Energy transition begins

A dialogue on global energy transition highlighted renewable energy challenges and potential, reports Ahmed Kotb from Berlin

One hundred and fifty gigawatts (GW) of renewable energy capacity were installed worldwide in 2015 alone, the highest of all time. Almost half of all electricity capacity installed globally in the last three years was from renewables.

Investments in renewable energy grew by 22 per cent in 2015, at a cost of $330 billion. These were some of the figures revealed during the 2016 Berlin Energy Transition Dialogue (BETD) which took place last week in Berlin.

The two-day conference discussed energy policies amid a global shift towards using sustainable, reliable and cost-effective renewable energy sources that help lower carbon dioxide emissions that contribute to the current global problem of climate change. This is called energy transition.

BETD 2016 followed the United Nations Framework Convention on Climate Change (COP 21) in Paris last December, which reached agreement for the first time ever by the participating countries, including Egypt, to work on limiting global temperature increases below two degrees Celsius.

Adnan Amin, director general of the International Renewable Energy Agency (IRENA), believes that Germany’s energy transition experience brings possibilities to the world by proving how successful energy transition can be.

According to the German Energy Agency (DENA), energy transition plans in the country include reducing greenhouse gas emissions by 40 per cent and upping energy efficiency by reducing 10 per cent of electricity consumption by 2020, in addition to replacing nuclear power generation completely with renewable energy sources by 2022. Germany currently has a 33 per cent share of renewable in its electricity production capacity, and aims for 80 per cent by 2050.

Egypt has also started to invest heavily in renewable energy projects, with the share of renewables currently resting at around 10 per cent, with a plan to increase that share to 20 per cent by 2022, and 30 per cent by 2030.

“International cooperation can help energy transition everywhere in the world by facilitating share of knowledge and technologies,” Amin said, adding that IRENA helps this spread of information. IRENA is an intergovernmental organisation that supports countries in their transition to a sustainable energy future.

Sigmar Gabriel, Germany’s federal minister of economic affairs and energy, said that the world “should know that energy transition will not affect the economy in any negative way”. On the contrary, Gabriel said, it is compatible with a successful economy because, for example, the renewable energy sector created 300,000 jobs.

“We currently need fossil fuels but not in the future,” Gabriel stressed, and explained that fossil fuels are important mainly as they represent back-up capacity for renewable energy, the fluctuation in sun irradiance and wind blow.

Renewable energy technologies are now mature, allowing households, through special schemes, to generate electricity, use it and sell the excess energy, Gabriel pointed out. Here the minister was referring to schemes like feed-in tariff that was approved last year in Egypt and led to a boom in renewable energy projects by encouraging private sector investments in solar photovoltaics and wind power.

The feed-in tariff is a special pricing system whereby the government is obliged to buy electricity generated from new energy installations by the private sector, which can be an ordinary household, at a fixed tariff. It was introduced in Germany by the 2000 Renewable Energy Act.

According to Nefesa Hassan, general manager of economic and environmental studies at the New and Renewable Energy Authority (NREA), energy transition has already started with energy efficiency steps and the large amount of renewable energy projects boosted by the new tariff policy.

Energy efficiency in Egypt includes large-scale awareness campaigns about energy efficiency in household consumption, which represents about 60 per cent of total electricity consumption, and replacing conventional street lights with LED energy-saving lamps, as well as distributing 13 million LED lamps to consumers at a discount, among other energy-saving procedures in government buildings.

Hassan pointed out that the feed-in tariff system resulted in solar photovoltaic and wind projects that will add a capacity of 4,300 MW by 2018. The current capacity of the Egyptian electricity grid reaches more than 37,000 MW, with a maximum consumption recorded last summer at 28,000 MW.

“Other biogas projects are being discussed to be included in the feed-in tariff mechanism. Producing energy from wastes can be of great potential to the energy sector in Egypt,” she said, adding that security of supply will not be compromised by the growth of renewable energy projects.

According to Boris Schucht, chief executive officer of 50 Hertz, one of the four transmission-system operators for electricity in Germany, “high share of renewables can be combined with a high level of security of supply”. He added that a strong integrated and interconnected regional grid is extremely important to achieve security of supply.

