German energy transition at a crossroads, minister says

German Economy Minister Katherina Reiche on Monday urged a change of course in the country’s transition to net zero, stressing the need to bring down costs in order for the shift to be successful.

Germany’s energy transition is at a crossroads, Reiche said in Berlin while presenting a report monitoring progress on the issue.

Germany has committed to climate neutrality by 2045. But in order for the move to net zero to stay on course, efforts need to centre on reliability, supply security, affordability and cost-effectiveness, Reiche said.

Based on the report’s findings, the minister plans to implement 10 “key measures,” including systematically lowering subsidies.

While general promotion of renewables is set to continue, a fixed rate for solar power generated from new installations and fed into the grid is to be abolished under the plans, for example.

The report, commissioned by Reiche’s ministry, was compiled by two institutes to gauge expected electricity demand, the expansion of renewable energies and electricity grids. It also highlights potential areas for greater cost efficiency.

Reiche, who has been serving as economy and energy minister since May when Germany’s conservative-led government took office, has spoken out in favour of focusing energy policy on costs and supply security in light of Germany’s stuttering economy.

Her predecessor Robert Habeck, serving in the post under the previous centre-left administration, heavily promoted the expansion of renewables, primarily from wind and solar power.

However, increasing interventions have become necessary to prevent the grid from becoming overloaded – costly measures that have brought up grid fees, which in turn fuel electricity prices for consumers.

Today’s energy prices are weighing on the economy, Reiche said, declaring to better control the expansion of renewables.