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The Paradigm Shift in the Energy World

2/25/2013 | German House, New York

The Paradigm Shift in the Energy

This discussion addressed the principal causes and anticipated challenges of today's energy sector.

As a result of increased renewable energy generation, supply will replace demand as the key influence of modern-day power systems and will thus induce a paradigm shift in the energy sector in the near future. This evening discussion with Dr. Urban Keussen from E.ON SE addressed the principal causes and anticipated challenges of this transition. The event was organized in joint cooperation with the American Council on Germany (ACG).

In the past, energy providers generated energy in response to consumers’ demands. Predictions indicate, however, that supply will become the future reference value, calling for disruptive energy industry innovations. According to Dr. Keussen, Senior Vice President, Technology & Innovation at E.ON SE, the three main drivers of this modernization are government regulation policies, technological advancements, and customer engagement. Using the German photovoltaic (PV) market as an example, Dr. Keussen showed that regulation can be used as an instrument to support technological innovation and to create new markets: The German Renewable Act, which guarantees high feed-in tariffs for energy producers, led to about 32 gigawatts of installed PV capacity in Germany between 2002 and 2012 and an overall investment of about 50 billion euros in this market since 2000. New technologies, such as organic coated solar-cell foils, and increased efficiency have resulted in significant PV cost reductions, making it affordable for the broader public to actively engage in green power generation.

Today, 25% of the electricity used in Germany is produced by renewables.The long-term goal is to increase this share by up to 80% in 2050. Since green power generation is influenced by unpredictable weather scenarios rather than customers’ demands, especially mid-term storage devices will be necessary to steadily meet the renewable-based energy demand. Efficient storage devices provide for week-long energy loading and thus help to balance intermittent renewable power production and bottleneck hours on the grid. This, in turn, calls for dynamic investment in innovative and resourceful battery structures, such as power-to-gas systems and electric batteries.

As Dr. Keussen pointed out, the energy paradigm shift is also a market-driven transition. Higher taxes, a rise in the grid fee, and investment in renewables further increased power prices. “The grid has to be significantly extended in order to integrate more renewable energy production,” said Dr. Keussen. In order to lower their costs, consumers, with the help of green energy facilities, are now turning into producers, feeding their own power back to the grid. “Customer perception and behavior are important drivers of change,” he said, stating that industrial consumers are taking an active stand to increase energy efficiency and sustainability.

In Germany, environmental concerns regarding fracking and shale gas production remain. Also, in the aftermath of Fukushima, the German government agreed to shut down all nuclear power plans by 2022. As for Germany, “PV has the potential to become the so-called winning technology. It will eventually take over, even if there are no more government regulations or incentives,” Dr. Keussen said. Ideally, in future scenarios, clean tech and green energy investments will pay off economically as well.

The accompanying Q&A session was moderated by GCRI Director, Dr. Joann Halpern.

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    • Dr. Urban Keussen

      Senior Vice President, Technology & Innovation, E.ON