Sector coupling projects threatened by regulatory strains – Bundesrat committee

Up to 100 projects in the field of sector coupling should be freed from regulatory hurdles, the economic committee of the Bundesrat, Germany's council of state governments, urged on Friday. In a statement, the committee unanimously agreed that integrating the power sector with heating, industry and transport was "indispensable" to reaching Germany's climate targets but that many projects currently risk becoming "stranded assets" when they reach the end of their operating grants. The committee recommended that the federal government creates an experimental clause, which could be used to exempt temporary and geographically limited projects from expenses such as electricity tax or grid fees, in order to make them more economically competitive.

The committee's recommendation was based on a study by the Institute for Climate Protection, Energy and Mobility (IKEM), which showed that experimental clauses could help projects and plants overcome economic challenges without establishing "a new funding regime". IKEM's Simon Schäfer-Stradowsky welcomed the committee's decision saying it would "allow projects in sector coupling to test new technologies and business models under shielded legal but also real market conditions and, above all, to introduce them to the market."

Sector coupling, the idea of running energy-intensive heating, transport and industry on renewable power instead of fossil fuels, will require the rollout of many new technologies and rules. So far, Germany’s energy transition has largely happened in the electricity sector, where the share of renewables in gross power consumption stands at 42 percent. Other areas, particularly buildings and transport, still predominantly depend on fossil fuels, and in Germany’s primary energy consumption, renewables only have a share of about 15 percent.