Germany Faces $1 Trillion Challenge to Plug Massive Power Gap

By Paul Homewood



Germany has set aside more than €260 billion ($275 billion) to deal with the immediate risks of an energy crisis triggered by Russia’s war in Ukraine, but the ultimate fix will be much costlier — if the country can pull it off at all.
The pending price tag for future-proofing the country’s energy system is projected to amount to over $1 trillion by 2030, according to BloombergNEF. The costs include investments in upgrading power grids and above all new generation to manage the phase out of nuclear and coal plants, handle increased demand from electric cars and heating systems, and meet climate commitments.
The transition will require the installation of solar panels covering the equivalent of 43 soccer fields and 1,600 heat pumps every day. It also needs 27 new onshore and four offshore wind plants to be built per week, according to a wish list presented by Chancellor Olaf Scholz during a recent visit to Volkswagen AG’s headquarters in Wolfsburg.
“This is a bold undertaking — possibly the boldest project since the reconstruction of Germany,” Vice Chancellor Robert Habeck, who oversees climate and energy policy, said earlier this month.
Around 250 gigawatts of new capacity will have to be installed by 2030 — when power demand is expected to be about a third higher than it is now — according to estimates from Germany’s network regulator and think tank Agora Energiewende.
To put the scale of the challenge in context, the required generation is enough to cover current household demand for all 448 million people in the European Union. The additions will be a mix of renewables and gas-fired plants — that might one day be converted to run on hydrogen.
It will be a long road to get there. This week, the government announced it will prepare tenders this year for gas plants that account for about a tenth of that capacity. And for renewable expansion, setting up a single wind mast can takes as long as seven years to clear Germany’s red tape.
BASF SE’s plans to cut 2,600 jobs as it faces strains from the energy crisis is a sign of the urgency. The chemical giant’s operations in Germany swung to a loss during the second half, and it’s now closing a number of energy-intensive factories, including two ammonia plants and related fertilizer facilities, resulting in 700 job cuts at its main Ludwigshafen site.


February 28, 2023 at 03:48AM

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