Germany’s National Energy Agency, or DENA (Deutsche Energie Agentur), recently wrapped up its annual two-day conference in Berlin. The focus of this year’s conference was energy efficiency.

I attended the conference hoping to gain a better understanding of how the government’s ambitious goals for energy efficiency are being met. Is Germany on track to reduce the energy it uses for heating by 20% by 2020? If so, how is this being achieved? If not, what are the obstacles?

What I found is that Germany is wrestling with the same challenges we face in the U.S. when it comes to expanding and implementing programs for building energy efficiency. The primary difference seems to be that in Germany, these efforts are being made in a political, economic, and cultural climate that is generally supportive.

Germany is transitioning to renewable energy

DENA is a public/private entity that is playing an important role in implementing the government’s ambitious plan for an Energiewende, or Energy Transition. Half of the agency’s funding comes from the government, and the other half from private partners.

The presenters at the conference represented a mix of high-level government administrators, business executives, researchers, and program directors from both public and private institutions. It seemed that 95% of the attendees were men, most of whom wore suits. This was not your typical green-building conference in the U.S.

DENA Chief Executive Stephan Kohler kicked off the conference with remarks that included a fact that I would hear repeatedly during the following two days: buildings are responsible for 40% of the energy used in Germany (about the same as in the U.S.). He touted building energy efficiency as being one of the best levers for reducing energy use and curbing greenhouse gas emissions.

Mr. Kohler called for a holistic approach to the Energiewende, one that integrates supply, demand, and infrastructure, and one that balances the potentially competing priorities of the environment, business, and societal needs. He sees the main challenges as being improving demand-side management, developing energy storage technologies, ensuring the reliability of energy supplies, and coordinating more closely with European partners in areas such as energy markets, deploying renewables, and upgrading the grid.

The cost of energy needs to be lowered

The opening plenary featured Germany’s environmental minister, Peter Altmaier, who at the time was participating in negotiations between his party, the Christian Democrats, and Germany’s second largest political party, the Social Democrats, to form a “grand” governing coalition. Like many others who would speak at the conference, Mr. Altmaier argued that the country’s goal of 80% renewable energy by 2050 could be achieved only if the existing renewable energy legislation — the Renewable Energy Sources Act, or EEG — was reformed so that the costs were lowered and shared more equitably.

Hildegard Müller, chair of the board of the German Association of Energy and Water Industries (Bundesverband der Energie- und Wasserwirtschaft — BDEW), also spoke. When asked by the moderator how she would grade Germany’s progress on integrating the Energiewende with the rest of Europe, she gave her country a “C” — but quickly added that other European countries generally deserve a “D” for their efforts to increase efficiency and mitigate climate change. Ms. Müller emphasized the need for better coordination between the energy policies of all EU countries.

Can Europe be self-sufficient in energy?

When the CEO of French-based Scheider Electric, Jean-Pascal Tricoire, took the stage, he apologized for speaking in English, but I didn’t mind. His prescription for greater success with the Energiewende was more technology and more energy efficiency (“a smart grid is no good with dumb buildings”). The Internet currently connects 2.5 billion people. By 2020, another 2.5 billion people are likely to be connected. More importantly, continued Mr. Tricoire, by that time 40 billion machines will be connected. He sees tremendous potential for using this connectivity to incentivize energy efficiency. According to Mr. Tricoire, Europe’s relative lack of natural resources is continuing to drive innovation that the world needs. He believes that Europe has a duty to be energy self-sufficient — and in the push toward self-sufficiency, he sees European companies developing competitive advantages.

In the panel discussion that followed, the speakers touched on Germany’s failure to meet the its energy retrofit (energetische sanierung) target of retrofitting 2-3% of its existing building stock per year. This is the rate of retrofits required to reach the Energiewende goal for reducing energy use. Ms. Müller suggested that more government incentives would help, because studies have shown that every 1 Euro invested by the government in energy efficiency results in 8 Euros of private investment. Mr. Tricoire acknowledged that, although he is generally not a fan of government regulation, he thinks that appropriate regulations could play an important role in encouraging more energy retrofits.

Prizes for energy efficiency achievements

An awards ceremony followed the panel discussion. This is the seventh year that DENA has awarded prizes for noteworthy projects in Germany and beyond. In choosing this year’s winners, the jurors were clearly emphasizing that energy efficiency transcends boundaries of size and sector.

The third prize went to a bakery/cafe in Hamburg that had implemented an extensive program of efficiency upgrades. In addition to the usual measures such as LED lighting, variable-frequency drive pumps, and an improved power management system, this company installed a small CHP plant in its basement to provide heat and power, and a wind turbine on its roof. The award referred to “the coffeehouse in Hamburg that is a power plant.”

