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Topic - Conventional Energy Sources

Key factors for a secure energy supply

Introduction

Competition policy is a core element of economic policy. It is tasked with ensuring and safeguarding functioning competition that is as unrestricted as possible in the interest of consumers and businesses.

Germany's energy supply is undergoing a radical transformation. Conventional energy sources still generate just under 70 % of Germany’s electricity. However, the ongoing expansion of renewable energy and the phase-out of nuclear energy will have a lasting impact on the composition of the electricity mix. In order to ensure security of supply even when there is a high proportion of intermittent renewable energy, the existing electricity market is to be developed into an “electricity market 2.0".

Diagrams on conventional energy sources in Germany

Natural gas

Heating, storage, power generation: a multipurpose source of energy

With an annual consumption of approx. 85 billion cubic metres, Germany is one of the largest sales markets for natural gas in the European Union and is also an important transit country for gas.

Natural gas will continue to make a significant contribution to energy supply in Germany over the coming decades. In particular, gas can continue to play an important role as a bridge from fossil fuels to renewable energy. Germany also extracts its own gas. But 93% of the gas it uses is imported, mainly from Russia, Norway and the Netherlands. Natural gas reaches Germany via pipelines, and is subsequently fed into the German long-distance gas grid and the downstream distribution grid.

An important role in the energy transition

Natural gas is the second most important primary energy source in Germany’s energy mix, after petroleum. In 2015, its share of primary energy consumption amounted to 21.1 per cent.

The heat market is still by far the most important market for natural gas. However, nowadays gas is used for more than just producing heat. It is also a flexible and diverse source of energy to balance fluctuations in electricity generation from renewable energy, and in future can be a form of storage for renewable electricity and a source of energy for mobility. As it produces less CO2, natural gas is also more climate-friendly than other fossil fuels.

Infrastructure

The total length of Germany’s gas grid is 511,000 km. The pipelines which go to make up the gas grid are essential for transporting and distributing natural gas. They enable widely varying quantities of gas to be delivered safely over long distances. Considerable amounts of gas are transported across Germany to other EU states.

The Gas Network Development Plan, which is updated each year, includes measures for the expansion of the network in line with demand and for ensuring secure supply and safe and reliable network operation. You can find more information here.

Looking ahead to power-to-gas: using gas to store energy

Another important and promising use for the natural gas grid is emerging. By converting electricity from renewable sources into hydrogen or methane and feeding it into the natural gas grid, the latter could serve as a huge reservoir for several billion kilowatt hours of energy. A number of very encouraging research and demonstration projects aimed at using this technology on a large scale over the next decade are currently underway. For more information, please click here.

Playing safe with the gas supply

The strong dependence on imports means that the instruments for ensuring security of the gas supply are vital. Germany’s natural gas supply is very secure and reliable. Germany has the world's fourth-largest gas-storage capacity, which at close to 24.1 billion cubic metres is also the largest within the entire European Union.

In December 2015, the Federal Ministry for Economic Affairs and Energy published a list of key principles for measures to improve the security of the gas supply. Find out more about securing the gas supply and contingency planning.

Trade and regulation of the gas market

The German gas market is characterised by a large number of privately organised operators in the areas of networks, storage operations and gas trading. There are currently two market areas in Germany (NCG and Gaspool), each with their own coordinator who ensures that access to the gas grid and market activities are carried out in an efficient fashion. 16 long-distance gas companies are currently operating on the German gas market – other players are the distribution system operators, storage facility operators, and traders. The EU internal market package for the liberalisation of the market for electricity and natural gas, most recently amended by the Third Internal Energy Market Package, redefines the areas of activity of market players. To promote competition, the operators of gas supply networks and storage facilities are separated from natural gas trading activities. The electricity and gas supply grids are regulated by the Federal Network Agency and the regulatory authorities of the Länder.

Gas price and costs

As is the case for other goods and services, natural gas prices are not regulated but are set according to supply and demand. Prices are based on different cost components.

Acquisition costs include the gas purchase price and transport costs. Distribution costs are all the costs involved in transmitting natural gas to the end customers. These costs also include all costs associated with the expansion and maintenance of the natural gas grid.
The natural gas tax is based on the Energy Tax Act under which the level of natural gas consumption in the various areas of application is taxed.
Where network operators use public land for laying and operating gas pipelines, they must pay the concession fee to the respective local authority. You can find out more about the gas prices here.

Coal

An energy source for power stations and industry

Hard coal and lignite still play an important role in the energy mix: almost 25 per cent of primary energy consumption is still based on these energy sources.

