Bank aus Verantwortung Promoting sustainable energy under the framework of the German “Energiewende” The role of KfW

2GIZ Pressereise - KfW in Ruanda KfW – Bank aus Verantwortung Employees

3 Energiewende / Energiewende in Germany: Demanding objectives 2 On track Too fastToo slow

4 Energiewende / Expanding the use of renewable energies › Considerable investment needs (approx. EUR 12.4 bn p.a. for RE in the electricity sector in Germany up to 2020): › So far, European emissions trading only with weak incentive effects: adjustment required › Early inclusion of affected citizens and municipalities required › Legal framework: the Renewable Energy Act. Ambitious goals until 2050: › Increasing the share of renewables in gross final energy consumption up to 60 % (2013: 12.3%) › Increasing the share of renewables in the gross electricity consumption up to 80 % (2013: 25,4%)

5 Energiewende / Functioning of EEG € transmission system operator electricity market (EPEX Spot) kWh marketing revenues EEG charge € € guaranteed payment kWh › EEG plant operators usually receive technology-based guaranteed payments for electricity from the transmission system operator for the next 20 years (injection priority) › Transmission system operators bring the EEG electricity to the market (Day-Ahead or Intraday) › Difference between revenue and costs (injection interest rates, merchandising, balancing deviations) is allocated to electricity consumers › A national EEG-charge per kWh is computed

Bank aus Verantwortung KfW’s contribution to Domestic Promotion of Renewable Energies

KfW-Action Plan Energy Turnaround 7 Renewable Energy 2013: 4.8 bn € Energy Efficiency 2013: 16.7 bn € Innovation KfW-Energy Efficiency Programme KfW-Offshore Wind Programme ERP-Innovation Programme KfW Programmes Energy-Efficient Construction and Refurbishment of Buildings KfW-Programme Generation and Storage of Renewable Electricity Direct Loans for Larger Private Corporates („Finanzierungsinitiative Energiewende“) KfW-Programme Energy-Efficient Urban Lighting KfW-Programme Municipal Energy Provisioning (Power and Heat) KfW IPEX-Bank (Direct Loans and Project Finance for Corporates) Windenergy (On- and Offshore) Solar Energy (Photovoltaic und Solarthermal) Energy-Efficient Power PlantsGrids Concepts for and Management of Energy Refurbishment in Urban Areas KfW-Programme for Renewable Production of Heat Energiewende /

8 8 KfW Renewable Energies Programme “Standard“ Promotion of electricity from renewable energies For whom? › German and non-German enterprises, self-employed professionals › Enterprises in which municipal authorities, churches or charities hold an interest › Private individuals and non-profit organisations which feed the generated electricity into the grid or which sell the generated heat For what? › Electricity from solar energy (photovoltaic), biomass, hydropower, onshore wind power plants › Investments in low-voltage and medium-voltage power grids › Electricity and heat generated in combined heat and power stations How? › Loan amount of up to EUR 25m › Financing of up to 100 % › Loan term of up to 20 years, up to 3 years repayment-free › Risk-based interest rate

9 Energiewende / KfW Renewable Energies Programme “Premium“ Promotion of large plants in which heat is generated from renewable energies For whom? › SMEs (EU-Definition) and self-employed professionals › Non-profit organisations, municipal authorities and companies in which municipal authorities hold an interest of more than 25% › Private individuals which use the generated heat exclusively for their own needs For what? › Construction and expansion of large solar collector systems › Biomass plants for combustion of solid biomass for thermal utilization › Heating networks which are supplied from renewable energies › Systems for development and utilization of deep geothermal energy How? › Loan amount of usually up to EUR 10m. Loan term of up to 20 years, up to 3 years repayment-free › Risk-based interest rate Customers benefit from attractive repayment bonuses financed by Federal Ministry for the Environment, Nature Conservation and Nuclear Safety. Particularly favourable conditions for small enterprises (EU definition).

10 Energiewende / KfW Renewable Energies Programme “Storage“ Promotion of storage battery systems For whom? › German and non-German enterprises, self-employed professionals › Enterprises in which municipal authorities, churches or charities hold an interest › Private individuals and non-profit organisations which feed the electricity generated by a solar collector system into the grid For what? › Financing of stationary storage battery systems in combination with a solar collector system › Prompt integration of small and medium sized solar collector systems into the grid How? › No maximum amount, financing of up to 100 % › Loan term of up to 20 years, up to 3 years repayment-free › Repayment bonus from BMU of up to 30 % of financeable costs Customers benefit from attractive repayment bonuses financed by Federal Ministry for the Environment, Nature Conservation and Nuclear Safety.

11 Energiewende / KfW Offshore Wind Energy Programme Establishment of wind farms off the German coast For whom? › Project companies For what? › High loan volumes to establish wind farms in the North and Baltic Sea How? › A) Direct loan under banking consortia, pari-passu-condition, loan amount of up to EUR 400m › B) Financing package composed of an on-lent loan through a bank and a direct loan from KfW, loan amount of up to EUR 700m › C) Direct loan under banking consortia to finance unforeseen cost overruns (“cost overrun facility”), pari-passu-condition, loan amount of up to EUR 100m › Financing of up to 50 % of total debt capital requirements › Loan term of up to 20 years, up to 3 years repayment-free

12 Energiewende / Conclusion and perspectives Pillars of a comprehensive decarbonisation strategy: › Incentive instruments in order to induce behavioral changes in firms and households › Securing long-term funding › Promotion of innovations 8KfW’s contribution