A computer server company in Bremen called Erecon AG received second prize for its implementation of “green IT.” Thanks to an ambitious program targeting energy efficiency, the company’s computer room is now completely heated and cooled using waste heat from the servers themselves. The company’s success at reducing its own energy use led it to spin-off: a new company that now provides energy efficiency consulting services to companies across Germany.

This year’s first prize was awarded to Salzgitter Flachstahl, a manufacturer of flat-rolled steel products. The company’s employee-led process to reduce energy consumption and optimize its electricity production resulted in the implementation of 118 efficiency measures, ranging from installing occupancy sensors for lights, to revamping its cogeneration plant to make use of waste heat from the steel manufacturing process.

Energiewende critics frequently contend that manufacturing will be driven out of Germany by the high cost of electricity — even though many energy-intensive industries are exempt from paying Germany’s high surcharges on electricity. By highlighting the efficiency achievements of an energy-intensive steel manufacturer, DENA is sending a message to those critics.

Meeting energy retrofit goals is tough

At lunch I caught up with Nils Petermann, a German acquaintance who had spent six years working in Washington D.C. for the Alliance to Save Energy. These days he is back in Germany, working with energy-economy researchers who model the long-term impacts of potential international climate policies. For Nils, the DENA conference presentations were refreshingly down-to-earth. For me, coming from the world of green building and NESEA conferences, much of this conference seemed like it was happening at 30,000 feet.

The initial sessions of the three different conference tracks started after lunch. The first session in the building energy efficiency track focused on the development of “Sanierungsfahrpläne,” or retrofit roadmaps, for owners of large portfolios of existing buildings. (This being Germany, automotive imagery was common at the conference: “roadmap for success,” “engine of growth,” etc.)

The first presentation was by the head of DENA’s Energy-Efficient Buildings Division, Christian Stolte, who gave an overview of the current reality and the efforts needed to reach the government’s targets in the realm of building energy efficiency. The existing building stock consists of 15 million one- and two-family homes (41% by area), 3 million multi-family homes (24%), and 1.8 million commercial buildings (35%). As was noted previously, these buildings represent approximately 40% of Germany’s energy use. The retrofit rate has been averaging about 1% per year, but it needs to be close to 3% per year to reach the desired goals.

How do we convince homeowners to invest in an energy retrofit?

Peter Rathert, who heads a government ministry division devoted to energy-saving construction and building systems, presented the strategies and tools that were used to achieve substantial efficiency gains in several representative projects. He believes that because existing energy efficiency regulations are already challenging to implement in a cost-effective way, further progress will likely depend more on information, advice, and education than on more rigorous regulations. “If savvy marketers can convince consumers to pay €1,000 for a coffee machine, just imagine what they could do with insulation!”

Next up was Jürgen Gehb, who represents the Institute for Federal Real Estate Management (BImA), one of Germany’s largest property owners. In working with DENA to develop retrofit roadmaps for part of its 50 million square meter portfolio, this organization had found that it would not be feasible to meet the energy-reduction targets in a cost-effective manner. The future of these efforts would depend in part on decisions made by the new government. In the meantime, BImA was progressing on those projects where the benefits were clearly worth the costs.

The next presenter, Volker Bargfelde, spoke on behalf of the State of Brandenburg and its large portfolio of properties. He and others overseeing the state’s buildings had worked with DENA to develop a retrofit roadmap that targeted specific energy-reduction goals, including reducing heating energy use by 23% in 2030 as compared with 2007 levels. Mr. Bargfelde described the data collection, analysis, and action planning that resulted in the roadmap. In his opinion, the roadmap is a valuable strategic tool that is already yielding positive results.

Equipment on the trade show floor

Following this first afternoon session, I visited the modest exhibition hall where conference sponsors had set up information booths. A number of equipment manufacturers were there, including Buderus/Bosch, Viessmann, Wilo, and Grundfos.

Bosch is promoting an online tool for energy retrofitting that was developed with support from the Frauenhofer Institute for Building Physics. The website makes use of simple user-entered data to create a model of a building and its energy usage. It then generates recommendations for energy-related upgrades, and provides payback information for the various measures. While I don’t believe that algorithms will be replacing experienced, knowledgeable energy auditors anytime soon, this online tool could provide a useful overview to German homeowners contemplating energy upgrades.

Several industry organizations were exhibiting in the hall, including Germany’s Insulation Industry Association (GDI), the Institute for Heating and Oil Technology (IWO), and Metalle Pro Klima, a group dedicated to highlighting the “achievements and potential of the non-ferrous metals industry in climate protection, resources and energy efficiency.”

