ENERGIO - The Energy Policy Turnaround Caught Between Regionalisation and Centralisation

Project partners: 

University of Kassel, area of expertise “empirical economics research” (Prof. Andreas Ziegler)
University of Hamburg, area of expertise economics/ public finance (Prof. Andreas Lange)
Economics of Energy Institute at the University (PD Dr. Christian Growitsch)

Partners in-the-field:

Representatives from ministries, regional institutions (Munich, Schönau, Regensburg), associations, energy companies and various scientific disciplines

Tasks

In the course of the turnaround in energy policy the German federal government set targets for the reduction of greenhouse gas emissions, the increase in the share of renewable energies and the reduction in energy consumption. The implementation of the measures necessary to achieve this usually requires an agreement between the federal states and municipalities,, as well as a local implementation of the measures. Closely linked to the need for regional implementation and for independent local and regional policy measures are approaches to a decentralisation of energy provision itself, which completes, and if necessary, replaces existing central provision. However, between the regionalization of energy policy and a centralized approach there is a potential area of tension arising from both the characteristics of energy provision, as well as from behavioural and acceptance aspects on the part of citizens, companies and state institutions. Both centralized, supraregional planning, as well as a decentralised approach that is close to citizens have certain advantages, but cannot be readily implemented at the same time.

In addition, the regional baseline situations for achieving the targets of the energy turnaround are often very different (in terms of natural resources, the strategies of energy providers and demographic trends, for example). This baseline situation is also heavily influenced by political lobbying.

It remains largely unclear whether the political activities of the states and municipalities are economically expedient and socially desirable. A form of maximisation philosophy and optimism about implementation seem widespread and to such an extent that all levels of government should and can implement as many of the measures for achieving the goals of the energy turnaround as possible. However, there are good reasons for giving the various levels of government in a federal state differentiated tasks and competences.

The aim of this project is to shed empirical light on regional aspects of the planning and implementation of the energy turnaround in Germany and to explain the interaction between cost efficiency and preference equality/acceptance. Different methods will be used to analyse the degree to which the acceptance and participation of the players involved differ at a regional level and how energy policy measures can be designed in a regionally differentiated and/or more cost-effective way. It will also explore whether energy policy measures can be implemented in areas where it is least expensive to do so and/or where the greatest untapped potential for avoiding CO2 emissions and innovation can be expected. Policy recommendations can then be deduced with the help of theory-based criteria. The results will be made available to experts and the general public. The validity and transferability of the results will be improved via an interdiscplinary group of project experts and the organisation of workshops.

Project parts

The core of the project will consist of empirical research, which will employ different methods, to highlight the various aspects of a regional and decentrally structured energy policy. Common reference points and arguments are theoretical concepts based on the economic theory of (fiscal) federalism, governance concepts in multi-level systems, work from economic geography and literature on innovation systems, strategic niche management and socio-technological transitions. These concepts are discussed against the background of energy policy framework conditions. To this end, a longer literature review on the expansion of renewable energies in German federalism and multi-level systems was compiled. It reflects on the wide range of different ideas and reform recommendations put forward in this literature in an overarching review.

It is accompanied by the following empirical modules:

1) Regional modelling with the help of shift-share analysis based on regression analysis:
The project should ask which German federal states, and which of the economic and energy consumption sectors based in them, feature relative advantages and disadvantages in the implementation of energy policy targets. An examination of competences should reveal the reasons for the differences in emission intensity and the type of energy production, as well as the potential for the cost-efficient reduction of emissions intensity.

In addition to an overview of all energy sources, the modelling of individual, renewable energies in the electricity sector turned out to be appropriate in the first instance. In view of the heterogeneity of the Länder, a highly disaggregated approach was adopted at a county level. The explanation of the distribution of wind energy capacities seemed particularly interesting to us here in spatial terms, because political and civil society influences are also very important at a local and regional level in addition to spatial-geographical and federal policy influences (EEG reference yield model). This gave rise to the following working paper:

Götzke, Frank, Tilmann Rave, "Exploring the Heterogeneity of Wind Energy Expansion Across German Regions", GFS Working Papers No. 5, 2015 (PDF Download), also ENERGIO – Working Paper Nr. 3

In a revised form

Goetzke, Frank and Tilmann Rave, "Exploring Heterogeneous Growth of Wind Energy Across Germany", Utilities Policy 41, 2016, 193–205 

2) The behaviour of households as energy users
Hypotheses on the behaviour of energy consumers cannot be tested more closely and on a micro-founded basis in the framework of regional modelling. Questions of social acceptance therefore remain largely undiscussed. Regional modelling will accordingly be initially complemented by an analysis of household behaviour. The focus will especially be on the analysis of household acceptance and willingness to pay in terms of the regionality of the implementation of the turnaround in energy policy.

3) The behaviour and strategies of energy providers
The modelling can only offer general orientation with regard to the role of energy providers. As a result, this part of the research should explicitly investigate the extent to which the corporate strategies of energy providers favour or counteract a regionalisation and decentralisation of energy provision. A brief survey of energy providers jointly conducted with the Energiewirtschaftlichen Institut Köln and a more detailed survey of the energy industry serve as the cornerstones of more in-depth analyses:

Growitsch, Christian, Lisa Schaup and Heike Wetzel, "Kurzstudie: Die Energiewende - Herausforderung für Politik und Unternehmen", ENERGIO – Working Paper Nr. 1, 2014, 2014 (PDF Download)

Growitsch, Christian, Lisa Just, Helena Schweter, Thomas Triebs and Heike Wetzel, "Die Energiewirtschaft im Wandel – Herausforderungen und Strategien der Energieversorgungsunternehmen - Auswertung der Ergebnisse einer Branchenumfrage", 2015, ENERGIO – Working Paper Nr. 4 | PDF Download

Schweter, Helena and Heike Wetzel, "Scale and scope economies of German electricity and gas distribution networks", ENERGIO – Working Paper Nr. 9, 2017 | PDF Download

Just, Lisa, Helena Schweter and Benjamin Tischler, "Explaining regional differences in investments: The example of PV expansion in Germany", ENERGIO – Working Paper Nr. 10, 2017 | PDF Download

4) Institution-building and the interaction of local players
Specific local conditions are also to be considered that could (additionally) explain advantages and disadvantages in terms of emissions avoidance and energy efficiency. At a local and regional level in particular, there are various approaches towards establishing new types of energy supply and upscaling them in the form of experiments and models. The extent to which these approaches can be readily used to achieve energy-policy goals remains unclear. The question of the extent and reasons for the diffusion of innovative policy measures and concepts - or parts of them - in the energy sector of municipalities and their utility companies is of central importance to this research. The internal factors and processes of the municipalities and/or utility companies will be monitored on the one hand, while external influences need to be considered on the other. Based on empirical case studies, further conclusions as to the replicability and scalability of innovative practices and policies beyond niches may potentially be drawn.

Munich, Regensburg and Schönau in the Black Forest will be used as case studies.