In that regard, Egypt and Saudi Arabia have started the first step in the implementation of the electrical interconnected grid between the two countries, following the approval of the Egyptian and Saudi cabinets on financing the project, which is due to start operation in 2018 at a total investment cost of $1.6 billion. The project allows both countries to share electricity power of up to 3,000 megawatts, which helps secure electricity supply at peak times, which are different in the two Arab states.

Thomas Silberhorn, German parliamentary state secretary, said that global energy demand will increase by 40 per cent in 2030, and that the world should only meet rising demand in a climate-friendly way by investing in renewables. Silberhorn added that Germany is cooperating with 35 countries around the world, and that the German government understands that global energy transition will be implemented in different ways depending on local circumstances in each country.

“Solar panels and wind mills are increasing rapidly in Germany despite low sun irradiance and fluctuation in wind blow. Imagine how this can work for countries with stronger sun and wind,” Silberhorn said.

The huge amount of investments in renewable energy was highlighted by Michael Liebreich, chairman of the advisory board of Bloomberg New Energy Finance, who stated that $329 billion were invested in renewable energy in 2015, as opposed to $253 billion in fossil fuel projects. Liebreich added that in 2005, only $88 billion were put in renewables, which shows how fast clean energy is growing after costs fell in recent years.

“Clean energy is not a luxury that is limited anymore; it has become affordable and more efficient,” he said. 

Liebreich also said that the use of electric cars has become more widely recognised after they became cheaper and more practical. The average electric car costs around $30,000 and can go for about 200 miles (320 kilometres) before its battery needs a recharge, he added. “By 2040, about 35 per cent of all vehicle sales will be electric.”

What is helping accelerate the use of electric cars are efforts to curb emissions from the transport sector as part of energy transition plans. Emissions from the transport sector are very high, which is why electro mobility, or the use of electric vehicles, is a very important component of energy transition, said Rainer Baake, state secretary of Germany’s Ministry of Economic Affairs and Energy.

Last year, one-third of emissions in Europe came from the transport sector. The use of electric cars is growing worldwide, with over one million vehicles currently running in the world.

Baake also said that greenhouse gas emissions in general will be lowered in Germany by more than 80 per cent in 2050. He stressed that energy efficiency is key to achieving that goal since the electricity power sector has the most emissions, followed by substituting fossil fuels with renewables.

According to Hassan, infrastructure for electric cars can be easily embedded in Egypt’s new administrative capital project which is being established to help make the new capital greener, in addition to the other renewable energy projects planned for it.

“It is easier to start using electric cars in Egypt by trying them in the administrative capital as part of a car-sharing programme inside the new capital,” Hassan stated, adding that this is possible with recently reduced costs of electric cars.

According to Jochen Mueller, head of communication at BMW Group Plants in Leipzig, infrastructure is the most important thing for the introduction of electric cars in any new market. Electric cars are getting cheaper and becoming more popular. BMW electric cars, i3 and i8, for example, are made of energy saving and recycled materials that encourage more people to use. This is in addition to pollution and noise reduction as main features of electric cars.

“There are about 30,000 BMW cars running worldwide, and the Egyptian market can be very promising once work for infrastructure starts,” Mueller added.

Emissions have been kept under control recently despite economic growth. Fatih Birol, executive director of the International Energy Agency, said that a surge in renewable energy projects, along with improvements in energy efficiency, were key to keeping emissions flat for the second year in a row (2014-2015), even though the global economy grew by three per cent.

More than 90 per cent of new energy projects come from renewables. Falling costs of renewable energy technologies enable the attraction of investments. For example, in the last five years, solar photovoltaic technologies fell in cost by 80 per cent, according to Birol. However, he added, low gas and coal prices may slow down plans to accelerate energy transition to renewables.

Sustainable energy supply is an important foreign policy issue, and the world is on the way to achieving energy sustainability through renewable energy, said Frank-Walter Steinmeier, Germany’s federal foreign minister.

Three-quarters of all countries have joined IRENA, proof that most countries are looking for energy sustainability, he said, adding that for Germany, energy transition is like the American moon landing project in the 1960s.

 “Every country or every region can set their own standards for energy transition,” Steinmeier said.