Coal is one of the most important energy sources for the generation of electricity. Around 42% of electricity is generated from coal (lignite: 23.8%, hard coal: 18.1%).

Hard coal: a raw material for electricity generation and the steel industry

The main consumers of hard coal in Germany are the power stations and the steel industry. In 2015, power stations accounted for 78% of total consumption of hard coal, the steel industry for 20%, and other industry, home fires and small-scale consumers for roughly 2%. The German hard-coal mining industry has been undergoing a process of restructuring for some decades. Output and the number of mines and employees are constantly falling. In view of this development, imports now cover approx. 90% of the supply of hard coal and hard coal products on the German market (57.5 million tonnes in 2015). For further information on the extraction and subsidisation of hard coal, please click here.

Lignite: Germany is the world’s largest extractor

Lignite is the most important domestic fossil fuel. It is available in sufficient quantities and can be extracted without any need for subsidies. The lignite reserves and resources will last for a very long time. There are around five billion tonnes of lignite in opencast mines that have been approved and developed.

Lignite is extracted in four districts, Rhine, Lausitz, Central Germany and Helmstedt, and all of the mines are opencast. Annual extraction has been fairly constant over recent years; in 2015 it amounted to approx. 1,781 million tonnes. Germany is the world’s leading extractor of lignite, ahead of China, Russia and the United States. Further information about coal can be found here.

Mining statistics: Facts and figures on mining in Germany

Germany has a long mining tradition, and mining continues to play an important role today. More than 20,000 people are employed in mining operations; they mainly extract coal, gas, oil, potash and salts. The Federal Ministry for Economic Affairs and Energy works with the mining authorities of the Länder to produce an annual report entitled "Mining in the Federal Republic of Germany – mining sector and statistics". The report (known as the “Blue Booklet” because it was originally bound in blue) contains comprehensive data from all the mining companies in Germany and provides detailed statistics.

Petroleum and Motor Fuels

A raw material for transport

Oil continues to be one of the main forms of energy used in Germany. 34% of primary energy consumption in 2015 derived from oil and motor fuels, and the bulk of this is imported.

With a share of approx. 34% of primary energy consumption in 2015, oil remains the most important primary energy source in Germany. Back in the 1970s, oil accounted for more than half of primary energy consumption, but its share dropped in the 1980s, largely due to the increased use of gas for heating. Oil plays an important role in the transport sector: 94% of final energy consumption in the transport sector is accounted for by oil (2015).

Domestic sales of oil products amounted to approx. 102 million tonnes in 2015. In quantitative terms, the main oil products were diesel fuel (36.8 million tonnes), gasoline (18.2 million tonnes), light fuel oil (16.1 million tonnes) and naphtha (16.3 million tonnes); naphtha is used for petrochemicals. Other oil products include kerosene (8.5 million tonnes) and heavy fuel oil (4.5 million tonnes); the latter is used in industry.

For some years, biofuels like bioethanol and biodiesel have been helping to cover the energy supply and to mitigate climate change. Find out more about the alternative fuels here.

Trade in and imports of oil

In 2014, Germany’s crude oil imports amounted to nearly 90 million tonnes. Ten years previously, the volume was roughly 20 million tonnes higher. The main source is Russia, which has covered between 33 and 39% of Germany’s crude oil needs in recent years. Together, Norway and EU Member States supplied Germany with a total of 26 million tonnes in 2014, or around 30% of Germany’s crude oil imports. Find out more about the trade in oil here.

Extracted, transported, refined: how oil gets to Germany

Crude oil is imported to Germany via four cross-border crude oil pipelines and via the ports of Wilhelmshaven, Brunsbüttel, Hamburg and Rostock. Pipelines from the ports of Wilhelmshaven, Brunsbüttel and Rostock lead to various refineries. The pipeline infrastructure is owned by the oil-processing industry; it is generally operated by companies which are jointly owned by several oil companies. The storage of crude oil and of intermediate and finished products takes place both below ground in caverns and above ground in refineries and in numerous tanks outside refineries. In total, the tank storage capacity in Germany amounts to approx. 62 million cubic metres; 40% this takes the form of caverns.

The markets for motor and other fuels

The sale of diesel, gasoline and other motor fuels like LPG and natural gas takes place via more than 14,000 roadside fuelling stations and around 350 fuelling stations on autobahns. In addition to the major oil companies, numerous independent companies are active on the motor fuel market. You can find out more about this topic here.

As is the case for other goods and services, gasoline and diesel prices are not regulated but are set by supply and demand. The crude oil price has a major influence on the availability of these fuels and thus on the price at the petrol pump. You can find out more about fuel prices here.

