Dr. Michael Suess – Member of the Managing Board of Siemens AG, CEO Energy Sector
Competitive energy landscape in Europe
Brussels, May 14, 2013 © Siemens AG 2013 All rights reserved.
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Agenda
Europe’s competitiveness depends on an affordable and reliable energy system
Lessons from Germany’s energy transition
Our request: Utilize optimization potential in Europe
© Siemens AG 2013 All rights reserved. Page 2
May 14, 2013
Dr. Michael Suess
The markets are shifting – Growth mainly outside Europe
3.2%
Russia 1.9%
2.5%
-0.2%
0.2%
0.9%
6.8%
Europe USA
6.9%
0.2% 4.3% 1.1% 0.6% Population Growth per year 2012-30
China
India
Brazil
GDP Growth per year, real, 2012-30
© Siemens AG 2013 All rights reserved. Page 3
May 14, 2013
Dr. Michael Suess
The basis of a successful economy
Capital
Resources Prosperous economy
People
Energy
© Siemens AG 2013 All rights reserved. Page 4
May 14, 2013
Dr. Michael Suess
Majority of Siemens Energy production is located in Europe Brande/ Denmark: Wind turbine facility
Berlin/ Germany: Gas turbine facility
Finspang/Sweden: Small gas turbine facility Weiz/Austria: Transformer facility Budapest/Hungary: Gas turbine blades facility
Nearly 61% of the Energy Sector employees (53.000) work in Europe, but we generate only 33% of our revenue here. .
A strong Europe imports work!
© Siemens AG 2013 All rights reserved. Page 5
May 14, 2013
Dr. Michael Suess
Europe needs competitive electricity pricing for economic growth Comparison of electricity prices, €ct/kWh Industry 16,7 14,0 11,2
9,1
7,6
7,2
5,2
9,4
10,8 8,1
11,6
10,4
9,3
Private households
29,8 25,2 1) 18,4 11,5
13,5
14,2
14,7
Polen
France
Czech
20,8
20,9
Italy
Spain
15,8
USA
5,9
5,9
China
India
EU27
Turkey
Great Britain
Germany
Denmark
1) Preliminary forecasts for 2013: 28.5 €ct
© Siemens AG 2013 All rights reserved. Page 6
May 14, 2013
Dr. Michael Suess
Quelle: Eurostat; IEA.
8,9
Major differences among energy transitions in Europe Sweden
• Nuclear new build, hydro power, wind
Denmark
• Wind on-/offshore, CHP
Germany
• Nuclear phase-out, PV, wind off-/onshore new build, grid expansion
United Kingdom
• Nuclear new build, wind offshore, CCS, CO2 floor price, shale gas
France
• Nuclear lifetime extension, wind offshore, moderate solar PV
Italy
• Solar PV, reduction of power imports
Spain
• Moderate renewables new build, support for domestic coal
Poland
• Clean Coal, diversification of energy mix: wind offshore, shale gas
© Siemens AG 2013 All rights reserved. Page 7
May 14, 2013
Dr. Michael Suess
Agenda
Europe’s competitiveness depends on an affordable and reliable energy system
Lessons from Germany’s energy transition
Our request: Utilize optimization potential in Europe
© Siemens AG 2013 All rights reserved. Page 8
May 14, 2013
Dr. Michael Suess
Renewable energy should cover 45 percent of Germany’s power needs by 2030 Power generation in Germany in TWh
Share of renewable energy in 2030: 45%
~600
Biomass, waste
~600 Wind Onshore
~125 (21%) ~20 (3%)
~270 (45%)
Nuclear ~100 (16%) ~20 (4%)
~90 (15%)
Oil
~5 (1%)
~120 (20%)
88 (15%)
35 (6%)
Renewable energy
Hydro
76 (13%) Solar PV 67 (11%)
Gas Wind Offshore in TWh
~260 (44%) ~190 (32%)
2012
Coal
2030
© Siemens AG 2013 All rights reserved. Page 9
May 14, 2013
Dr. Michael Suess
Driven by the “energy transition,” installed capacity will increase 35% to over 250 GW Development of power plant capacity in Germany in GW
253
Share of renewable energy in 2030: 54% 5 (2%) Biomass, waste
+35% + 66GW
Wind onshore
187 137 (54%)
39 (15%)
Renewable energy
76 (30%)
69 (37%)
Nuclear
11 (6%) 13 (7%)
Wind offshore 12 (5%)
Hydro
44 (17%)
Gas
21 (8%)
Oil
40 (16%)
Coal
28 (15%) 14 (8%)
52 (28%)
2012
17 (7%)
Photovoltaic
in GW
2030
© Siemens AG 2013 All rights reserved. Page 10
May 14, 2013
Dr. Michael Suess
EEG subsidies cost more than €20 billion in 2013: Massive redistribution in Germany German states
(preliminary forecast): Total expenditures2) - €26.9 billion
Baden-Württemberg
-0.5
Bayern Berlin
1.2 -0.4
Brandenburg
0.4
Bremen Hamburg
-0.1 -0.3
Marketing TSOs:
Hessen
+ €2.6 billion
Mecklenburg-Vorpom.
0.2
Niedersachsen
0.2
Direct marketing: + €4,0 billion Difference in costs: - €20.3 billion
Nord-Rhein-Westfalen -1,8 Rheinland-Pfalz
-0.2
Saarland
-0.1
Sachsen
-0.1
Sachsen-Anhalt Schleswig-Holstein Thüringen
1) Data for 2012
-0.6
0.3 0.4 0.0
2) Inclusive direct marketing and one-time effects (liquidity reserves and balance 2012)
© Siemens AG 2013 All rights reserved. Page 11
May 14, 2013
Dr. Michael Suess
Quelle: BDEW; ÜNBs.
