What we need now

The energy transition has made great progress in recent years. But this success is fragile. Heinrich Gärtner, co-founder and CTO of GP JOULE, explains what is important now

Renewable energies are the mainstay of German electricity generation today. However, contradictory decisions have recently brought this upswing to a halt. The to-ing and fro-ing costs trust, time and money and creates uncertainty. The new federal government must therefore create a reliable framework. Climate protection is one of the most important tasks of the state.

In order to be able to invest in climate protection, companies and local authorities need reliable structures and clear expansion paths. Neither companies nor local authorities will make decisions if they don’t know what to expect.

Utilising the opportunities of the energy transition

The energy transition offers enormous economic opportunities. Energy consumers – industrial companies as well as small and medium-sized enterprises – must be enabled to utilise this potential. In addition to the expansion of local renewables, this also includes favourable local marketing. This can be achieved through reduced grid charges and regional price components in the electricity price.

We need clear signals about a steep and firmly anchored price path for CO2 in order to switch to renewable energies and phase out a climate-altering, CO2-emitting economy. Companies can and will adapt to this.

Grid expansion and promotion of regional projects

The combination of decentralised generation and use is the core of a secure energy supply. It reduces grid expansion and lowers system costs. In addition to the agreed expansion of the transmission grid, the expansion of a distribution grid designed for decentralisation is essential in order to implement the energy transition quickly and cost-effectively. At the same time, regional energy projects promote local value creation, create jobs and strengthen structurally weak rural regions.

Flexibility is crucial in order to respond to the variable generation of wind and solar power. Anyone who offers system-beneficial flexibility – via storage, electrolysis or heat pumps – must be rewarded. The important thing for this is efficiency and digitalisation of grids and integration of storage systems. This makes it possible to react to the varying power generation. A key building block for this is the design of network tariffs that properly reflect the costs incurred and that create incentives for climate-friendly energy generation and system-friendly flexibility.

Storage and sector coupling will enable us to convert the energy system entirely to renewables. A system-friendly choice of location and the operation of systems such as electrolysers, large heat pumps and battery storage systems should be incentivised.

Reliable investment incentives and security

As capital costs often have the greatest influence on the feasibility of renewable energy projects, a favourable interest rate level can be used as a major lever. Similar to the existing KfW development bank promotional loans, incentives for investments should be provided in the form of a “transformation interest rate” as a subsidised loan over 20 years, thereby significantly increasing competitiveness.

Here, in the EU and in many other countries, important steps have been taken in recent years towards a sustainable energy system. Companies, local authorities and many citizens have set out on the path to a sustainable future. They all – all of us– need to set the right course and be reliable.