Our goal: a secure supply of oil

Among the sectors that depend on a reliable supply of oil are private and commercial transport, shipping, aviation, heating, and manufacturing. As we have seen in the past, better energy efficiency, energy conservation and a switchover to technologies using other sources of energy can help reduce our dependency on oil. Given our high level of dependency on oil imports and the risks affecting the world market, however, there is a need to take precautions against short-term disruptions to supply. Within the Federal Government, the Federal Ministry for Economic Affairs and Energy is in charge of ensuring energy security and taking precautions to cope with energy crises. You can find out more about contingency planning here.

Nuclear power

Phasing out nuclear power without compromising on security

In its energy transition, Germany has decided to phase out the use of nuclear power to generate electricity. At present, there are 8 nuclear power plants still operating in Germany. These will be successively shut down, with the last ones closing by the end of 2022.

In the wake of the disaster that struck at the Japanese nuclear power plant at Fukushima, Germany reconsidered the role of nuclear power. The accident made it necessary for the residual risk posed by nuclear power to be reassessed by society. In summer 2011, the Federal Government decided to speed up its energy transition and to completely phase out its domestic use of nuclear power by the end of 2022.

Nuclear power plants in Germany

A total of 37 nuclear power plants have been built in Germany and put into commercial operation since 1962. At present, there are 8 nuclear power plants still operating, generating approximately 11,000 MW.  These will be successively shut down, with the last ones closing by the end of 2022.

Decommissioning and dismantling of nuclear power plants: financing and provisions

The decommissioned nuclear power plants are to be dismantled. The parties which cause the costs are responsible for bearing the costs: according to the Atomic Energy Act, the operators of nuclear power plants must bear all the costs of dismantling the nuclear power plants and disposing of radioactive waste. The relevant energy utilities are required by law to form reserves to enable them to cope with the high costs involved. In order to establish clarity regarding liability for the dismantling and disposal of the nuclear power plants, the Federal Cabinet adopted the Act on Extended Liability for the Dismantling of Nuclear Power Plants and the Disposal of Nuclear Waste in October 2015.

Commission on the financing of the nuclear phase-out

On 14 October 2015, the Federal Cabinet set up a Commission to Review the Financing for the Phase-out of Nuclear Energy. The expert commission was to come up with recommendations on how the financing of the decommissioning, dismantling and disposal can be designed in a way that allows companies to remain viable in the long term so that they can meet their obligations in the nuclear field. It presented its unanimously adopted final report in April 2016. The Federal Government is currently drafting three laws to implement the recommendations.

Final disposal of radioactive waste

A suitable site is being sought for the secure storage of highly radioactive waste over a period of a million years. The Repository Site Selection Act entered into force in July 2013 and guarantees that there will be an open-ended, transparent and science-based site selection process. The Federal Ministry for Economic Affairs and Energy is responsible for basic research into nuclear disposal; this research is non-site-specific and application-oriented. The focus is on the question of safe handling and disposal of radioactive waste. In the funding concept entitled “Research on the Disposal of Radioactive Waste” (2015-2018), the Ministry has presented a more detailed description of the research and development work. Find out more about the final disposal of radioactive waste and research into final disposal in Germany.

Research to improve reactor safety

The research on the safety of nuclear energy undertaken by the Federal Ministry for Economic Affairs and Energy contributes towards what is recognised internationally as a high safety standard in German nuclear power plants. It defines the state-of-the-art when security assessments are made. The funded research projects provide, for example, calculation tools for the assessment and analysis of procedures in nuclear power plants and investigate the behaviour of materials in conditions found in nuclear power plants. This work also helps to maintain the expertise which continues to be needed in the use of nuclear technology and in radiation protection in medicine, industry and research.

In view of the international trend towards continued use of nuclear energy, the German government wishes to retain the skills needed to assess the safety of nuclear power plants in neighbouring countries and, if necessary, to make proposals for improvements. For this reason, research on the safety of nuclear energy is increasingly taking place in the context of international cooperation, e.g. in the EU (Euratom) and the OECD Nuclear Energy Agency.

Further information

  • 19/10/2016 - Press release - Conventional Energy Sources

    Press release: Cabinet approves important energy legislation

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  • 06/06/2016 - Press release - European and International Energy Policy

    Press release: Energy Ministers discuss security of gas supply and regional cooperation

    Open detail view
  • 27/04/2016 - Press release - Conventional Energy Sources

    Press release: Commission to Review the Financing for the Phase-out of Nuclear Energy presents recommendations to the Federal Government

    Open detail view
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