Electricity grid upgrades will cost Germany 650 billion euros by 2045 - report

Germany will have to invest around 650 billion euros into the expansion of its electricity grids by 2045, according to a report by the Macroeconomic Policy Institute (IMK) of the Hans Böckler Foundation, which has close links to trade unions. Annual investments until the country’s envisaged climate neutrality target year will have to more than double to around 34 billion euros from the 15 billion euros raised in 2023, the researchers said.

“The decarbonisation of the German economy will require a massive expansion and conversion of the electricity grid infrastructure by 2045 in order to cope with the electrification of transport, industry and buildings, among other things,” IMK said.

Total grid investments will have to be evenly split between the transmission grid and the distribution grid, according to the report. The authors said that total costs could be even higher if raw material costs rise or due to supply bottlenecks in transformers or lines, as well as delays in approval procedures. “In view of these uncertainties, an accelerated, strategically coordinated grid expansion is essential in order to achieve the goals of the energy transition in Germany and ensure a climate-neutral electricity supply by 2045,” the researchers said.

Germany’s electricity grid is currently not able to allow a full use of all the renewable electricity the country generates - and it will have to cope with a lot more intermittent power generation in the future, as more and more sectors are switching to electricity as their main energy supply. But building new powerlines has proved a fraught process, plagued by public resistance. The underdeveloped grid is already costing consumers hundreds of millions of euros every year.