Siemens CEO expects electricity prices in Germany to increase in next years

The head of German engineering company Siemens expects power prices in the country to increase for some years, as the country undergoes a fundamental transformation of its energy system. “We come from an energy system with low investment but high operating costs,” Siemens’ CEO Roland Busch told tabloid Bild Zeitung in an interview. Investments now had to increase to turn the system around. Renewables could provide power “practically for free (…) once they have been built”, Busch said, adding that “I expect electricity prices to rise” in the interim. At the same time, the country had to invest in backup capacities “to keep the system safe” and boost its transmission grid capacities. “All this is initially making things rather expensive. We will be, and will remain, a power-import country”. Moreover, Busch said that Germany will continue to rely on fossil fuels after 2030 as “reaching the renewable power targets becomes increasingly difficult” if the buildout is not significantly accelerated. At the same time, the Siemens CEO said he is not worried about deindustrialisation tendencies in Germany, arguing that the company had just launched a one-billion euro investment programme, including in decarbonisation measures. “We believe in the innovative power of the people in our country.”

Rising power prices in Germany and many other European countries as a result of the 2022 energy crisis have been a cause for concern among industry observers. They worry that companies might reconsider investment in energy-intensive production in Germany and instead choose countries with lower energy price levels. The government is launching schemes to compensate investing companies for part of their higher costs with state support measures, for which approval by EU state aid regulators is still uncertain.