E.ON head suggests Germany puts check on renewables expansion to lower costs

The head of Europe’s largest energy network operator E.ON has suggested that Germany could moderate its expansion of renewable power sources, newspaper Die Welt reported. This would help to keep system costs in check and allow for a commensurate growth of transmission and storage capacity, E.ON CEO Leonhard Birnbaum said. He told an annual shareholder conference that it would make sense “to synchronise the expansion of renewables with grid expansion and to make it contingent on that”. Birnbaum warned that the costs of the energy transition are going to be immense and that this could undermine support for the process. “If we don’t want to lose people, we need to be honest,” he argued. Adding more renewables “at random” makes no sense if their benefits are not felt by customers while costs keep increasing. If the financial risks of grid bottlenecks were put on investors instead of consumers, this would automatically lead to lower investments in new installations, he added. Decarbonisation must not be the only factor the government considers when planning the transition, he said. The government should also focus on “affordability, functionality and resilience”, he added. E.ON revealed at the conference that it had revised its own Europe-wide investments until 2028 and now planned to spend 42 billion euros on projects like grid expansion, more than twice the amount estimated three years ago, the article said. 

Birnbaum’s comments echo a similar statement from Germany’s Court of Auditors (Bundesrechnungshof) made in the previous week, which had criticised that grid expansion lags vastly behind that of renewable power sources. The court’s head, former conservative opposition party Christian Democratic Union (CDU) politician Kay Scheller, had criticised Green Party economy minister Robert Habeck’s energy plans as “detached from reality” and said they compromised energy security. The minister said he recognised the court’s opinion but did not see a need to respond.

Germany’s renewable power expansion plans stipulate a rigorous expansion of renewable power sources, after a severe slump in the previous years. The capacity of solar PV and wind power installations is expected to rise rapidly in the coming years in order to phase out fossil power plants and bring the share of renewables in the electricity system to 80 percent by 2030. A recent analysis by consultancy PwC found that increasing the pace of Germany’s energy transition could help reduce costs and bring about economic benefits more quickly than a slow transformation, news agency dpa reported in an article published by public broadcaster ARD. While investment costs initially remained high, benefits would start to materialise once the transformation is completed, which the government aims to achieve by 2045, the consultancy said. Pulling investments forward would be more than compensated for through lower energy costs in the long run, said Nicolas Deutsch of PwC Germany. “Not only climate action but also the economy will benefit from these lower costs,” Deutsch argued.