EEG 2013
Renewable Feed-in-Legislation induced net cash flow (billions of €) 1)
Without storage, there is always the challenge of simultaneity of generation and consumption Germany, day with minimal peak load in summer 2012 (Sunday, August 26, 2012) GW
76
80 70
Temporary “surplus” renewable energies
60 50
50
40
47
Solar PV
29
Wind onshore
26
30 20 24
10 0 4h
8h
12h
16h
20h
Maximum load 2012 Daily load pattern Germany, August 26, 2012
24h
2012 2021 Assumption: Maximum available capacity (GW) wind onshore + photovoltaic on windy and sunny days 1)
Minimum load 2012 1)
Assumption: Both wind onshore and solar PV have 80% of total installed capacity available
© Siemens AG 2013 All rights reserved. Page 12
May 14, 2013
Dr. Michael Suess
Without storage, there is always the challenge of simultaneity of generation and consumption Germany, day with maximum peak load in 2012 (Wednesday, February 8, 2012) GW
80 70 60 50 40 30 20
Solar PV
10
5
3 2 1
0 4h
8h
12h
16h
20h
Maximum load 2012 Daily load pattern Germany, February 8, 2012 Minimum load 2012
24h
2012
2
Wind onshore
2
2021
Assumption: Minimum available capacity (GW) wind onshore + photovoltaic 1)
1) Assumption: Wind onshore has 6%, solar PV has 4% of total installed capacity available
© Siemens AG 2013 All rights reserved. Page 13
May 14, 2013
Dr. Michael Suess
Quelle: ENTSOE; eigene Annahmen und Analysen
Coverage of demand by other sources required (such as fossil power plants and imports)
Despite increase in renewable energy, CO2 target in Germany will not be reached Share of renewable energy in gross power generation
Development of CO2 emissions in power generation sector
TWh
Mt CO2
400
Current development
350 ~600
~600
~600
~600
300
76%
63%
24%
37%
250
50% target
150
35% target Renewable 49% 1)
generation
230
Reference path 2)
200 161
100 50
18%
0 2010
2012
1) Including hydropower
2020
2030
1990
2000
2010
2020
2030
2) Assumption: National targets are proportionally assigned to power sector
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May 14, 2013
Dr. Michael Suess
Source: Umweltbundesamt; Siemens
82%
Fossil 51% generation
Current situation in Germany’s energy market: The energy economic triad is threatened Economic efficiency Electricity cost for industry: +25% above EU average
Energy supply
Sustainability
Supply security
230 Mt CO2 in 2030 (target: 161 Mt CO2)
Currently over 1,000 grid interventions annually
© Siemens AG 2013 All rights reserved. Page 15
May 14, 2013
Dr. Michael Suess
Agenda
Europe’s competitiveness depends on an affordable and reliable energy system
Lessons from Germany’s energy transition
Our request: Utilize optimization potential in Europe
© Siemens AG 2013 All rights reserved. Page 16
May 14, 2013
Dr. Michael Suess
Three requirements for a sustainable European power market Support of technologies based on maturity and marketability
1. 2.
Differentiated procedures based on maturity level (e.g. PV vs. Offshore Wind) Competitive environment for support of technologies (e.g. auctions)
Best-solution Model – Technology and Regions Location-optimized use of renewable energies (wind and sun) Optimization of energy mix through a “coal-to-gas” shift
Clear and reliable targets for CO2 reduction
3.
Definition of long-term and binding CO2 targets for the EU Measures for preventing price fluctuations (e.g. price corridor) Fleet benchmarking (as already implemented for the automotive sector)
© Siemens AG 2013 All rights reserved. Page 17
May 14, 2013
Dr. Michael Suess
Support is differentiated based on level of technological maturity and marketability Technological maturity level (marketability)
PV
Support of…
through …
Efficiency
Free & fair competition
Market penetration
Auctions
R&D, demonstration projects
Programs, invitations to tender
1)
Wind onshore
Wind offshore Electrolyzer (as storage)
Time frame 1) If necessary with financial corrections, such as internalization of external effects through CO2 prices
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May 14, 2013
Dr. Michael Suess
Optimally utilize potential for wind and solar National targets
Capacity additions 2012-2030 (GW): Solar PV 138 GW Wind onshore 101 GW Wind offshore 80 GW
Balanced choice of location *)
• 50% of renewables in best locations • Saved PG invest. ~32 bn € (until 2030) • Additional grid invest. ~5 bn € (lifetime 40 years) on top of existing invest. programs (power consumption close to generation) • 50% of grid invest incl. (40 year lifetime) Net savings ~€30 billion
*) only 50% of non optimum located installations shifted to consider decentral self-supply applications
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May 14, 2013
Optimum location choice
• 100% of renewables in best locations • Saved PG invest. ~60 bn € (until 2030) • Grid investment for energy transport to Germany (800 kV DC) ~30 bn € (lifetime 40 years) on top of exist. invest. programs • 50% of grid invest incl. (40 year lifetime) Net savings ~€45 billion Shift of wind power installations Shift of solar PV installations Dr. Michael Suess
A reform of EU Emission Trading System would be desirable Preferred: Reform of EU ETS
Alternative: CO2 limits in sector
Definition of long-term, binding CO2 targets for the EU (to 2030 or beyond)
Europe-wide limits for the CO2 intensity of electricity from generators or providers
Possible simultaneous measures to prevent massive price fluctuations (e.g. through a minimum price or a price corridor)
Reduce limits to, for example, 300 g CO2/kWh in 2030 Raising CO2 price for emissions above the limits Corresponding to a fleet benchmark (already successfully used in the automotive sector)
© Siemens AG 2013 All rights reserved. Page 20
May 14, 2013
Dr. Michael Suess
Thank you!
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