Next week, things will get serious: by the end of the month, the energy consulting firm BET, together with the Institute of Energy Economics (EWI) at the University of Cologne, is to present an initial report on the current state of the energy transition in Germany. The report will cover the status of grid expansion, the expansion of renewable energies, digitalisation and the ramp-up of hydrogen. It will address security of supply in the country and expected electricity demand. And this much is already clear: this report, commissioned by the Ministry of Economics, is likely to have a significant influence on German energy policy in the coming years.

The CDU/CSU and SPD had already agreed on rapid monitoring of the energy transition in their coalition agreement. And the new Federal Minister for Economic Affairs and Energy, Katherina Reiche, gratefully took up this proposal: When she took over the ministry, the Brandenburg native announced a „reality check“ in the presence of her predecessor Robert Habeck in order to get the costs of the energy system under control again.

In the weeks that followed, Reiche repeatedly made it very clear where she wanted to start in order to achieve greater cost efficiency. At the BDI Business Day in June, she said that grid fees were so high because the current targets for the expansion of renewables were „completely unrealistic“ and „completely excessive“. The expansion of wind and solar power must be geared to the grid and not the other way around.

The CDU politician has identified the forecast electricity consumption as a key parameter. The reasoning is that if the forecasts are scaled back, investments in the electricity grids can also be reduced in the long term and less generation capacity will be needed. The monitoring contract awarded to BET/EWI explicitly refers to studies, some of which come from the (energy) industry, that support this thesis.

A study commissioned by the utility company EnBW and conducted by Aurora Energy Research in early April concluded that the climate-neutral restructuring of the energy system by 2045 could yield savings of up to 700 billion euros. Lowering the offshore wind expansion target from 70 to 55 gigawatts (GW) alone is expected to generate 80 billion euros, with the same amount coming from a lower target for battery storage. Reducing domestic hydrogen production and, as a result, lowering photovoltaic expansion targets by 37% to just 254 GW is expected to cut costs by as much as 100 billion euros. More hydrogen-compatible gas-fired power plants and greater use of „blue“ hydrogen – obtained from natural gas – are expected to have an effect of 40 billion.

However, Aurora analysts see the biggest cost lever, at 400 billion euros, in an adjustment of electricity forecasts. Expectations for future end-customer demand have fallen significantly since the 2023 Network Development Plan (NEP2023) was drawn up. „A reduction of 20 to 25% is in line with current studies,“ they clarify.

A study commissioned by Berlin-based transmission system operator 50Hertz and presented by E-Venture at the end of 2024 points in the same direction. Here, too, lower electricity consumption is assumed, mainly as a result of lower demand from industry and reduced electrolysis capacity. The costs for onshore power grid expansion in this study are estimated to be 20 to 23% lower than in NEP23 by 2045.

Current political plans envisage an increase in net electricity demand in Germany from 464 terawatt hours (TWh) last year to 713 TWh in 2030 and 1,100 TWh in 2045 – 2.3 times as much as today. Key drivers in the scenarios are the expansion of the hydrogen economy, data centres, e-mobility, the switch to heat pumps and, of course, the decarbonisation of industry.

The Federation of German Industries (BDI) and the Boston Consulting Group (BCG) also take a closer look at foreseeable misguided policies in the system in their 70-page report „Impulses for a more competitive energy policy“ published in March. They also consider domestic hydrogen production to be greatly overestimated. In the building sector, the assumptions regarding heat pumps and the expansion of e-mobility are probably too high for 2035. The BDI and BCG therefore estimate that electricity demand over the next ten years will be 15% lower than in the current plans.

This would mean that by 2035, 330 billion euros in system costs could be saved in the German energy supply, 215 billion of which would come from a more needs-based expansion of the electricity grids and renewable energies alone. The rest could be achieved through a mix of greater flexibility and efficiency, including increased use of gas-fired power plants. According to the study, 370 billion euros in investments could be saved over the next ten years – which could also have a positive effect on electricity prices. For industry alone, this could result in price reductions of 11 billion euros in 2035.

Before returning to federal politics, Economics Minister Reiche was herself an energy manager: she was head of the Eon subsidiary Westenergie and chaired the National Hydrogen Council. In her new role, she now appears to want to follow the proposals from the aforementioned studies in order to make the energy transition more cost-effective. At the same time, she proposed that operators of wind and solar power plants should also participate in grid expansion. „That will bring the business case down even further,“ she made clear at the BDI Business Day.

The plans for backup gas-fired power plants that have been announced so far also fit into this picture. The black-red coalition wants to issue a tender for new generation capacities with a volume of 20 GW. The previous coalition had only targeted 12.5 GW. And it is also still unclear whether the previously planned mandatory switch to hydrogen will be maintained. In Berlin, the foreseeable capping of renewable energy targets is already causing unrest.

The German Environmental Aid Association criticised the fact that the monitoring requirements for electricity demand should only analyse existing developments. How technologies such as e-mobility, data centres, storage and heat pumps, as well as the modernisation of the business location, could be further expanded, on the other hand, plays no role. Federal Managing Director Sascha Müller-Kraenner accused Reiche of having „ideological blinders“ on.

Sharp attacks are also coming from the Greens. Their chairwoman, Franziska Brantner, criticised that innovative players are being slowed down on the path to better hydrogen production or the digitalisation of the energy grid. And deputy party leader Sven Giegold, who, like Brantner, was Habeck's state secretary, sees this as a declaration of war on renewables and, through the black-red coalition, a major social conflict looming – „between the fossil fuel cartel and the federal government on the one hand, and innovative companies, civil society and us Greens on the other.“

Even within the black-red coalition, not everyone is happy with Reiche's uncompromising course in her first 80 days in office and is warning of new planning uncertainties on the investor side. In a letter to the minister this week, Nina Scheer, energy policy spokesperson for the SPD parliamentary group, made it clear that the monitoring mandate given to BET/EWI was not compatible with the coalition agreement in all respects. She said that a rapid review was desired, but that the agreement between the CDU/CSU and SPD did not indicate „a joint intention to realign energy policy“.