Hinders the Progress of Energy Transition?
In a bid to make Germany climate-neutral by 2045 while making the energy transition more affordable and efficient, Katherina Reiche, the new Economics Minister, has commissioned an interim report. The report, presented by Reiche, outlines ten key measures to achieve this ambitious goal.
One of the most significant developments in Germany's energy landscape is the doubling of the installed capacity of solar modules over the past five years, now standing at 102 gigawatts. This growth is a testament to the country's commitment to renewable energy. However, the installed capacity of wind turbines, at 66 gigawatts, also plays a crucial role in powering the nation, with approximately 60% of electricity now coming from renewable sources.
Yet, the current approach to renewable energy has reached its limits, leading to three expensive oddities, including uncontrolled expansion. Harmful incentives cause green power plants to constantly feed electricity into the grid, even when regional grids are on the verge of collapse on a sunny day. This situation, often referred to as the 'overproduction' of green energy, has led to costs of bottlenecks amounting to 2.4 billion euros last year.
To address these challenges, Reiche recommends honest demand assessment and planning realism, market- and system-friendly promotion of renewables, synchronized expansion of grids and flexibility, a technology-open capacity market starting in 2027, digitization of the power system, maintenance and expansion of liquid energy markets, systematic reduction of subsidies, promotion of research and innovation, pragmatic ramp-up of hydrogen, and establishing Carbon Capture and Utilization (CCS/CCU) as a climate protection technology.
The minister also addresses the issue of subsidies, stating that operators of renewable energy installations will have to share some of their excess profits when energy prices are high. Furthermore, she sees the need for support for large PV open-field installations but not for private solar panels on rooftops, which she believes can be profitable without state subsidies.
The steelworks in Wetzlar, the only one in Hesse, is about to close, putting 470 jobs at risk. The electric arc furnace in Wetzlar, which runs on electricity instead of coal, is no longer profitable due to high electricity prices. This situation underscores the need for a more efficient energy transition that benefits all sectors of the economy.
Alexander Kox, CEO of BET Consulting, echoes this sentiment, stating that the energy transition needs to be done 'a bit smarter.' To this end, Reiche plans to set a maximum price for the sale of electricity from large PV open-field installations, aiming to prevent the overproduction of green energy and reduce costs.
However, the transition is not without its challenges. Approximately 4.2 million people lived in households in Germany last year that couldn't pay their energy bills on time. Wind turbines are shut down in large numbers when the wind is particularly strong due to a lack of transmission lines. These issues highlight the need for a balanced approach that considers both the environmental and economic implications of the energy transition.
Compensation is due to wind park operators for shutting down wind turbines, but the electric price drops to zero, and subsidies continue to flow to green power plants. This situation underscores the need for a more market-driven approach to the energy transition, one that encourages efficiency and discourages waste.
In conclusion, the energy transition in Germany is at a critical juncture. The ambitious goal of becoming climate-neutral by 2045 requires a concerted effort from all stakeholders. By implementing the measures outlined in Reiche's interim report, Germany can chart a course towards a greener future that is both affordable and efficient.
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