Germany's energy transition has moved beyond the simple use of renewable energy sources and entered a phase that requires better coordination with grid expansion and flexibility in order to deliver on the promises of affordable, sustainable and secure energy supply. The German government is trying to find its bearings in this “new reality”. How do you successfully run an advanced industrial economy in an increasingly electrified system that depends on the weather? There would seem to be plenty of reasons to celebrate, yet past successes do not mean the country is ready for such a future, industry leaders point out.
What will the Germans bring to COP30?
German Chancellor Friedrich Merz, Development Minister Reem Alabali-Radovan and Climate Minister Carsten Schneider will take part in the annual UN climate talks (COP30) in Brazil. Germany is travelling to Belém “with an offer” on climate matters and regards climate foreign policy as a “door opener” for new strategic partnerships, as Germany's top diplomat Johann Wadephul has stressed.
Germany's energy sector is losing patience
Germany will not hold auctions for new backup gas-fired power plants before the end of the year, and it may take months before the government reaches an agreement with the European Union and finalises the relevant legislation. “Given global demand for electricity, we need to deal with this issue now rather than wait for tenders to be announced,” said Markus Becker, a representative of gas turbine manufacturer GE Vernova. The company has previously voiced concerns about Germany's “very ambitious” plans for new backup power capacity, which were first announced in early 2023. “Nobody is investing in power plants, because everyone is waiting for the investment framework to be introduced,” said Timon Gross, an expert on sustainable energy systems at the energy industry association BDEW. A capacity market is due to be introduced in 2027 to provide further support for new power plants.
Moving towards independence in raw materials
An “action plan” addressing Germany's strategic dependence on critical raw materials is expected by the end of the year. Making electric cars or wind turbines requires lithium and copper. Germany's recently appointed security council will draw up the plan, which will cover key issues such as strengthening domestic mining and the circular economy.
The cost-effectiveness of the energy transition
It is clear that, in the present circumstances, Germany's energy transition can no longer be planned in isolation. Rising energy demand, the expansion of renewable capacity, grid modernisation and flexible capacity must all be planned in step, say the main stakeholders. Germany's Ministry for Economic Affairs, in its September 10-point plan endorsed this view and is drawing up legislation and reforms for future renewable energy support schemes, grid financing mechanisms and large-scale battery connections.
Cleaner heating systems
The contentious election pledge to “scrap” Germany's so-called heating law has quietly been “forgotten”... According to media reports, the buildings and economy ministries are still “preparing amendments” to the law, which provides for a phase-out of oil and gas boilers. Officials, however, are still unable or unwilling to give any further details. The German government has commissioned an expert opinion on the implementation of the Energy Performance of Buildings Directive (EPBD) – the European law intended to improve the energy efficiency of buildings – as part of the review of the “heating law”. An update could be published within a few weeks or months.
October round-up
Citizens' initiatives are driving change
Two German citizens' groups have succeeded in “turning” their climate initiatives into regional law. The people of Hamburg approved a referendum bringing the state's climate neutrality deadline forward by five years, to 2040. The city of Berlin, meanwhile, passed a law prompted by a citizens' initiative to plant one hundred thousand trees in the capital by 2040.
Plans to phase out gas heating
Under a draft law from the economy ministry, Germany's local utilities would be able to refuse to connect customers to gas grids and to disconnect those customers whose networks the companies no longer regard as having a future. Local utilities have expressed regret that the lack of rules on the gradual decommissioning or conversion of gas grids, and on how the costs are to be shared, remain the main obstacles to planning the transition. The industry association BDEW is examining the wide-ranging draft law. “The provisions set out in the draft law are essential if the climate neutrality targets are to be met,” the association said in a statement.
Substantial support for industry
Government leaders recently met representatives of the steel industry to look for ways to help a sector that is struggling to switch to clean production while facing trade conflicts, overcapacity and international competition. After the “steel summit”, the government pledged to bring down energy prices in Germany and to secure changes to the European carbon border tariff system. Support measures had previously been promised to the car industry as well, which faces similar problems. Germany announced the introduction of an electricity price discount for industry from as early as January 2026.
The hydrogen “chicken and egg” dilemma
Germany's Federal Court of Audit has announced that, despite billions in subsidies for the sector's development, both hydrogen supply and demand will remain significantly below target by 2030. Germany has yet to resolve the hydrogen “chicken and egg” dilemma and should review its strategy to focus more on cost-effectiveness, representatives of Germany's budget watchdog stressed.
Carbon capture and storage is now permitted
The German parliament has approved a law that allows carbon to be stored beneath the seabed, permits the construction of pipelines for transporting CO₂ and effectively rules out the use of carbon capture and storage (CCS) at coal-fired power stations, while allowing it in gas infrastructure. Industry welcomed the move; environmental organisations, as usual, called for even stricter limits.