How much of Germany's energy is renewable?
A year ago, Germany emitted more than 805 million tons of greenhouse gases. However, it was 2019 that saw the most considerable annual reduction in emissions since 1990. Compared to last year, Germany has reduced greenhouse gas emission by as much as 35%. By the end of 2030, the emission reduction will amount to at least 55%. It is related to the energy policy of Germany, which puts renewable energy first. In the first quarter of 2020, renewable sources covered more than 50% of Germany’s electricity needs. Moreover, it is as much as a 7% increase in the share of renewable energy sources than the same period last year. In 2019, Germany used 44% of renewables concerning the consumption of fossil fuels and natural gas.
In the first quarter of 2019, Germany’s renewable energy sources generated 67 billion kilowatt-hours. A year later, we can see a significant increase – solar panels, wind turbines, and other sources produced as much as 77 billion kilowatt-hours.
In the first quarter of 2020, Germany consumed a total of 148 billion kilowatt-hours (approximately 2% less than in the corresponding period of the previous year). Most of Germany’s renewable energy came from wind power (28.9%). Although it was the first full quarter when renewable energy sources covered most of the country’s energy consumption, a similar trend could be seen earlier in individual months.
What is Germany doing about renewable energy?
Germany is a leading country in the world in terms of renewable energy. The Energiewende, i.e., Germany’s internal policy, regulates the country’s energy policy. It is a plan to transform the energy system so that it is more efficient and environmentally friendly. The primary goal of Energiewende is to minimize electricity consumption from traditional sources and replace it with renewable energy, such as offshore wind and solar. Renewable energy generation in Germany continues to increase, but there are still difficulties meeting the short-term reduction targets of energy consumption. This problem is mainly due to uneven progress in various sectors, such as transportation sector and heating. In the coming years there are plans to reduce nuclear power and brown coal.
The German strategy on climate change foresees a series of climate action by 2050. It assumes a reduction in greenhouse gas emissions by 40% by 2020, by 55% by 2030, by 70% by 2040, and as much as 80-95% by 2050. According to the assumptions of Energiewende, Germany should be neutral in terms of greenhouse gas emissions by 2050. This policy’s objectives are supported by the European Union’s general climate and energy policy 2030.
Last year, the government created a climate unit led by the chancellor. Its goal is to develop solutions for reducing carbon emissions to take place by 2030. One of them is charging for carbon dioxide emissions for specific sectors (coal fired heating and transport sector), tax breaks, renovation of buildings, subsidies for electric cars, or more significant public transport investment.
What is Germany's most renewable enegry?
Every year, the Energiewende is more and more visible in the way energy is generated in Germany. While coal is still the largest source of electricity and power, renewable electricity has almost wholly replaced nuclear power. In 2017 alone, the production and consumption of wind energy overtook both nuclear and natural gas. Therefore wind energy becomes the second-largest source of renewable electricity and power generation.
How does the energetic policy in Germany look like in practice? The government will donate up to € 40 million to coal-producing regions, including Brandenburg, Saxony and Saxony-Anhalt, and North Rhine-Westphalia (total compensation will be EUR 4.35 billion). These funds will be allocated to retraining employees, creating new infrastructure and renewables.
That is why Codibly asked Enerhym, German energy consultancy and company business partner, about the needs of the German renewable energy and utilities market concerning the services of consultancy and technology companies. Marius Ratzmer, CEO of Enerhym and Bartosz Majewski, CEO of Codibly talked about the current state and challenges of the energy market in Germany.
BM: You’re running Enerhym, a management consultancy company based in Hamburg, Germany. What exactly do you do in Enerhym? Tell us more about what’s your focus area in terms of needs within the German energy and utilities market and how our companies can mutually address these needs.
MR: Let’s start with a few words about Enerhym. We formed the company about three years ago but I, myself, have been in the energy business for more than fifteen years. As you may know, German energy companies came from a big cradle of monopoly business and now they are being intercepted by new market players. To strengthen the business of our native energy market, we introduce innovative management models and technologies. We show energy companies in Germany how this agile management combined with innovative technologies can increase their effectiveness, optimize their processes, and reduce overall costs by using big data, analytics, incorporating digitization standards and so on. So what we are trying to do is to bring energy companies into the future, shift them to the new world of renewable electricity generation, as we would say, by ensuring cost-cutting and starting the evolution of organizations to be more professional, more effective, more efficient in the modern world.
Renewable energy in Germany - trends
BM: Do you see any specific trends within the energy and utilities market in Germany?
MR: I’ve been watching three main tendencies in Germany. The first one is energy delivery to end-customers. It still works in the old school style. I think a lot of our companies work in this ancient model “You need some energy – I sell the energy – come and buy it”. It’s a very obsolete model that actually doesn’t work anymore. Energy business in Germany has to be more customer-oriented, especially when there’s a big move within the whole community focused on shifting to renewable energy, low carbon usage, saving the environment, being greener both in business and everyday life. We should use these new ideas, products innovations, new offerings such as wind turbines, power plants, solar power to build insightful so-called customer journeys and to learn more about energy customers. To figure out what our customers expect from the energy business, what are their needs and what’s driving it. This transformation has to happen, otherwise, our energy market in Germany will be dominated by foreign suppliers who have a modern customer approach and offer more renewable energy sources.
My next observation concerns something, I’m sure, you work with on a daily basis in your projects. I mean digitization, of course. Energy market in Germany should embrace it, make it a core business strategy asset, particularly in the field of technology, to reduce costs and manual work. Let’s say you’re a grid provider. You’re building new lines and you want to check the historical data of previous installations, whether the chosen area is adjusted for such infrastructure. You have to dig through tons of papers prepared 30-40 years ago. This is something we have to digitize. The documentation should be in a digital form, easy to access within a data system, easy to update. When I say it, I mean the energy sector mostly, but digitization should be taken outside this particular industry. This is expected and it would be a huge change for the better.
