Concerns are mounting over potential disruptions to Germany’s energy transition following recent announcements from Economics Minister Katarina Reiche (CDU). The Ifo Institute and the energy sector have voiced warnings against prioritizing natural gas over wind and solar power, cautioning that such a shift could drive up electricity prices and jeopardize the nation’s climate goals by the middle of the century.
Karin Pittel, energy expert at the Ifo Institute, emphasized that electricity generation from natural gas is currently among the most expensive options. “The less it needs to be used in normal times, the more affordable electricity becomes” she stated. Pittel stressed that expanding natural gas capacity should not come at the expense of renewable energy development.
The German Association of Energy and Water Industries (BDEW) also expressed apprehension regarding potential delays. Kerstin Andreae, CEO of BDEW, warned that any prioritization must not lead to inaction regarding network expansion, resulting in necessary capacities not becoming available on time. She also raised concerns about the potential negative impact of renewable energy producers’ participation in network expansion costs, suggesting it could lead to reduced incentives for further renewable energy development and disadvantage German electricity production within the European market.
The proposed participation of renewable energy producers in network expansion costs, alongside a monitoring report commissioned from the business-affiliated consultancy BET, which could lead to a reassessment of the energy transition, has sparked criticism. The report, expected in September, is being used to assess future electricity demand.
Pittel acknowledged a likely downward revision of electricity demand forecasts, citing slower-than-anticipated adoption rates for electric vehicles and heat pumps, alongside a weakening economy. This reduction in demand could potentially result in cost savings and a more accurate calculation of required gas capacity. However, she cautioned against approaching this with excessive caution to avoid hindering the transformation of other sectors.
She further criticized Minister Reiche for commissioning only one institute to recalculate electricity demand, arguing it would be more prudent to involve two institutions to avoid accusations of bias within the resulting analyses. She underscored that the cost of engaging multiple institutions would be justified given the potential for significant financial implications and the critical nature of the resulting data for the ongoing energy transition.
Andreae from BDEW emphasized the importance of consistent policy for attracting investment. “Companies only invest sustainably in new technologies, infrastructure and business models when political goals are clearly formulated, long-term reliable and underpinned by suitable regulatory instruments”. She called for clarity and stability from policymakers at all levels to ensure a smooth energy transition, noting that the term “energy transition” should not be synonymous with constant and unpredictable shifts in policy direction.