Being on the Climate-KIC Summer School for the fourth week now, I and 39 other European students heard the most inspirational speech during the journey this morning. Hans-Jürgen Cramer, with his huge experience in business, energy and entrepreneurship, gave us an unusual and interesting lesson about the German electricity market and on worldwide actions against climate change with inspiring examples of how innovation can help the climate and at the same time solve problems like hunger, health sanitation and education.

Energy transition in Germany and its major challenges

Hans-Jürgen Cramer

Hans-Jürgen Cramer, Entrepreneur and Climate-KIC consultant, former CEO of Climate-KIC Germany and former CEO of Vattenfall in Germany

Starting with the energy market, in summary, the German government wants 80% of its energy to be produced from renewable sources by 2050. Biomass, wind, solar and water energy currently contribute about 27% of the country’s electricity demand. The country is planning to shut down the last nuclear power plants by 2022 and also already started to shut down the first fossil fuel power plants. However, these changes have resulted in higher electricity bills, because private households and small and medium sized companies have to bear most of the energy transition costs. Another problem is the power grid capacity: Although Germany has made significant investments in wind and solar sources, the country faces a partial energy deficit because of insufficient transmission lines to carry wind power from the North Sea to the industrial centers in the south. And the country has to find a solution for a stable energy supply, because the sun is not always shining and the wind is not always blowing.

Social inclusion as a key factor for the right solutions

To solve the problem of the energy price, the proposal was announced to reform the clean energy subsidy system, which marks the most sweeping changes to support mechanisms for renewable energy in Germany since the country adopted feed-in tariffs in 1991. The tariffs guarantee renewable energy generators above market prices for the energy they produce. Only this made the boom for wind and solar energy in Germany possible. A new system based on tenders is tested right now, but it is uncertain, if it will be the right solution.

Challenges of the German Energy Transition

CC BY-NC-ND: Windwärts Energie GmbH / Photographer: Mark Mühlhaus/attenzione

With solutions for increasing the grid capacity and balancing the fluctuating energy supply, the situation is similar. Germany is planning a huge infrastructure project to extend the electricity grid and is testing different opportunities to store energy. However, these projects are very challenging and there are different opinions about which is the right solution. Cost and finance is an important question for all of these projects. But often this is not the main challenge. It is rather a problem of mindset and acceptance in society.

Energy and environmental issues, which triggered the environmental movement in the 70’s and 80’s, were the most important factors for the development of renewable energies in Germany in the first place. So, how to deal with today’s problems regarding the transition to a holistic renewable energy economy? Waiting for a “voila” answer. But social inclusion still seems to play a key role. Solutions regarding electricity prices, grid extension and energy storage are all closely related to acceptance and mindset.

The most sustainable business ideas are all about climate justice

Social Inclusion also brings me to the most inspirational part of the talk, which was climate justice. I can say that it is my motivation to be on the Climate-KIC Journey working on green business ideas. A business model that tackles climate change and reduces social inequalities is by far the most sustainable and innovative venture, and for sure gives me more faith and power to keep chasing my own goals. Two very interesting examples were presented today: WTO (World Toilet Organization), which provides clean and safe toilets for vulnerable communities without access to improved sanitation, and the Coolar system, which provides cooling based on solar energy to preserve medicines for off-grid areas, especially in developing countries. What I am trying to say is that we should think more about how to include the poorest communities in the transition to a low carbon economy, and help them in climate adaptation, because they are the first to suffer from climate change. Energy transition and climate actions generally all add up to mitigating climate change, but if we at the same time directly improve the situation for people most effected, it is the best we can do. This is climate justice!