No ‘one size fits all’ solution

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Chavalit Pichalai, Deputy Permanent Secretary of the Energy Ministry and Thailand member committee Vice Chair opened a meeting at which the Executive Chair, World Energy Resources programme, Dr Hans-Wilhelm Schiffer, gave a talk entitled ‘The Energy Transition in Germany and the EU – Lessons Learnt for Countries like Thailand’.

In the talk Schiffer explained that there are lessons for Thailand and other countries that can be learnt from the Germany energy transition, the so-called Energiewende, which is the world´s most ambitious prgram to transform the energy system of a country. The main elements are:

A complete phase-out of nuclear energy and converting the power supply from a conventional to a renewable energy based system and
A feed-in tariff system used as the favoured instrument which has been very effective.

It has resulted in the share of renewables in total power demand increasing from less than 7% in 2000 to nearly one third in 2015. But, this strong development has a price. Net subsidy paid by the customers to plant operators reached as much as €21bn in 2015 and €125bn in total for the period 2000 to 2015. This results in power prices in Germany being double that of the OECD average. Power producers, too, have to face new challenges. These include:

Reduced duration of the utilisation of conventional power plants.
Dropping prices on the wholesale market per kilowatthour resulting in reduced revenues and
Providing conventional power plants with the required flexibility to meet the fluctuations in the feed-in of solar- and wind-based electricity.

The lessons learnt are:

In providing incentives for investment in renewable energies one should set the right price signals and avoid impairing the market system.
It is appropriate to adjust the promotion system in a way that generation takes place where the power is needed.
Tender systems can be an adequate instrument in order to ensure that the dimension and the location of the investment are in line with policy targets and power system requirements.

However, regional priorities do differ - there is no ‘one size fits all’ solution, which is mainly because of different intitial situations and differing policy priorities between countries.