German policies support energy retrofit efforts

The second session of the afternoon had as its theme “Improving the energy performance of real estate portfolios — implementing retrofit roadmaps.”

Klaus Freiburg, who chairs the board of Germany’s largest real estate company, Deutsche-Annington Immobilien SD (DAIG), started off the session by presenting the retrofit investments that his company has been undertaking in consultation with DENA. Since 2008, his company has completed substantial retrofits at 1.6% of its properties on average per year. DAIG is now planning a significant expansion of these efforts.

Based on his company’s analysis, an economic case can currently be made for the energy retrofitting of approximately 70% of the existing building stock. However, conditions will have to be altered for the remaining 30% of existing buildings — primarily those built between 1960 and 1980 — to be cost-effectively retrofitted.

Anna Ipach-Öhmann, who is in charge of the building portfolio owned by the state of Baden-Württemberg, spoke about efforts being made to improve the energy performance of the nearly 10,000 buildings (11 million square meters) for which the state is responsible. Energy retrofits are one pillar of a four-pronged approach for reducing CO2 emissions. The other three areas are renewable energy, energy standards for new buildings, and energy management systems. Pilot projects at a university, a police station, and several schools are providing valuable examples of the potential for energy-efficiency improvements.

Local communities are investing in renewable energy facilities

The schedule for the second day included an opening plenary session focused on implementing the Energiewende at various scales within Germany.

Stephan Kohler started the plenary with remarks about the important role communities have to play in the success of the Energiewende. Any upgrading of the grid and transportation networks will have to be done in the context of communities. Communities have been a driver for the installation of renewable energy and efficiency measures. Approximately 50% of the renewable energy production in Germany now comes from decentralized sources owned by individuals or communities.

Mecklenburg-Vorpommern’s Minister for Energy, Infrastructure and Regional Development, Volker Schlotmann, discussed the importance of the Energiewende for his state, which has the lowest per-capita income in Germany. Renewable energy, particularly in the form of on- and off-shore wind farms, is providing for Meck-Pomm a “historic opportunity” to build a strong economic base that is not dependent solely on agriculture and tourism. Meck-Pomm’s strategy of including all stakeholders in the planning phases of renewable installations has spared it some of the missteps that have befallen other states.

Dr. Werner Brinker, CEO of the energy supplier EWE, sees the potential for developing technologies such as offshore wind to follow a downward price trajectory similar to that seen with more established technologies such as PV and on-shore wind. He commented on the important role that states and municipalities must play in advancing demand management and the development of the smart grid. He also called for revisions to the Renewable Energy Sources Act that would require the owners of renewable energy installations to contribute to the costs of developing and maintaining the distribution grid.

Energy-efficient pumps can save a lot of energy

Following the plenary discussion, I attended a presentation by Oliver Hermes, CEO of the high-efficiency pump specialist Wilo. He sees companies like Wilo as being well-positioned to contribute to and benefit from the Energiewende. Using his own company’s products as an example, he claimed that installing state-of-the-art pumps in all of Germany’s 42 million buildings would potentially save 12 to 14 TWh/year of electricity — an amount roughly equivalent to the output of four mid-sized coal-fired power plants. For Wilo, the risks and challenges posed by the Energiewende are worth the anticipated gains in innovation, market growth and international competitiveness.

Wilo’s CEO was followed by Karl-Sebastian Schulte, director of Germany’s Central Association of Trade Workers (ZDH). He spoke about the critical role that competent energy auditors and craftspeople have to play in implementing the Energiewende. His organization is working to establish Best Practices in the field of energy efficiency, and to strengthen the relevant qualification standards. The ZDH is participating in the EU’s program “Intelligent Energy Europe” to help ensure that the necessary institutions and resources are in place to reach the EU’s “20-20-20” goal of 20% reduced greenhouse gas emissions, 20% renewable energy, and 20% increased energy efficiency by the year 2020. ZDH has developed a program called “Build Up Skills” to provide energy-focused training for the building sector.

Plus Energy houses

Professor Gerd Hauser, PhD., of the Frauenhofer Institute for Building Physics, gave an overview of a prototype project, the “Efficiency House Plus” (Effizienzhaus Plus). The project involved a design competition that was won by the Technical University of Munich, and the subsequent construction of a prototype house. While the aesthetics of the house may not have broad appeal, the project allowed for prototyping various advanced energy efficiency and energy management systems. Professor Hauser’s presentation also included examples of other “Plus Energy” houses that are being built commercially by various prefabrication (“Fertighaus”) companies.

