Investors find German grid incentive reform “unsuitable” – BDEW survey
Clean Energy Wire
Investors wish for stronger incentives to modernise and expand Germany’s grids, according to a survey by the energy industry association BDEW.
Germany’s Federal Network Agency (BNetzA) is in the process of reforming its incentive regulation to transform gas and electricity grids in line with the energy transition, which defines the risk and return profile of network operators. However, BDEW found that investors, banks and rating agencies consider the conditions for providing new equity and capital unsuitable, potentially preventing the flow of billions needed to upgrade the networks.
“The Federal Network Agency must take investors' views into account,” BDEW wrote, adding that the current draft “is insufficient to cover the increasing financing requirements”.
BDEW surveyed 33 investors, including Deutsche Bank, Morgan Stanley and energy company EnBW. Two thirds said that Germany’s regulatory framework was rather or clearly unsuitable for enabling network operators to raise the required equity and capital needed to meet their increasing investment needs. Around 90 percent of those surveyed criticised the BNetzA proposal to rely solely on historical data to determine equity return rates.
Germany and Europe must upgrade, digitalise, and expand electricity grids to support the transition to a clean power system. This process requires billions, but planned investments through 2050 remain insufficient to meet the bloc's move to climate neutrality, the European Court of Auditors has said.
Gas grids, meanwhile, need to be decommissioned or repurposed as Germany nears its 2045 deadline to achieve climate neutrality. However, nearly half of the country’s local utilities are unclear what will happen to their gas network, according to a survey by VKU.
