology.
9.4.10 A first evaluation of the EEG was published in July 2007 9 and it shows the following results:
- In 2006, the EEG resulted in a reduction of CO2 emissions of 45 million tonnes (compared to 37 million tonnes in 2005)
- The utilities paid a total of €5.5 billion in 2006 for purchasing green electricity from those that hat installed a renewable energy technology (this compares to €3.6 billion in 2004)
- The total difference (" Differenzkosten") between the market price of electricity and the amount that utilities paid for green energy in 2006 was €3.2 billion (compares to €2.5 billion in 2004)
- This amount was spread over all electricity consumers (taking account of special regulations for very energy intensive organizations) and the average EEG-Umlage that a consumer had to pay to finance the production of green energy was 0.72ct/kWh.
- It has been calculated that for a household of 3 which usually consumes an average of 3,500 kWh per annum on average the EEG-Umlage would increase their monthly electricity bill by €2.20 which represents around 4% of their total electricity costs. This shows that, through the EEG, a small annual increase in the price of electricity per customer (which is the EEG-Umlage) can result in a large incentive for people to install renewable energy systems (as they receive a price above market prices for each kWh of green energy they feed into the grid).
9.4.11 Hence we can say that a total of €3.2 billion were paid by German consumers through the EEG-Umlage in 2006 and this was used to finance the EEG which resulted in 45 million tonnes of CO2 emissions saved.
9.4.12 That means, each € spent by German consumers resulted in a CO2 emission reduction of 0.014 tonnes. Or the other way around, €71 were spent to reduce CO2 emissions by 1 tonne.
- In addition to that, the evaluation report indicates that as the production of renewable energy has a positive effect on the industry price of green electricity. It has been calculated that this so-called "merit-order-effect" has led to savings of approximately €5 billion in 2006 which is higher than the "Differenzkosten" of €3.2 billion that consumers have to pay.
- It has also been calculated that each tonne of CO2 emissions has an estimated economic cost of €70 (taking account of the impact on pollution, reduced air quality, climate change etc.) Hence in 2006, CO2 emissions were reduced by 45 million tonnes which can be translated into avoided economic costs through the EEG of €3.4 billion.
9.5 Information and transparency on available and suitable programmes
9.5.1 The Ministry for Economics and Technology/Labour offers a very clearly structured and transparent online support database (Förderdatenbank) which finds the suitable programme for different groups in many areas (it is not only energy specific) that are publicly supported. The following factors can be selected from drop-down lists:
- Support Region (Land)
- Eligible support group, such as
- Private individual
- Freelancer
- Community
- Higher education/Research institution
- Business
- Public organisation
- Charity/not-for-profit organisations
- Area of support, such as
- Energy and Environment
- Construction and improvement of buildings
- Infrastructure
- Research & Innovation
- Type of support (multiple response possible), such as
9.5.2 The database includes a total of over 900 support programmes on EU, federal and regional level and it is very easy for every individual, private and public organisation to find the right support programme for their region and their intentions. The database can be found on www.foerderdatenbank.de.
9.5.3 There is also a database particularly for the domestic sector that finds all support for a particular postcode. The database is available on the Website www.energiefoerderung.info.
9.5.4 In addition to the online databases, there is an energy specific, 180-page brochure "Geld vom Staat für Energiesparen und Erneuerbare Energie" (Funding from the State for Energy Savings and Renewable Energy) which lists all available programmes for energy efficiency and renewable energy by EU, federal, regional and communal level, including support from energy suppliers and contact addresses for advice centres.
9.5.5 Information and advice are also available through regional consumer offices and a variety of federal and regional energy institutions.
9.5.6 The "Energy Efficiency Initiative"
9.5.7 The German Energy Agency launched a national "energy efficiency information and motivation campaign" in 2002 in order to increase awareness of energy efficiency and encourage people to change their behaviour to save electricity and reduce CO2 emissions. The campaign was targeted on three separate groups where energy consumption patterns are usually very different: the domestic sector, the service sector and the industrial & commercial sector. For the purpose of the study, we will only focus on the campaign for domestic sector.
