Governing for Demand Management Innovations in Germany: Politics, Policy and Practice
EPG Working Paper: 1601
This working paper analyses governance for demand management innovations in Germany, related energy system outcomes, and issues still outstanding. Demand management is understood in its broad sense here to include demand reduction, demand side response, and distributed energy, but it is also understood to be pivotal to an affordable and sustainable energy system transformation. The working paper is informed by the IGov theory of governing for sustainable energy innovations in that it governance is also understood in a broad sense to include objectives, policies, regulations and market rules. The paper takes sustainable energy governance to be an iterative process that is contingent upon a variety of domestic political and energy structures that affect choices made, as well as the effectiveness in practice of attempts to govern for sustainable demand innovations. The paper is divided into 5 sections including an introduction and conclusion. The first two sections set the scene by setting out the energy market and political contexts within which governing for demand management takes place. Section 4 is divided into three sub-sections each of which focuses in more detail on each of the three aspects of demand management outlined above. This includes analysis of the policies focused on enabling demand management, market innovations, issues still outstanding and current attempts to address these issues including those suggested within the government’s 2015 White Paper on electricity market reform. The conclusion includes some lesson drawing for British sustainable energy governance. German energy governance has so far supported distributed and community owned renewable generation, allowed sufficient support and space for the entrance of new business models and technologies, as well as enabled new markets in demand reduction and energy efficiency. The paper shows, however, that much needs still to be done to refocus governance away from supply to demand side policies and, in particular, to enable and integrate more demand side response into electricity and heat markets. There is some awareness within energy policymaking communities that demand response and flexibility are cost effective and efficient methods of better integrating markets, but it remains to be seen if current policy suggestions will be sufficient to enable significant improvement.
Keywords: Governance, Distributed Energy, Demand Side Response, Energy Efficiency, Germany, Energiewende, Energy System Transition
Date: 25 Feb 2015
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