Renewables alone are useless: "Reiche is right: The energy transition needs a new 'operating system'"

For Katherina Reiche, one thing is clear: the energy transition is too expensive. A "reality check" should show where savings can be made. In the expansion of renewable energies? They lower electricity prices, says one expert. However, he believes the German electricity market needs a different "operating system."

For Katherina Reiche, one thing is clear: the energy transition is too expensive. A "reality check" should show where savings can be made. In the expansion of renewable energies? That's what critics of the new Economics Minister fear after three months of the conservative-red coalition. Bernd Weber also considers Germany's path to be relatively expensive. Unlike Reiche, however, the head of the Epico think tank sees no "completely excessive" expansion targets; quite the opposite: "Renewables are inherently cheap, increase supply, and ensure that wholesale prices fall – especially for industry," he says in ntv's "Climate Lab." But he agrees with Katherina Reiche on one point: the energy transition requires a new "operating system." Germany must become more flexible and learn to consume electricity at the right time, because that saves money and avoids unnecessary grid expansion.

ntv.de: How do you assess the work of Economics Minister Katherina Reiche so far?

Bernd Weber: It's too early for an interim conclusion, but it's clear that a new balance is being sought. The focus of the energy transition is shifting toward issues of cost efficiency and security of supply. In this context, the CDU/SPD coalition has also made significant commitments regarding electricity prices in the coalition agreement...

…but not yet delivered.

It's difficult to significantly reduce electricity prices within 100 days, but it's true: The coalition agreement explicitly announced a reduction in electricity tax to the European minimum. It's not good that this has been postponed due to the budget situation.

At the same time, the federal government decided last week to abolish the gas storage levy . A new electricity levy for everyone is necessary to build the new gas-fired power plants. Doesn't that give you a headache?

You have to look at the bigger picture. I think monitoring the energy transition is the right idea and a milestone, because the path we're taking is actually relatively expensive. Moreover, electricity demand is currently lower than expected. This is also due to one-off effects like the coronavirus pandemic. However, it's legitimate to look at this and consider whether the energy transition can be implemented more cost-efficiently – for example, through structural reforms in the electricity market or the question of whether more market-oriented support for renewable energies can be allowed. One could also consider shifting the focus from rooftop PV to ground-mounted PV. Grid expansion costs are lower there. However, monitoring must not lead to the misinterpretation that electricity demand will remain so low in the medium or long term and that we can afford less of an energy transition. The opposite is true.

Electricity demand should not influence the monitoring results?

Electricity demand will rise – not only in the energy sector, but also in industry, transport, and buildings. These sectors face mammoth challenges that must be solved primarily through electrification. This will lead to a massive increase in demand. In addition, how will gross domestic product develop? The demand for data centers? These diverse factors make it challenging to predict electricity consumption up to 2030. Comparing different studies reveals a wide variance between 620 and 760 terawatt hours.

What can a "reality check" reveal if you can't accurately quantify electricity consumption?

You can prepare and consider various scenarios: Which measures can be implemented under any circumstances? What are no-regret reforms? With this approach, we can do the right thing now and adjust later.

Are you not afraid that Katherina Reiche is deliberately underestimating electricity demand in order to push down the expansion targets for renewable energies?

I'm curious how electricity demand is calculated, but it doesn't make sense to expand renewable energies more slowly. They're our electricity price brake, so to speak: They're cheap in themselves, increase supply, and ensure that wholesale prices fall – especially for industry. Industry is often already exempt from system costs, i.e., grid fees, in order to be competitive. If industrial electricity prices are to fall further, renewables must be expanded more strongly. And as I said, we also want to electrify transport and buildings. How can that work if we don't have enough renewables?

Regardless of the outcome of this monitoring with regard to grid expansion or approval procedures, the expansion targets for renewables must not be changed?

I see no urgent need for action regarding the expansion of renewable energies.

Diplomatic.

Thanks (laughs) . Even if we slow down our expansion rate, we would have to build a huge amount to achieve the 2030 targets.

This can also be corrected downwards.

You can. However, the plan is to double solar energy, double onshore wind energy, and triple offshore wind energy over the next five years. These goals won't be achieved by slowing down the pace of development, and certainly not by slowing down expansion.

But "slowing down" is what's meant when we talk about "synchronizing." The construction of a large power line takes much longer than the installation of solar panels or wind turbines. If both are to happen simultaneously, the only option is to slow down renewables.

The question underlying the monitoring is: Where is the optimum balance for an affordable energy transition between wholesale prices established on the electricity market and the costs we pay in the form of grid fees and levies for a stable electricity system? For me, "synchronization" means ideally and efficiently matching supply and demand and creating flexibility. If we shift consumption to hours when electricity is particularly cheap, the grid is relieved, and consumers pay less. The potential in this area is far from exhausted.

By charging the electric car at the right time ?

Exactly, these are things like smart charging or energy storage that supply the house while you're sitting in front of the TV in the evening. Industrial companies can also adapt production processes. This topic is far too often overlooked, even though household-related flexibility such as electric cars, wall boxes, or even heat pumps will have a capacity of 200 gigawatts by 2030. That's ten times the capacity of the gas-fired power plants currently being discussed and more than double the capacity of the controllable power plant fleet, which has a capacity of 90 gigawatts.

Katherina Reiche, however, does not speak of flexibility, but rather of "completely excessive" expansion targets for renewables.

That's a strong statement, and I can't entirely agree with it. But it does have a point: The expansion targets are incomplete because the mere expansion of renewables won't create an efficient energy system. For that, additional "hardware" such as controllable power plants and storage facilities must be installed, and our "software" for an efficient electricity market must be updated. Especially for flexibility, we need a different operating system, if you will. The potential remains untapped because smart meters and the regulatory framework are missing. The coalition agreement states that grid fees should be reduced by up to five cents – that's good, because it relieves people's burdens and helps with climate protection because operating electric cars and heat pumps becomes cheaper. But the real problem isn't addressed: The electricity grids are overloaded because supply and demand aren't matched. Our current system contradicts physics . We need to better match feed-in and demand. Grid fees are an important lever.

What would that look like?

In a study , we propose five measures, including a reform of grid fees. Electricity generation fluctuates, and so does consumption. This sometimes leads to negative electricity prices . If supply and demand are variable, grid fees must be as well—and they fall when the grid is congested and, so to speak, overheating. This signals that now is a good time to take electricity instead of feeding it into the grid! Ultimately, the world of renewables is more volatile than the world of fossil fuels. We need regional electricity price signals to bring physics and the market together.

But no electricity price zones?

Dividing electricity into price zones would be another, economically interesting, solution. However, this option is de facto off the political table . Reforming grid charges is, so to speak, Plan B. Here's the thing: Households that support flexible consumption with electric cars, home storage, and heat pumps save money. Households that don't have them also benefit, because this flexibility lowers the overall costs of electricity and the system, and additional grid expansion is avoided. This is a difficult task because it's not easy to communicate the issue. Grid charges are a complicated and difficult issue. But this reform would be extremely important as a necessary adjustment to the "operating system."

Clara Pfeffer and Christian Herrmann spoke with Bernd Weber. The conversation has been shortened and edited for clarity. You can listen to the full interview in the "Klima-Labor" podcast.