Renewable Firms Rush to Secure German Projects as Mood Shifts

Mint

2 days ago

(Bloomberg) -- Developers of renewable energy are rushing to lock in German projects as Berlin's tone on the green transition shifts, sparking worries that strong government support may start to dwindle.
High participation at two recent clean energy auctions shows that demand for such projects remains strong, the Federal Network Agency said Thursday. Yet analysts see the rush as a sign that companies are heeding the messages of conservative Chancellor Friedrich Merz's new government, which wants to put the brakes on the country's rapid renewable expansion.
'Many developers are rushing into the auctions now because they are aware of the existing conditions and the risk that these could worsen in the future,' according to Casimir Lorenz, managing director for Central Europe at think tank Aurora Energy Research.
Germany boosted support for the green shift in the aftermath of the energy crisis sparked by Russia's war on Ukraine, in part by streamlining planning and permitting processes. But the rapid addition of new capacities has added pressure for expensive grid expansions and upgrades, with the new government looking to cut down on such costs for consumers.
The auction results show that the past measures 'are having their full effect,' said Bärbel Heidebroek, president of the German Wind Energy Association. She urged the new government to maintain the course, with current discussions 'damaging an industry that is on course for success.'
Economy minister Katherina Reiche, who is also in charge of the country's energy policy, said at a recent industry gathering that the rapid renewables expansion has led to massive grid growth and associated charges. She argued that renewables must develop more in line with the grid's needs — a view that has also gained traction in neighboring France — and expressed her intention to 'weaken the business case' of renewables.
In line with that, Germany's energy regulator recently proposed making renewable generators contribute financially for getting hooked up to the grid.
The debate about the role of clean energy will be guided by a study Berlin has commissioned on how much electricity demand Germany is likely to see in the coming years. A sluggish roll-out of electric vehicles, heat pumps and weak industrial demand have raised doubts that the country's current plan to double solar and wind capacity by 2030 is actually necessary.
The economy ministry selected the groups in charge of this examination at the end of June and has asked them to limit their analysis to existing scientific findings and studies in light of a short deadline, the ministry said in response to emailed questions. It added that cost efficiency should be one of the study's key priorities.
'The given conditions make it difficult to obtain reliable results,' said Simone Peter, president of the German Renewable Energy Federation.
The study's conclusions on future power demand are likely to serve as a universal reference for renewable developers and energy strategy.
To Claudia Kemfert, who leads the energy, transport, and environment department of the German Institute for Economic Research, this and other signals 'indicate a shift in priorities' – away from the accelerated energy transition toward a more fossil-friendly approach, even though the government has committed to keeping the goal of climate neutrality by 2045.
'The currently high participation rates could also reflect a kind of 'gate-closing panic,'' she said of the recent clean energy auctions. 'The new political framework will significantly complicate or slow down the expansion of renewable energies.'
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