Cogeneration Country Fact Sheet

GERMANY
APRIL 2014

Possible Market Outlook 1. Policy environment

1.1 CHP a key technology in achieving Energiewende goals

*Some policy uncertainty

New German Coalition

Government committed to
promoting CHP.
2014 CHP Law Review to
tackle shortcomings of current
support levels.
Several drivers foster CHP growth in Germany: the dedicated CHP law and binding target focus on improving
2014 amendment to the energy efficiency in buildings, strong GHG emission reduction objectives, and the commitment to phase out
Renewable Energy Law (EEG), nuclear energy by 2022. The main support scheme consists of a feed-in premium and EU ETS bonus for fossil-fuel
with possible implications for CHP and a feed-in tariff offered to renewable-based CHP. In addition, micro-CHPs below 20 kWe benefit from a
the profitability of auto-
producer CHPs, which may have capital grant ranging between €1425-3325. In 2014 the CHP law will be reviewed to assess whether additional
to cover part of the EEG levy. support is necessary to achieve the 25% CHP target.

* Stabilisation of energy markets

1.2 Energy and climate targets: Clear objectives set on the pathway to 2050 (Energiewende)
ahead.

Spark spreads will

remain negative, but are
expected to stabilise in
2014-2015.

* Strengthening economy.
1.3 2013 EEG/KWK-G : Support levels for CHP

Exports are staying strong.

Domestic demand
Figure 1 Approximate level of subsidy for CHP plants
expected to pick up pace.
under the EEG and KWK-G in 2013

The German economy is set to

expand steadily in the next
few years, driven by expected
growth in domestic demand
and also good export
prospects. In the longer run, 2. CHP Sector Key Figures
the new German Coalition
Government formed at the end 2.1 Statistics : Steady but slow growth (2002-2011) CHP production has been increasing in the past
of 2013 is committed to energy few years, as a result of a favourable policy
efficiency and further support environment and Germany’s economy avoiding
for the CHP sector. As the
government goes ahead with the economic crisis to a certain extent. CHP
its Energiewende plans (i.e electricity production now represents
high share of renewables and approximately 17% of total electricity
phase-out of nuclear), CHP production.
technologies will have an
important role Figure 3 CHP fuel
to play in ensuring industrial
competitiveness, reducing
mix in Germany
energy costs for the residential (2011)
sector, introducing higher
flexibility into the system and
delivering CO2 emission
reductions. Figure 2 German CHP electricity and heat production (2002-2011)
Gas and coal represent three quarters of the fuel input to CHP plants in Germany, while
renewable fuels are on the rise in the German CHP fuel mix, amounting to up to 10% of the
total CHP fuel input.

Sources
Figure 1: COGEN
calculations based on
KWK-G 2012 and EEG 2012
Figures 2, 6, 7, 9 :
Prognos/BDEW, 2013
Figure 3 : Eurostat, 2013
Figure 4: BAFA, 2014
Figure 5: CODE2 project,
2014
Figure 8 : EEX, 2014
Acknowledgements
COGEN Europe thanks
B.KWK for their valuable
contribution to this fact
sheet.
Disclaimer
This country fact sheet is
based on the best publicly
available information at
the time of publishing. The
views expressed here are
those of the authors and
do not necessarily reflect
the official policy or
positions of those who
contributed to it.
COGEN Europe may not be
held responsible for the
use, to which information
contained in this
publication may be put, or
for any errors which,
despite careful preparation
and checking, may appear.
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2.2 CHP installations by size range
Total installed capacity
reported to Eurostat by the
German government was
26.9 GWe in 2012, up by
30% since 2005.
Between 2009 and 2013
newly installed capacity
registred with the Federal
Office of Economics and
Export Control (BAFA)
Figure 4 Annually installed CHPs by plant size range (2009-2013) ranged between 0.5 -1 GWe.
Most of the newly installed capacity came from installations above 2 MWe. Total installed capacity from plants
smaller than 2 MWe has also been increasing. BAFA statistics show that the FiP and Incentive Programme gave a
significant boost to micro-CHP below 2 kWe, as installed capacity in this category registered with BAFA
increased ten fold between 2009-2013.
3. Forecast
Figure 5 Possible paths of CHP power produc-tion &
Good Prospects on the path to 2030 share of total power production According to
preliminary CODE2 results in the CHP Roadmap
for Germany, under the business-as-usual scenario,
which assumes no change to the current policy
framework, CHP's share of electricity production
could reach 19% and 22% by 2020 and 2030
respectively. Under the more ambitious 'Roadmap
scenario', taking into account the 25% CHP target for
2020 and in line with the 50% target RES share in
total electricity production, CHP production could
reach up to 185 TWh in 2030, equivalent to roughly
one third of total electricity production.
Figure 6 Growth scenarios for micro-CHP
(2015 -2030)
The segment below 1 MW is also expected to expand
in the short to long term, with the total number of
micro-CHPs installed set to reach up to 260,000
units by 2020 and 1 million installed units by 2050.
Small CHP installed capacity is also expected to
increase, from 700 units installed today up to 2500
and 3500 units by 2020 and 2050 respectively.
4. Additionnal information
Profitability marred by unfavourable spark spreads and lower operating hours
Figure 7 Number of profitable operating hours by type Figure 8 Average price for baseload power at
of CHP plant (2006-2012) EPEX spot/CHP Index (2000-2013)
High gas prices/deteriorating spark spreads have put a strain on the CHP fleet in Germany, having
affected profit margins considerably since 2009. Investment in new gas plants has been hit
particularly hard. While the CHP law FiP does compensate for the negative clean spark spread to
some extent, in 2012 the number of hours was as low as 1426 and 395 for new and existing gas
CHP plants respectively. This situation is expected to be tackled during the ongoing CHP Law
review.