Growing number of critics warn German econ ministry’s “reality check” could slow energy transition
The planned “reality check” by the economy ministry risks stifling the expansion of renewables in Germany, a growing number of critics have warned. Climate groups, think tanks, consultancies and government coalition partners alike have voiced concerns.
The planned energy transition monitoring report commissioned by Germany’s new economy and energy ministry is supposed to serve as a “reality check” for the energy transition. The results, based on a fresh forecast for the country’s electricity demand until 2045, should restructure energy policy to put cost-efficiency and energy security at the centre, said economy minister Katherina Reiche. This could impact, for example, decisions on targets for the expansion of renewables and the grid, as well as backup power plants.
Other measures to save costs
Climate NGO Germanwatch warned that the “reality check” was based on scenarios that did not account for Germany’s climate targets. The group, which analysed the government’s tender, was critical of both the content and methodology and said that “monitoring in this form is not suitable as a basis for political decision-making”.
A report by think tank Epico and consultancy Aurora Energy Research concluded that “even with lower growth in electricity demand, major efforts to expand renewable energy will remain necessary in the coming years”.
The authors recommended a number of measures which could reduce costs, such as prioritising ground-mounted solar photovoltaic installations over rooftops, as this could lower grid expansion costs, or ramping up battery storage capacity, which could reduce price fluctuations in the electricity market.
Reality check’s goals “incompatible” with coalition agreement
At the start of June, NGO Environmental Action Germany criticised the report for its lack of neutrality and that it could be used as a pretext to lower ambitions in the expansion of renewables.
Last month, think tank Agora Energiewende said that sticking to wind and solar expansion targets for 2030 would lead to lower electricity prices regardless of changes in demand. A report commissioned by NGO Friends of the Earth Germany (BUND) also concluded that the ambitious development of renewables would help lower electricity prices and system costs, incentivising the switch to electric appliances like heat pumps and EVs.
Nina Scheer, energy policy spokesperson for the SPD parliamentary group – one of the governing coalition parties – also counts among the critics. The statement of work for the monitoring showed “incompatibilities with the coalition agreement” wrote Scheer in a letter to the economy ministry last week. “Ultimately, the differences [in the statement of work] from the statements in the coalition agreement are so serious that I question whether and to what extent the results can be dealt with in accordance with the coalition agreement,” the letter stated.
Falling electricity demand
Germany’s electricity demand has fallen in recent years due to efficiency gains, slower electrification, and a decline in industrial production.
A report published earlier this year by consultancy McKinsey said that Germany’s future electricity demand would likely fall significantly below estimates. It suggested that expanding grids and renewables based on newer forecasts that account for Germany’s weak economic growth, the slow ramp-up of e-mobility and heat pumps, and the delayed development of electrolysis capacities for green hydrogen could slash transition investment costs. Energy companies and grid operators have come to similar conclusions.
Climate action proponents have argued that slowing the rollout of renewables due to lower electricity consumption or lagging grid expansion misses the point, because the real problem lies in the government’s failure to switch to climate-friendly technologies such as heat pumps and electric cars.
Consulting company BET is set to submit a first draft of the monitoring report this week, Frankfurter Allgemeine reported.
