Energy transition cautions raise concerns among Ifo-Institut and energy industry due to potential risks dawning on the horizon
In a recent development, the Federal Association of Energy and Water Industry (BDEW) has expressed concerns about potential delays in network expansion due to prioritizing gas over renewables. Economy and Energy Minister Katarina Reiche, on the other hand, plans to involve renewable energy feeders in the costs of network expansion.
The Ifo Institute and energy expert Karin Pittel have cautioned against prioritizing gas over wind and solar power, as it could increase electricity prices and endanger climate goals by mid-century. The less natural gas is used in normal times, the cheaper the electricity price will be, according to Pittel.
Andreae, CEO of BDEW, warns about the consequences of another course change, stating that companies only invest sustainably when political goals are clearly defined, long-term, and backed by suitable regulatory instruments. She reiterates that 'energy transition' does not mean 'energy' and 'flip-flop'.
The expansion of natural gas capacities should not come at the expense of renewable energy expansion, according to the Ifo energy expert. Pittel criticizes that only one institute has been commissioned to recalculate the figures for the energy transition, and suggests commissioning two institutes to avoid potential bias.
A monitoring report is being prepared by the business-adjacent consulting firm BET, which could lead to a realignment of the energy transition. Results from this report are expected to be presented in September. No new facts about the expected presentation of the report or the BET firm were mentioned.
Electricity generation from natural gas is currently one of the most expensive options. In contrast, renewable energy sources such as solar and wind have near-zero fuel costs, which generally help to stabilize or reduce electricity prices over time. Large-scale deployment of renewables has been empirically shown to correlate with smaller increases or even reductions in electricity prices in some regions, as renewables reduce reliance on fossil fuels and their associated fuel costs.
From a climate perspective, prioritizing natural gas—while cleaner than coal—still leads to significant greenhouse gas emissions that challenge achieving mid-century climate targets. Renewables and battery storage, by contrast, provide zero-emission options and can reduce reliance on fossil fuels over time, thus aligning better with decarbonization goals. Keeping fossil fuel dependence, especially on gas, risks locking in emissions and infrastructure that are incompatible with aggressive climate targets by mid-century.
In summary, favoring natural gas over renewables tends to increase electricity price volatility due to fuel cost exposure and slows progress on climate goals by perpetuating fossil fuel emissions. Expanding renewables and storage reduces fuel price risks and supports a cheaper, cleaner, and more climate-aligned electricity system by mid-century.
- The Ifo Institute and energy expert Karin Pittel advise against prioritizing gas over renewable energy sources like wind and solar power, as it could endanger climate goals by mid-century and potentially increase electricity prices.
- Andreae, CEO of the Federal Association of Energy and Water Industry (BDEW), warns that companies only invest sustainably when political goals are clearly defined, long-term, and backed by suitable regulatory instruments.
- Electricity generation from renewable energy sources such as solar and wind has near-zero fuel costs, which generally help to stabilize or reduce electricity prices over time.
- From an environmental science perspective, prioritizing natural gas—while cleaner than coal—still leads to significant greenhouse gas emissions, making it challenging to achieve mid-century climate targets.
