Is the Country’s $100 Billion Grid Expansion a Recipe for Disaster?

Is the Country's $100 Billion Grid Expansion a Recipe for Disaster?

Economists Criticize Green Party’s Plan to Finance Grid Expansion with School Bonds

Leading economists have criticized the Green Party’s plan to finance the expansion of the high-voltage grid using school bonds, calling it a “reality-denying” concept.

“It’s a reality-denying concept” said economist Veronika Grimm to the Bild newspaper. “The state won’t be able to bear the costs. It’s urgently necessary to mobilize private capital to drive the grid expansion. If the state takes over the planning, it will only make things more expensive. A debt of this magnitude would also be blocked by European fiscal rules.”

Many young people are engaged in the Green Party, Grimm noted, “It’s crazy to watch them pull the rug out from under their own feet.”

A Green Party spokesperson countered, “The European fiscal rules do allow for this measure.” The scope for this measure depends on economic growth.

Ifo President Clemens Fuest said to the newspaper, “The idea that decarbonization is possible without sacrifices is an illusion. The transition to a climate-neutral economy is associated with significant costs.” The government can try to redistribute these costs, but the vast majority of the population will have to bear them.

The planned amount for the operators to estimate and pass on as network charges (“Erlösobergrenze”) in 2025 is 11.7 billion euros. The projected investment costs for the expansion of the German high-voltage grid until 2045 amount to around 328 billion euros.

According to the Green Party’s plan, the network charges for companies and private consumers are to be abolished, and the grid expansion is to be financed through debt. The party plans to take over the network charges for the interregional power lines from the “Germany Fund” as stated in the election program. This “Germany Fund” is to be newly established and filled with credits in the billions.