KfW Energy Transition Barometer 2020: a good deal of untapped potential to transition the energy supply still remains

• Private households: central pillar of the energy transition
• Slight increase in the prevalence of energy transition technologies
• Assessment of private households: 90% support the energy transition. However, potential savings are low – expenditures are high
• Attractive funding opportunities for rehabilitation and an increase in carbon price continue to be important drivers

The KfW Energy Transition Barometer 2020 highlights the continued high level of commitment to the energy transition among private households in Germany, which were surveyed before the coronavirus crisis began in spring 2020. Around 23% of households already have energy transition technologies such as heat pumps or power generation technology based on renewable sources and electric cars. This represents an increase of around 10% from the previous year (21%).

The current survey shows that around 90% of households still consider the energy transition important or very important, three out of four households signalled their willingness to take action on a scale from zero to ten with eight or higher. Climate change is becoming increasingly tangible. “Two thirds of households believe that they will be impacted by climate change now or in the future. This underscores the urgency of bringing about the energy transition,” said Dr Fritzi Köhler-Geib, Chief Economist at KfW Group.

The high level of approval and willingness is evident in all regions of Germany and across different income groups and education levels. However, this has not led to sufficient investments by households in energy transition technologies. Only around 20% of households see significant potential savings in electricity, heat or mobility for their household.

“It is essential that private households participate if the energy transition is to succeed. Germany has already achieved substantial reductions in greenhouse gas emissions in many sectors. Particularly in the transport sector, but also in the building sector, the savings needed to achieve the target by 2030 still have to increase significantly again; both sectors need to see an increase to 5% annually. Considerable potential is lying dormant in private households,” said Köhler-Geib.

The percentage of households that have invested in energy or transport transition technologies is still relatively low at around 23%. This percentage is more than twice as high for owners (35%) as it is for tenants (13%), and prevalence in rural areas is significantly higher than in the city. With a view to future investments, we see promising momentum: around 4% of households plan to purchase this kind of technology in the next 12 months.

Financial incentives determine the activity of households in the energy transition

The survey shows that the main obstacle to investment in energy transition technologies is excessively high costs. But many households also consider the high refurbishment costs and long amortisation periods to be obstacles. At the same time, energy users primarily attach importance to the financial benefits of their investments, for example because they save costs or increase the value of their property. Although the investments seem worthwhile for many, the high costs prevent most other households from making these investments.

Coronavirus crisis slows down other investments

The problems with incentives and costs have likely been significantly exacerbated by the coronavirus crisis. Long-term investments are examined more critically in uncertain times or are not made at all. The same is true for more expensive alternatives to the status quo such as electric cars. Efforts to mitigate climate change and make progress in the energy and transport transition are thus threatened by the crisis.

This makes it all the more important that promotions for private households continue to create incentives to advance the energy transition, even during times of crisis. One starting point would be to lower cost barriers by offering attractive subsidies. Another would be to reduce the cost of refurbishment through approaches like modular refurbishment with standardised refurbishment elements. “At the same time, the regulatory framework must take effect in such a way that climate-friendly investments are encouraged and investments that are harmful for the climate become less attractive. A rising carbon price with simultaneous financial incentives for climate-friendly technologies and behaviour would be another sensible step,” said Dr Fritzi Köhler-Geib.

The KfW Energy Transition Barometer:

• Representative survey on energy transition among some 4,000 households in Germany
• The study is new and unique in scope and content
• It provides insight on
• • the attitude of households towards the issue of energy transition
  • energy transition technologies (e.g. solar energy systems, battery storage, e-mobility) being used by households
  • growth in new investments (planned purchases of energy transition technologies)
  • motivation to use and obstacles to purchasing energy transition technologies
  • Survey was conducted by the infas Institute for Applied Social Sciences
• The study is scheduled to be published annually
• It provides a good general overview of households’ participation in the energy transition in Germany

www.kfw.de/energiewendebarometer