A new study released by RWTH Aachen University and Frontier Economics quantifies the economic value of energy networks and how the modernisation of grid networks will help German to meet its 2050 climate targets.
Investments totalling over €110 billion ($129.9 billion) will be required by 2050 for the country’s grid network to be able to accommodate the required amount of distributed renewable energy for grid decarbonisation.
For German to achieve its climate protection goals and make the energy transition a success, electricity distribution networks must be expanded and modernised, according to the study.
Failure to upgrade the grid network will result in follow-up costs of up to €4.2 billion ($4.9 billion) per year up to 2050, according to the study.
At the same time, the risk that too much is being invested today is low. If the grid were to be developed more than necessary now, only a fraction of the additional costs that would be incurred by society in the future in the event of a lack of investment would arise.
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If investments in electricity grids are not made consistently and on a long-term basis today, the research shows that the grids will no longer be able to handle the electricity generated from renewable energies.
The complexity of the energy system and the number of small, decentralised plants is constantly increasing. The grids also need a strong development due to the increase of many new customer solutions like e-mobility, heat pumps or storage systems.
The report calls for the German government to enact policies that would allow the energy sector to attract more investments from both local and regional institutions.
Thomas König, E.ON’s COO Networks, said: “The basis for successful implementation of the energy transition and for climate protection is comprehensive, high-performance energy infrastructure. Politicians and regulators must now create the right framework conditions to ensure that we in Germany remain a leader in security of supply in the future.”
The release of the study comes at a time Germany utility E.ON has already connected around 800,000 renewable energy plants with a capacity of 77GW to its grid.
To ensure that decentralised green electricity continues to reach customers reliably in the future, E.ON will invest around €6.6 billion ($7.8 billion) in its energy networks in Germany over the next three years.