Expensive shift to renewable energy: "Price reduction is crucial"
Germany's Economy and Energy Minister, Katherina Reiche, has unveiled a strategy aimed at making the country's energy transition more cost-effective and sustainable. The strategy, which Reiche calls a "reality check," focuses on improving controllability and balancing the volatility of electricity generation, particularly from renewable sources.
Reiche's strategy emphasises the need for a thorough evaluation of electricity demand, renewable energy rollout, and grid expansion to inform policy. The Minister believes that renewable energy plant operators and grid management should take on more system responsibility, ensuring that grid expansion keeps pace with renewable energy growth.
Central to Reiche's approach is a comprehensive assessment of grid expansion to address bottlenecks that have so far limited the ease with which renewable energy can be integrated and transmitted. This could potentially lead to cost and implementation inefficiencies.
The strategy also promotes better integration of renewables into the energy system, rather than purely volume-based expansion targets. Flexible gas-fired power stations are seen as crucial in securing supply when renewable generation is insufficient.
Reiche's strategy is designed to ensure that renewable energy expansion is economically viable and systemically sustainable by aligning infrastructure investment with actual needs and system capabilities. The Minister advocates for a fair distribution of responsibility in the energy transition and has committed to the 2045 climate targets.
However, the proposed changes have not been without criticism. Greenpeace has criticised Reiche's "reality check" as a delay tactic that relies on gas power plants and brakes the transformation of the energy sector. On the other hand, Robert Habeck, Reiche's predecessor, has been a driving force behind the expansion of renewable energy, particularly from wind and solar power.
The current system, which partially subsidises renewable energy regardless of whether they feed into the grid, needs to be urgently revised from an economic perspective. Thousands of new kilometers of power lines are planned to transport wind power from the north to major consumption centres in the south, but most of it is not yet finished.
Reiche's strategy also suggests that operators of renewable energy plants should take on more system responsibility, contributing to the financing of grid expansion. The Federal Network Agency is responsible for reforming network charges, and the discussion paper mentions the broadening of the financing base through the involvement of "feeders" in network costs. Currently, costs for network expansion are being shifted from electricity customers to public budgets, amounting to around 30 billion euros.
In summary, Reiche's strategy aims to maintain the expansion path of renewable energies while addressing economic concerns and system responsibility. The Minister's goal is to ensure a more cost-effective energy transition that benefits both the environment and the economy.
The Economics and Social Policy Minister's strategy emphasizes the need for a thorough evaluation of electricity demand, renewable energy rollout, and grid expansion, aiming to inform policy decisions and make the energy transition more cost-effective and sustainable. The Minister's approach promotes better politics surrounding renewables, focusing on a comprehensive assessment of grid expansion, fair distribution of responsibility in the energy transition, and the need for renewable energy plant operators and grid managers to assume more system responsibility in ensuring grid expansion keeps pace with renewable energy growth.
