Germany and California hold the distinctions on their respective continents of being first movers in decarbonization policy. Both have aggressively pursued power sector decarbonization with ambitious renewable energy policies, and both have now set their sights on decarbonizing the building and transport sectors. While they have differences, their implementation aspirations are strikingly similar. In recognition of these commonalities, the California Energy Commission and the German Ministry of Economic Affairs and Energy hosted the first California–Germany Bilateral Energy Conference in mid-October. The idea behind this meeting of the minds was to share innovations and lessons learned in the aggressive pursuit of decarbonization goals.
The target trajectories for both regions run parallel, aiming to reduce CO2 emissions by 80 percent by 2050 compared with 1990 levels. In 2016, renewable energy sources already met 32 percent of Germany’s power demand. California has charted a similar course—the state will meet 33 percent of its renewable portfolio standard before the 2020 target, even without including around 7,000 MW of behind-the-meter solar.
Their plans for addressing the upcoming challenges of power sector transformation are also similar, and with good reason. The German Ministry published a discussion paper in fall of 2016 on 12 trends and tasks for the power sector through 2030 and shared it with the California Independent System Operator (CAISO). CAISO’s discussion paper, “Electricity 2030: Trends and Tasks for the Coming Years,” identifies eight key trends for California, and the overlap reflects their collaboration.
While there are many similarities, the paths do differ in some ways. One difference lies in how the regions view the challenges associated with higher penetrations of distributed energy resources, such as demand response, behind-the-meter generation, energy efficiency, and storage. Germany is presently focused on integration and cost allocation challenges, while California is focused on linking customer resources to the power and transport sector transitions in a way that lowers the cost of achieving both. A second difference is California’s focus on the economic benefits of being a U.S. leader in the energy transition (70,000 jobs in solar power alone and 500,000 jobs in the clean tech sector), which derives from the importance in the United States of demonstrating that decarbonization is not inconsistent with prosperity.
It is fair to say that these differences reflect where the two regions are on their respective implementation pathways, rather than fundamental differences in direction.
Differences notwithstanding, participants in the bilateral conference agreed that the technologies and lower costs of today enable us to move forward aggressively. The primary hurdles to be overcome are customer acceptance, institutional changes (including regulatory changes and changes in utility practices and procedures), and incorporating decarbonization of the transportation and building sectors into the energy transition. Another common theme among the speakers was the need to focus on maximizing the cost-effectiveness of measures going forward.
Policymakers aspiring to advance power sector transformation in their jurisdictions will face similar challenges. Germany and California are sources of both encouragement and solutions for each other. Both regions envision energy efficiency playing a significantly greater role and variable renewable energy sources “shaping the power system” by 2030. They also seek regional cooperation and integration through market extension, encouraging flexible resources to complement clean variable generation, and incorporating building and transport decarbonization into power sector transformation. Whether others look to California’s Energy Imbalance Market (and potential regionalization) in the Western United States or Europe’s Internal Energy Market, declining fossil fuel use and the need for regional cooperation rank high among the favored solutions.
A final lesson to be learned from these two leaders is the power of collaboration. While this conference was ultimately a conversation between two regions about their respective experiences, both jurisdictions expressed hope that more collaboration emerges. For example, Germany seemed especially impressed in the progress California is making in electrifying transportation, and California seemed equally taken with the progress Germany is making in offshore wind development and regional coupling. In short, Germany and California are saying, “Why stop here?”
The bilateral conference offered a powerful stepping stone for ongoing dialogue and increasing exchange and collaboration on joint projects. These collaborative efforts will accelerate the development of best practices, which will not only benefit the two regions, but will undoubtedly produce global benefits as well. We look forward to seeing where these boats sail.
