E.ON CEO backs government's energy transition "reality check," calls for curbing renewables support

The CEO of energy company E.ON, Leonhard Birnbaum, has lauded the German government’s efforts to make cost efficiency a greater priority in its energy transition plans, arguing that the growth of new renewable power installations in the past years has led to higher costs for consumers. “Green energy itself is not expensive,” Birnbaum said in a guest article for newspaper Die Welt, adding that “it becomes expensive when this energy does not arrive at households or companies or only at disproportionate costs.”

The economy ministry's upcoming and controversial energy transition "reality check" monitoring report is set to put fresh numbers on Germany's expected power demand in future and prospectively guide updated renewable and grid expansion targets. Birnbaum said this was important for efficient and demand-focussed planning. “We need a constant reality check instead of political targets,” he argued.

The head of the company that focusses on energy distribution and retailing said Germany currently is building wind turbines and solar farms “without any plan at the expense of the public” and “at locations where nobody needs them and where the grid is already at its limit.” Birnbaum said that the “unchecked growth in the energy system” caused a situation where excessive renewable energy feed-in is throttled because there is no way to store it or transfer it to consumers. “Money is being spent on a useless support system, for example for renewables, that have long been able to support themselves,” the CEO argued.

The previous government had made fast renewables expansion a key feature of its energy and climate policy, a measure industry groups and climate action advocates regarded as long overdue to ensure the country stays on track towards its emissions reduction targets and prepares the economy for a transition towards greenhouse gas neutral production. Renewables expansion in the country only recently rebounded to levels nearing those needed for climate targets, but still fall short. To back up a renewables-based, electrified economy, the grid and other features of the energy system have to be adapted to manage intermittent renewable energy feed in, which adds system costs despite renewable electricity generation becoming significantly cheaper.

Arguing that the country could save billions of euros in system costs by putting a check on current support mechanisms, Birnbaum said that “it is right from the government to take unpopular decisions in this regard.” The monitoring report must lead to “courageous consequences,” Birnbaum said. This would mean “building energy generation and capacity and the grid only where it is really needed,” to “cut support massively, also if individual lobby groups will cry out hysterically.” Birnbaum already in the past had called for cutting support for small-scale solar PV owners, which are exempt from grid frees that E.ON uses to pay for grid operation costs. He also called “to finally tap into the vast potential of flexibility in our energy system.” 

The monitoring report was commissioned by energy minister Katherina Reiche, who was employed at an E.ON subsidiary before joining the government of her fellow conservative Christian Democrat (CDU), chancellor Friedrich Merz, in May. The report that Reiche has labelled as a “reality check” for the energy transition has been widely criticised for its possible consequence of slowing down the expansion of renewables in the country, a measure that many climate activists and industry representatives regard as running counter to reaching climate targets and preparing the economy for a transition to a fully renewables-based system. Critics especially lament a lack of transparency in the monitoring’s preparation, which could assume very slow growth of demand factors - such as electric vehicles, heat pumps, and green hydrogen production - and thus lead to a slower energy transition.