Risks Affecting Germany’s Electricity Grid Expansion

Germany has backed international efforts to reduce greenhouse gas emissions and decelerate climate change, yet its energy transition (Energiewende) initiative must clear a number of hurdles before substantial progress can be achieved. Germany’s energy transition includes the expansion of the country’s electricity grid and a shift from fossil fuels and nuclear power to renewable energy sources like solar and wind power. Risks that German construction companies are facing, however, are delays in the completion of projects because of lengthy planning processes, a shortage of trained professionals, and a series of lawsuits hampering progress. Furthermore, Germany struggled with electricity deficits to cover domestic demand in 2019, resulting in a relatively high power outage risk.

With the adoption of the energy transition initiative, Germany aims to raise the total share of renewable energy to 65% by 2030. Germany has also agreed to increase the share of renewable energy sources in its gross electricity consumption from roughly 38% in 2018 to 65% by 2040. The slow expansion of wind energy in Germany, however, may render this goal a challenge. A draft regulation on wind energy may slow down the spread of wind energy across the country, as it could reduce the ratio of tenders for land-based wind energy projects by 13% from 2020.

Under the energy network expansion scheme, Germany aims to build 1.800 km (1.100 mi) of additional power transmission lines and maintain, improve, and reconstruct 7.500 km (4.700 mi) of the existing electricity network. The high-voltage transmission lines “south link” and “southeast link” crossing the country to provide industry centers in the south and west with electricity will be particularly important in this context. Moreover, Germany will extend its grid across borders to further integrate its power transmission into the European electricity network.

Transborder networks are also critical for Germany to maintain a stable power supply. In summer 2019, the amount of electricity generated in Germany could not cover the domestic demand, resulting in the risk of power outages. June 2019, in particular, posed a challenge to transmission grid operators, such as Amprion, 50Hertz, and TransnetBW, as they struggled to prevent electricity shortages. One cause of this risk is the energy transition, which places a greater focus on solar and wind energy. These two renewable power sources depend on weather conditions, which is why electricity yields are difficult to predict accurately. Transregional transmission grid operators may have difficulty balancing electricity demand and supply.

Other risk factors affecting electricity companies in Germany are lengthy lawsuits and numerous construction regulations. The number of regulations for the construction sector has risen from 5,000 to 20,000 in recent years. Further complicating the situation for construction companies is the fact that the country lacks overarching construction standards because projects are regionally administered. Construction projects could benefit from improved cooperation between Germany’s states. This would accelerate the completion of electrical grids, transmission lines, and other construction. Lawsuits filed by residents and other parties against high-voltage grid projects also hinder the country’s infrastructure expansion. Federal administrative courts are managing approximately 18,000 cases against construction projects from all sectors in Germany, with tens of thousands of additional cases forthcoming in the future.

Germany’s Minister for Economic Affairs and Energy, Peter Altmaier, seeks to increase the speed of the state’s electricity grid expansion by merging the responsibilities of regional authorities and by offering landowners funds if they accelerate contract agreements with companies. Digitizing administrative tasks to a larger extent can also accelerate the planning and approval of constructions. A new law from December 2018 to expedite construction projects may also pave the way for a facilitated electricity grid extension. The regulation includes the employment of additional external project managers, the simplification of lawsuits regarding railways and highways, and the permission to replace buildings without complex planning approval procedures. Yet what may become a challenge in the future is a potential shortage of trained professionals and managers when existing managers retire in the 2020s.

In conclusion, the risks caused by personnel shortages, slow-moving lawsuits, complex regulatory measures, and a lack of transregional cooperation impede the expansion and improvement of Germany’s infrastructure. International organizations, such as the International Monetary Fund and the Organisation for Economic Co-operation and Development, as well as the French Minister of the Economy and Finance, Bruno Le Maire, have pointed out that Germany should invest more in its infrastructure. However, a lack of investment alone is not the only stumbling block for Germany’s energy transition and grid expansion.

About the Author

Yasemin Zeisl

Yasemin Zeisl is a Risk Analyst at Global Risk Intelligence. She earned her MSc in International Relations and Affairs from the London School of Economics and Political Science (LSE).

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