Germany’s second energy revolution? Putting efficiency first

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by Professor Peter Hennicke

I am currently visiting Australia from Germany, and while preparing for my trip I have started to take an interest in the local debate on climate and energy. It would appear I have chosen an interesting time to visit your great country.

Germany has been pursuing the transition to clean energy sources for many years. Strong climate targets drove policy that resulted in big, early investments in renewable energy. We are not perfect, but Germany is often pointed to as a global leader in the transition to clean energy sources.

We call this transition the Energiewende, and it has been enabled by two major factors. The first is well-known: the costs reductions in wind and solar PV generation have been Spectacular.

However the second factor is often overlooked: the role of energy efficiency in lowering the cost of transition. Indeed Germany has put energy efficiency on an equal footing with renewable energy as a core pillar of German energy policy.

I am often asked about the rationale for this. If we are about to be inundated with clean, cheap renewable energy, why should we worry about energy efficiency?

The answer is simple. We need an efficiency revolution to make a 100 per cent renewable system technically feasible, cost effective and attractive to the public. In Germany, we’ve found that combining energy efficiency and renewable energy delivers the best pathway to a low carbon energy system, and the best result for homes and businesses in terms of energy bills.

Despite the rapid drop in the cost of renewable energy, taking advantage of cost effective energy efficiency can often deliver an outcome, such as a warm, low carbon home, for half the costs of new power supply.

As a result, Germany has put a lot of focus on improving energy efficiency across the economy. Energy efficiency measures in homes and cars have cut carbon emissions, and saved the average German household 30 per cent on their energy bills in 2017, or around $520 AUD every year. Cost savings from efficiency measures are a big reason 90 per cent of the German public support the Energiewende.

The benefits of pairing renewable energy and energy efficiency are huge, but Germany didn’t recognise this initially. In the early stages, we focused more on renewables, and efficiency wasn’t given as much attention as it deserved.

However we have corrected our mistake; several years ago we expanded the focus of the Energiewende to adopt an ‘efficiency first’ policy. This means we examine opportunities to save energy to meet our needs before defaulting to investments in new energy infrastructure.

While I am new to Australia’s energy debate, it appears there is a similar dynamic playing out, with the vast majority of attention focused on renewables, especially their relative merits as compared to coal generation.

On this point, the answer is straightforward; the world is on the pathway to complete decarbonisation of the energy system. A sensible analysis of the political, technological, economic and environmental drivers bear this conclusion out. Electricity from wind and PV in many regions is already cheaper than building new coal power plants, even when the additional costs of ensuring security of supply are considered.

However, Australians with an interest in the clean energy transition should not forget about efficiency. Not only is it important to reach a transition to 100 per cent renewables on the smoothest pathway ; it enables that transition to take place more quickly, and more cheaply, then is otherwise possible.

Australia has been an energy superpower. As a nation, you have the opportunity to maintain this title throughout the 21st century and beyond. However the future strength of this amazing country can no longer be based on fossil fuels; rather, it must be built on the abundant potential of renewables and efficiency.

Professor Peter Hennicke is a German energy expert, the former President of the Wuppertal Institute, and a member of the Club of Rome. He spoke at the National Energy Efficiency Conference in Sydney which was held on the 19th and 20th November.

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