Will the Commission abruptly terminate financial support for renewable energy alternatives, Rogall?
Karsten Rogall, CEO of Leipzig City Utilities GmbH, has recently expressed his views on regulatory interventions in the expansion of renewable energies. While Rogall's exact statements cannot be cited without a specific source, the typical arguments aligned with perspectives like his can be summarized as follows.
Arguments For Regulatory Interventions:
- Ensuring Grid Stability and Reliability: Intermittent renewable energy sources like solar and wind require effective integration to maintain a stable electricity supply. Regulatory frameworks can help achieve this.
- Coordinated Planning and Development: Government intervention can provide a strategic approach to infrastructure development, including grid upgrades and storage solutions necessary to support renewables.
- Market Failures and Externalities: Renewables deliver public benefits such as reduced emissions. Regulation can correct market failures by promoting investments that might not be immediately profitable without subsidies or mandates.
- Consumer Protection: Regulation ensures fair pricing and prevents undue costs being passed to consumers while supporting a just energy transition.
- Meeting Climate Goals: Direct interventions align energy expansion with national and international climate targets, fostering accelerated renewable deployment.
Arguments Against Regulatory Interventions:
- Risk of Market Distortion: Excessive regulation or subsidies can distort the energy market, potentially leading to inefficiencies or blocking innovative solutions.
- High Bureaucratic Costs and Delays: Regulatory processes may slow development and increase costs due to paperwork, permitting, or inflexible rules.
- Investment Uncertainty: Frequent changes in regulation can deter investors wary of policy risk, reducing capital flow into renewable projects.
- Overdependence on Government Support: Too much reliance on regulation may inhibit competition and private sector initiative.
- Potential Misallocation of Resources: Regulators may not perfectly predict the best technologies or projects, leading to suboptimal deployment and innovation pathways.
In essence, Rogall and similar industry leaders often argue for a balanced regulatory approach: enough to provide direction, stability, and support, but not so heavy-handed as to hinder market dynamics and innovation in renewable energy expansion.
Rogall has also criticized the different regulatory frameworks for various value-added stages of the energy industry, stating a desire for equal framework conditions. He has advocated for increased investment in the expansion of power infrastructure, especially in city districts where connecting to district heating is uneconomical.
Moreover, Rogall has expressed doubts about abruptly ending renewable energy subsidies, stating that expanding renewables must orient itself to the capacity of the grids. He believes that smart grids and storage technology can mitigate the effect of overcapacity, but the current technical status is not yet sufficient to negate the fundamental problem.
The Leipzig City Administration's swift deadline of 2035-38 for the switch to hydrogen, which resulted from a request by the Greens in 2024, has also been a point of criticism for Rogall. New rules are needed for municipal heat plans to support affordable heat prices for district heating expansion.
In addition, Rogall has criticized double strategies in promoting both district heating expansion and heat pumps in the same area, requiring grid reinforcement, which is a key demand for supporting electromobility. He also criticizes the planned intervention in a functioning business model, specifically in the water industry having a total capital return of six percent on its investments, while power grids do not have the same advantage.
Lastly, Rogall has expressed that the initial state promotion of renewable energies should end after more than 20 years. The profits generated by Leipzig City Utilities GmbH are used to finance other parts of the L Group. The "champagne of the energy transition", i.e., green hydrogen, will not meet the exaggerated expectations. Most of the green hydrogen will not come from Germany due to high energy costs. The abolition of the instrument of "avoided network charges" for plants in operation by 2022 without cause is irresponsible, as it was relied upon in calculations for a power plant in Leipzig.
In areas recommending decentralized, electricity-based heat supply, heat pumps or other technologies should be state-subsidized, but double subsidies should be avoided. The federal government unilaterally cutting revenue potential in energy supply could leave municipal utilities feeling abandoned.
The Leipzig City Utilities GmbH is a part of the L Group and has diverse tasks for the city of Leipzig. The government should not promise the public that their heating costs will not rise as the path to climate neutrality costs money.
- Despite Karsten Rogall's focus on the expansion of renewable energies, he also emphasizes the importance of a balanced regulatory approach, advocating for conditions that encourage both market dynamics and innovation, while providing direction and support.
- In the case of renewable energy subsidies, Rogall has conveyed concerns about abruptly ending them, as he believes the current technological status is not advanced enough to negate the fundamental problem of overcapacity in the grid.
