Herr Löschel, die Bundesregierung erlaubt nun doch neue Gasheizungen, und Tage später verdoppelt sich der Erdgaspreis wegen des Irankrieges. Schlechtes Timing, oder?
If the message really is “back toward the gas” then that’s bad timing. We should continue to reduce gas consumption because of the energy transition and also because of energy security. This is particularly true when it comes to heating, where heat pumps are now often a good alternative.
How precarious is the supply situation: is gas just becoming more expensive or becoming scarce?
At the moment I see this primarily as a question of price. Winter is almost behind us, gas storage facilities are sufficient despite low levels. The problem, however, is that we have to quickly replenish them by next autumn, and that is a challenge in the current situation. And if gas prices remain high for a longer period of time, the question will arise of how to deal with them.
This text comes from the Frankfurter Allgemeine Sonntagszeitung.
What lessons should German energy policy draw from this?
We have to move away from natural gas and oil, step by step. To do this, we must firstly reduce import volumes and, secondly, distribute imports more widely to more suppliers than before. We need to improve on both points. In response to the last energy crisis, gas consumption fell in 2022 and 2023, but it has been rising again since then – also because gas prices have fallen, reducing the pressure to save gas and replace it with alternatives such as renewable energy.
We have already been at this point: four years ago, the then FDP leader Christian Lindner praised renewable energies as “freedom energies” because they made us independent of oil and gas imports.
Despite all the discussion about the costs of the energy transition: Renewable electricity can reduce dependencies, in industry, when driving with electric cars or when heating with a heat pump. Electrification won’t be the answer everywhere, but in many areas it just makes sense.
After all, gas dependence on Russia no longer exists.
Yes, with the construction of import terminals for liquefied natural gas, or LNG, we have created new options. This has massively increased the resilience of our gas supply. Now it is important to further increase diversification: We have to position ourselves more broadly when it comes to LNG imports. Most recently, new liquid gas came mainly from the USA.
Does Germany need state gas emergency supplies like it does with oil?
The question is: How do you create higher filling levels without undermining market incentives and responsibilities when filling the storage facilities? Strict fill level specifications do not achieve this. That’s why we should consider alternatives. The development of a strategic natural gas reserve could be one of these.
How do you actually heat your own home?
After the gas heater broke down, I bought a heat pump two years ago. The house is an old building, a mid-terrace house. Even without any structural work, it has worked well for two winters and was cheaper to run. But of course there are cases where the heat pump is unsuitable. You have to look carefully.
Heat pumps are expensive. A green gas heater that runs on biomethane or hydrogen could seem like a cost-effective alternative to many.
The planned relaxation of the installation requirements should first of all enable the best individual option for the new heating system. But for this to work, you have to talk very honestly about the existing options, including how they will perform in the longer term. Otherwise there is a risk that a gas heater will simply be installed again. But green gas will be in short supply and there will be great competition for use.
In principle, it is right to pay more attention to the economic efficiency and costs of the energy transition. Otherwise it will be very difficult to implement the ambitious goals. Although implementation details are still unclear, it addresses the right issues, often with strong headwinds. Your network package, for example, addresses a real problem: renewable energy expansion and network capacities often do not go well together. We therefore have to look at how the scarce resource of the networks can be used in the best possible way. And it is also right to consider how the promotion of renewable energies should continue.
Reiche says she is committed to a more market economy. Does she do that?
That is certainly the guiding principle behind the various initiatives. How well this works will be shown in the implementation. Example of security of supply: Germany needs protection for periods of calm when too little wind and solar power is generated. To this end, the federal government wants to build new gas power plants in particular. This makes sense in the short term. But in a second step, there needs to be technology competition between controllable capacities, demand flexibilities and storage systems with different operating times. Details play a big role here, and they are not yet clear.
And what about the market economy in the electricity grids?
There are a bundle of initiatives in the grids, for example on grid connections or regional management of renewable energy expansion. There is often greater reliance on administrative instruments. For example, network connections should be allocated depending on the level of maturity. That makes sense, but auctions or a market for connection capacities would probably be market-based. Another example is the so-called redispatch reservation.
This means: Operators of wind and solar parks should no longer receive compensation if their systems are temporarily shut down due to grid bottlenecks.
Exactly. At its core, it is about the regional management of investments in order to make the electricity system more efficient. The market economy solution to deal with the problem would be to allow spatially differentiated prices in Germany, even if this is politically sensitive.
But the government doesn’t want that.
There is currently a uniform electricity price zone for the whole of Germany. With a geographical division of the electricity market, the electricity prices would be different in different regions and would show whether there is a lot or little electricity available in the region. This creates the right incentives for investments and operations. Electricity prices in regions with a lot of renewable energy production will tend to be lower, creating incentives for large electricity consumers such as data centers to locate there. And when generation and consumption come closer together, it relieves the strain on the networks because less electricity has to be transported across the country.
Is the planned abolition of the guaranteed feed-in tariff for solar power from private house roofs correct?
The investment costs for PV roof systems are usually a factor of 3 higher than for large ground-mounted systems. Therefore, it makes purely economic sense to focus government support more on large systems.
If the CO2 price rises in European emissions trading, won’t fossil power plants be automatically displaced by green electricity?
This will increasingly happen. But only if we consistently stick to the CO₂ price. In the public discussion I tend to see countermovements, and that is problematic.
Chancellor Friedrich Merz recently expressed skepticism about emissions trading.
As a result, the CO2 price fell on the market, and the Chancellor made his support for market-based climate protection clear the next day. But public discussions are undermining trust in this central instrument.
A study showed last year that large electricity distribution network operators like Eon, who are monopolists in their regions, achieved high double-digit returns. Is there a need for action for the government here?
Local market power does not only exist in the electricity distribution network. The Monopolies Commission recently pointed out existing competition problems in various areas, such as district heating and charging infrastructure for electric cars. The conclusion: There can be no energy transition without competition.
So politicians have to ensure more competition?
Yes, with the integration of renewables, with reserve capacities, with digitalization. The rapid installation of millions of digital electricity meters in households, so-called smart meters, is of utmost importance for the energy transition. This should also take place in competition, but this is apparently not planned so far.
Let’s summarize: If you could wish for three things for German energy policy, what would they be?
First of all, I would like us to think through the local electricity prices without reservation, that would be a great achievement. Secondly, we should all rally more strongly than before behind the CO2 price as a key instrument for climate protection. And thirdly, I would like to see a new approach to hydrogen. There is a great need for action here, and hydrogen has no real alternatives in many areas.