Last but not least and the biggest one – data management and analytics. Most energy companies in Germany have a lot of data about grid performance, energy generation and consumption, about their customers and their behavior. The problem is how to use it with the best possible outcome. It’s not that rare that companies don’t even know what types of data they already have and how to use it to optimize things, it’s about 60% of the business.
Having in mind these three elements, meaning customer-oriented services, digitization of the energy sector and robust data management and analytics, we can say to a potential customer of Enerhym “we’ve got your back on this” and help him drive the business transformation.
Germany's renewable energy and digitalisation
BM: I guess the regulation provided by the German government concerning getting rid of fossil fuels, coal in particular, in the upcoming couple of years are also speeding up this process. I’m pretty sure that this is the part of all the dynamics nowadays. It’s quite a challenge to build a really great team with extensive industry knowledge, capable of addressing energy transition needs. Am I right or is it the other way around? What are your thoughts on this?
MR: I think that’s really the point. To be honest, the topic of big data and digitization is not perceived as relevant in Germany right now. It’s still somewhere outside here, somewhere in the US, in Asia. Maybe you’ll find good specialized companies also in Germany that could handle these topics but in the past, during our projects, we were struggling with finding people that have also the insights from the energy and utilities sector. If you are trying to start some business, you want to start with something like a PoC. You want to check if your concept is reliable and will work. For achieving this, you need some specialists in the energy field, people that know how it should be done, optimized in terms of building something that is likely to work successfully. So the technology component of the whole idea is crucial. You have to have good technology specialists that are also experts in creating solutions for your industry. You know that they already have that necessary knowledge and that’s what makes it work.
BM: That’s where we, as Codibly, are happy to help cause our focus has been there for the last couple of years. What you mentioned is pretty exciting from the technology stand of point. As a management technology consultancy, we tend to collaborate widely with our clients, they are mostly energy and utilities based. We help them to prove their concepts, so they wouldn’t have to spend hundreds and thousands of euros, trying to build the renewable eneergy solution that actually won’t be able to work because of some concept mistakes or even the lack of the fully shaped idea of what is necessary to be done at the very beginning. That’s why we have a PoC approach, the Proof of Concept, followed by the Minimum Viable Product, which is building something small, tangible, yet able to be tested against the needs of the energy and utilities clients. Are there any situations when you actually encountered such a need from one of your potential customers in Germany? Did you come across it?
MR: Let’s go back for a minute to customer experience. We’re observing how the market is changing, how customers want to be served by energy companies. One of the main problems in Germany is the fact that the utilities sector is still struggling with understanding customers’ needs, especially when customers tend to turn into very well-informed prosumers aware of the possibilities that come with digitization. Even if companies have a lot of behavioral data, the problem still lies in using them effectively to create consumers’ behavioral profiles and that’s the area for technology companies to claim.
The second one is access to professional services in both technology and industry-related solutions. It’s not difficult to find tech specialists but finding technology companies with extensive renewable energy knowledge and experience becomes a challenge that business doesn’t cope with. Utilities in Germany need technology experts whose work is rooted in renewable energy sources and solutions. People that will say “we are technology experts but we understand the needs of your business, so from our perspective, you should do X, Y to achieve your goals”. And that’s what we did in the past. We try to stimulate energy business by providing deep insights, suggesting best practices, for example, analyzing social demographic data to classify company data info different segments easy to understand and manage. We can take a look at utilities assets in Germany from an external perspective and suggest a solution we know already worked in similar cases.
Utilities in Germany
BM: In other words, business knowledge will enable us to experiment with different approaches, depending on the needs of a client. Marius, recently Codibly and Enerhym announced our collaboration focused on providing our mutual expertise in terms of consulting and technology for the renewable energy and utilities sector in Germany. How do you envision joining forces of our companies and providing this added value to potential utilities customers in Germany? Can you share any ideas on how we can do this together?
MR: In Enerhym we track different market trends that we can use to advise our customers on the C-level where and when they should make a move to improve and strengthen their business. With Codibly as a partner, we will be able not only to showcase trends but also to propose a way to achieve the desired outcome. Strategic and technology solutions that will upgrade your business.
BM: Exactly, I mean being a technology consultancy, we are missing the business part of the advisory. We need to get the business context provided by the management consultancy that actually specializes in the energy & utilities field. It feels really natural for us to get a partner and I’m really excited about having this partnership on the German market, to see how we can help by joining management consultancy and technology consultancy to solve utilities problems. And I’m wondering what we may do together as a next step.
MR: During my last visit to Cracow we did the workshops with you guys and I was amazed by your team, their creativity, understanding business stand of point, being proactive and ready to work on this. I told them about our business model and instantly they had lots of their own ideas about how we can work together. This is the thing that is crucial for the renewable power market in Germany, that spirit, that need and urge to drive this transformation and see the outcome. We can still work with the management model that was good for the market situation from 20, 30 years ago. We have to change the approach of management and problem-solving in an agile way. And that was exactly the thing I felt when I was in Cracow. I think we can create together new ways of managing energy and utilities companies not only in Germany but globaly.
BM: Totally agreed. I also think that the workshops are an effective way of interacting with our mutual clients. They can save their money and time by just attending the workshops and spending a couple of days on really intense work with two companies that actually understand the renewable energy industry inside out and are capable of providing effective outcomes from these intensive sessions. I think this is a really great value of our potential collaboration for the energy market in Germany. Marius, it was a huge pleasure having you here. Again, I’m very excited about us working together. Thanks again for your time.
MR: Thanks a lot from my side. I’m looking forward to the future.