Stephan Kohler then spoke on behalf of a DENA-supported industry group called the Alliance for Building Energy Efficiency (GEEA). The GEEA is calling for government policies that would significantly strengthen incentives for energy retrofitting. The group also sees the need for the process of energy retrofitting to be simpler and more transparent for building owners. Mr. Kohler described the GEEA’s new initiative called the “Hauswende,” which focuses on facilitating the retrofit process for owners of one- and two-family homes. The campaign aims to educate, advise, motivate and guide these homeowners through the retrofit process, and thereby increase the rate of energy retrofits.

The round-table discussion that followed these presentations included not only the presenters, but also a representative of Germany’s association of architects, the spokesperson for Germany’s insulation trade group, and the president of Germany’s trade association representing building technologies. When the moderator asked the panelists, “Who or what bears the responsibility for the shortfall in building retrofits?,” the participants’ answers ranged from “All of our organizations bear partial responsibility” to “We are not the weak links; we all get it. It’s the people and companies not represented at this conference who need to be educated and take action.”

The panelists agreed that there seems to be a general lack of knowledge among building owners about the potential for energy efficiency improvements.

What about social justice?

The theme for the afternoon presentations in the building energy efficiency track was “Energiewende in the realm of buildings: shaping the social contract.” Presenters included the head of Germany’s largest tenant advocacy organization (DMB), the president of the Association of Apartment and Real Estate Companies (GdW), the director of a social welfare umbrella organization (DPW) similar to the United Way, the head of an association dedicated to sustainable development within cities, and the Chief Sales Officer of Ista, an energy management and metering company.

The presenters offered alternative views on the social impact of the Energiewende, and how the costs for energy retrofits should be allocated between owners, tenants and the government. Germany has a relatively strong social safety net, and its tenants’ rights laws are far more protective than one tends to find in the U.S. Nevertheless, the high cost of electricity associated with the Energiewende is a hardship for some of Germany’s poorer citizens.

In Germany, more so than in the U.S., the theme of social justice is often raised in discussions about the Energiewende. Critics argue that high electricity prices have created a new class of poverty, the “energy poor.” According to this line of reasoning, the burden of paying for Germany’s rapid expansion of renewable energy has fallen disproportionately on the poor. While it is true that Germans pay higher electricity prices than customers in any other European country, the percentage this makes up of the typical household budget is in line with other countries, because the electricity is used relatively efficiently. Because roughly half of all renewable energy installations are owned by small, decentralized entities is approaching 50%, much of the feed-in tariffs that Germans pay in their electricity bills ends up going directly back to communities.

Distributed energy generation

At this point, late in the afternoon on the second day of the conference, I was beat. I headed for the exhibition hall to have a cup of coffee before leaving the conference. There I struck up a conversation with a man named Alexander Trageser, who seemed to embody much of the ethos of the Energiewende. He had worked for Siemens for thirty years in the area of nuclear power generation. After retiring several years ago, he began learning about small-scale combined heat and power (CHP) systems. He invested in a gas-fired unit and installed it in the basement of a building where it provides heat and power to two apartment buildings and an Italian restaurant. He pays €0.06/kWh for the gas, it costs him €0.08/kWh to run the system, he gets paid €0.15/kWh for electricity he provides to the grid, and he charges his end users €0.24/kWh for their power — €0.04 less than what the local utility company charges. Springboarding off his success with this system, he now provides consulting on CHP systems to individuals and organizations.

A veteran of several DENA conferences, Mr. Tragender advised, “You have to take everything you hear at this conference with a grain of salt. After all, look at who’s paying for it.”

The decentralization of the energy supply that Mr. Trageser’s project represents is to my mind one of the most interesting aspects of the Energiewende, and the one that will potentially be most transformative to Germany’s energy systems. For some, this decentralization represents stability, security, and the re-democratization of basic citizen rights such as clean air and healthy water. The naysayers see in this decentralization a destabilizing force that may cripple the grid and further increase the cost of electricity.

Time will tell how this issue, as with so many others that have been raised by the Energiewende, plays out. I’ll be following this ambitious undertaking to see whether the Germany of 2020 and beyond is a shining example for the rest of the world to follow, or a cautionary tale about the dire consequences of overly ambitious politicians reaching for unattainable goals. Regardless of the outcome, I tip my hat to the Germans for trying.

Andrew Dey’s background includes carpentry, contracting, and project management. For the past six years he has provided construction consulting services to clients in New Hampshire, Vermont, and Massachusetts. He is passionate about retrofitting existing buildings — including his own house — for greater energy efficiency. His blog is called Snapshots from Berlin.