9.5.8 For the domestic sector, the campaign concentrated on providing information and encouraging behavioural changes through a variety of channels such as brochures, websites, a phone hotline, road shows, events, media, press and partnerships with retailers, focussing on two particular aspects. Firstly, the energy efficiency of household and entertainment appliances such as fridges, washing machines, TVs, computers, etc, and secondly, the use of energy efficient lightbulbs. The main focus of the campaign was on the electricity consumption of appliances in stand-by mode.
9.5.9 A central element of the campaign was the partnership with around 7,250 retailers of various appliances which provided adequate advice and information materials to customers that were looking for an appliance for their home. This was an important strategic move as surveys have confirmed that 75% of all respondents indicated they would seek professional advice from the retailer before buying an appliance. That means the retailer can inform the buyer about the energy efficiency of appliances and provide him with further information brochures on energy efficiency in households and the buyer can make an informed decision about the products he wishes to purchase.
9.5.10 The energy efficiency initiative has been evaluated continuously on a quantitative and qualitative basis supported by surveys of consumers and retailers. The evaluation summary states that the initiative is considered to be very successful as positive changes could be observed and measured regarding the knowledge and attitude of consumers.
9.5.11 For example, at the beginning of 2003, 23% of respondents believed that the use of electricity when appliances are in stand-by mode is negligible. At the end of 2004, only 17% thought this statement was true. Retailers stated that consumer requests for advice on energy efficiency of appliances have increased. In addition to that, at the end of 2004, 48% of all respondents indicated that the energy rating of the appliance was "very important" which represented a 4% increase compared to the start of 2003. This is only a snapshot of the changes in attitude that the energy efficiency campaign has achieved.
9.5.12 The campaign has helped to develop a support infrastructure for energy efficiency and will be continued in order to achieve long-term behavioural changes of consumers with regard to energy efficiency.
9.6 Areas of Best Practice
9.6.1 One very positive aspect about the German support system is that the financial support structure is very clear, as the KfW-Förderbank is the main central support organisation, and that financial support for energy efficiency and microgeneration is provided to all sectors.
9.6.2 The main type of support for implementing energy efficiency measures is low interest loans which are available to all sectors and this is something that represents a gap in Scotland (with regard to the domestic sector in particular). In addition to the loans available, small grants of 10-15% are provided as an incentive for achieving very high energy efficiency levels in the building, as defined in the En EV.
9.6.3 The implementation of renewable technologies can be part-funded through BAFA grants based on the capacity of the technology or they can be supported through loans from the KfW-Foerderbank. Again, the support is available to all sectors which is very essential as it encourages all individuals and organisations nationwide to implement renewable technologies.
9.6.4 The feed-in tariff is a mechanism that has been very successful in encouraging the implementation of microgeneration technologies. The information on the feed-in tariff in this case study is kept on a very basic level and a detailed study on the implementation of a feed-in tariff in Scotland could be considered further. The need for a feed-in tariff in Scotland has also been mentioned by a number of survey participants.
9.6.5 Compulsory energy certificates for buildings have been introduced with the new En EV 2007 (Energy Saving Decree) and are being introduced progressively over the next two years, through such policy initiatives as the single survey, for the sale of private housing. They provide clarity and transparency on the energy efficiency and consumption levels in buildings and the certificates enable individuals to make informed decisions about the purchase of properties and the implementation of further energy efficiency measures.
9.6.6 The online support database that provides information on available support programmes for all sectors is an easy way of finding the right support for any individual and a similar database could be developed for support that is available in Scotland, by region and support area. While EST does manage a single database in relation to the support available for a range of sectors, it is not as comprehensive and user-friendly compared to the German version. The database could have a holistic resource efficiency approach and look at energy efficiency, renewable energy, waste, water and other relevant areas.
9.6.7 Finally, there is one programme that part-funds the use of renewable material for insulation per m2 in the form of small grants. The need for encouraging the use of renewable materials for insulation such as Thermafleece and Warmcell was also highlighted in feedback in the household survey.
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