Energy shift and climate objectives may face challenges due to the potential prioritization of gas over other resources
In a recent development, concerns and criticisms have been voiced against Economics Minister Katarina Reiche's plan to prioritize gas over renewable energies in Germany's energy transition. The main issues at hand include increased electricity prices, fossil dependency, undermining climate goals, grid expansion, and burdening producers and consumers.
- Rising Electricity Prices and Fossil Dependency
The proposed addition of at least 20 gigawatts of new gas-fired power capacity exceeds coalition agreements and lacks hydrogen readiness. This approach risks locking in expensive fossil fuel infrastructure, leading to higher electricity prices and increased dependency on imported fuels. Experts warn that this will stifle innovation in storage and the grid while perpetuating fossil fuel reliance.
- Threat to Climate Goals
The emphasis on gas under Reiche’s leadership threatens to derail Germany’s decarbonization targets by reinforcing the use of fossil fuels instead of decisive support for wind, solar, and battery storage technologies crucial for a renewable future. This setback risks locking the country into carbon-intensive infrastructure.
- Underestimation of Electricity Demand and Grid Expansion
The Ministry has been criticized for underestimating future electricity demand by using forecasts that exclude expected growth from heat pumps, electric vehicles, and data centers. This downplaying of demand reduces the perceived need for large-scale renewable capacity and grid expansion, jeopardizing energy security and industrial competitiveness.
- Burden on Producers and Consumers
The policy’s reliance on gas may lead to higher costs for producers who face fossil fuel price volatility and infrastructure investments, potentially translating into higher electricity prices for consumers. Additionally, it complicates investment and innovation in renewables and storage batteries, which are essential to long-term cost reductions and energy stability.
Karin Pittel, energy expert at the Ifo Institute, and Kerstin Andreae, CEO of BDEW, have expressed their concerns about a potential shift in the energy transition and the possible consequences of another policy change. Pittel warns that the expansion of natural gas capacities should not come at the expense of renewable energy expansion.
Andreae also warns about the possible inaction in grid expansion, resulting in necessary capacities not being available in time. She emphasizes the responsibility of politics and administration to ensure clarity and stability in the energy transition.
In response to the growing criticism, Minister Reiche has announced plans to involve renewable energy feeders in grid expansion costs. However, this move has raised concerns among experts and industry leaders about the potential over- or under-expenditure from the findings of the report and their critical nature for the further course of the energy transition.
Pittel expects that the forecast for electricity demand will be lower in the short and medium term due to the slow rollout of e-mobility and heat pumps, as well as a weakening economy. Despite this, the long-term vision for a sustainable and renewable energy future remains crucial for Germany's energy policy.
A monitoring report prepared by the business-oriented consultancy firm BET is being prepared by Minister Reiche, which could lead to a realignment of the energy transition. The results of this report are scheduled to be presented in September.
- Concerns have been raised that the emphasis on gas by Reiche may lead to increased electricity prices and prolonged dependency on imported fuels due to the expansion of expensive fossil fuel infrastructure.
- Experts such as Karin Pittel and Kerstin Andreae have expressed worry about a potential shift in the energy transition, stating that the expansion of natural gas capacities should not come at the expense of renewable energy expansion.
- The potential over- or under-expenditure from the findings of Minister Reiche's monitoring report on the energy transition has raised concerns among experts and industry leaders about its implications on the further course of the energy transition.
- The report prepared by BET, meant to be presented in September, could lead to a realignment of the energy transition in Germany, influencing the long-term vision for a sustainable and renewable energy future.
