Germany’s climate targets ‘depend on investment in grids’

4 November 2020

A study by RWTH Aachen University and Frontier Economics has quantified the economic value of Germany’s energy networks. This is the first time such an exercise has been carried out. It suggests that restraint in grid expansion will cause long-term additional costs of up to €4.2 billion per year, and argues that politics and regulation must now set the course for growth in the networks.

The study was carried out on behalf of E.ON. If Germany wants to achieve its climate protection goals and make the energy transition a success, concludes the study, electricity distribution networks must be expanded and modernised. Without corresponding grid investments, follow-up costs of up to €4.2 billion per year up to 2050 will arise in the coming decades. 

At the same time, the risk that too much is being invested today is low. If the grid were to be developed more than necessary now, only a fraction of the additional costs that would be incurred by society in the future in the event of a lack of investment would arise.

According to the study, investments totalling over €110 billion will be required by 2050. If they are not made consistently and on a long-term basis today, they will no longer be able to handle the electricity generated from renewable energies. After all, it says, the complexity of the energy system and the number of small, decentralised plants is constantly increasing. The grids also need a strong development due to the increase of many new customer solutions like e-mobility, heat pumps or storage systems.

For network operators, the necessary investments can only be financed if the regulatory framework is adapted and investments in the grids in Germany remain attractive in a European comparison.

Thomas König, E.ON's COO Networks, commented: “The basis for successful implementation of the energy transition and for climate protection is comprehensive, high-performance energy infrastructure. Politicians and regulators must now create the right framework conditions to ensure that we in Germany remain a leader in security of supply in the future.”

E.ON says it has already connected around 800 000 renewable energy plants with a capacity of 77 gigawatt to its networks in Germany. That is around two thirds of all renewable energy plants in Germany. To ensure that decentralised green electricity continues to reach customers reliably in the future, E.ON will invest around €6.6 billion in its energy networks in Germany over the next three years.

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