PenInfo Desk: Ambitious plans to expand Germany’s electricity grid as part of the shift toward renewable energy may cost €651 billion ($685 billion) by 2045, according to a new economic study released on Thursday.
The expansion is intended in part to facilitate moving power from northern Germany, which has abundant wind farms and other renewables, toward population and industrial centers in the south.
The study from by the Institute for Macroeconomics and Economic Research (IMK) and the University of Mannheim found that Germany will need to roughly double its annual spending on grid expansion to €34 billion.
In 2023, Germany invested about €15 billion in grid projects.
The study was funded by the Hans Böckler Foundation, which has close ties to the German trade union movement.
The expansion of the electricity grids is considered to be a crucial part of Germany’s ambitions to achieve climate neutrality by 2045.
In Germany’s electricity grids, a distinction is made between the transmission grid, which is responsible for long-distance overland transport of power, and the distribution grid, which is responsible for regional distribution to consumers.
The IMK study warned, however, that the total costs could turn out to be even higher.
Among the risk factors identified in the study were the possibilities of rising raw material prices, bottlenecks in the supply of transformers or power lines and delays in regulatory approval procedures.
While the transmission grid is around 38,000 kilometers long, the distribution grid is around 1.9 million kilometers long.
The costs for operation and expansion are passed on to all electricity consumers in the form of grid fees.
Those fees have risen in recent years, prompting discussions among politicians over possible grid subsidies to limit the damage from high energy costs for German industrial producers.
The study based its calculations on forecasts from the transmission grid operators, which estimate the costs of the current grid expansion plan at €328 billion.
The researchers then made their own calculations for the expansion costs for the distribution grid and arrived at a similar investment requirement of €323 billion.
By way of comparison, a study by the consulting firm ef.Ruhr earlier this year estimated the total costs at around €732 billion.
The new study’s authors said they now hope to look into ways in which the investments can best be financed.
Source: “dpa”, Editing by Rishan Nasrullah
Peninfo/desk/09.12.24/01.05am