“Nuclear power won’t help solve current shortages”

People are worried about the electricity supply. How bad will it get?

On 12 December, electricity prices rose sharply to over 900 euros per megawatt hour. Such price spikes indicate shortages in supply. It was a day with little sun and hardly any wind. Such dark, windless periods are normal. We need to be better prepared and expand storage and back-up power plants faster, not only grids and renewables.

Are we facing a blackout this winter?

I don’t expect any unplanned shutdowns. The grid operators have many means at their disposal to prevent a blackout. There is reserve capacity and also the option of industrial consumers taking demand off the grid to reduce electricity consumption and thus stabilise the situation.

Sweden and Norway blame Germany for the turmoil in the electricity market because we have phased out nuclear power. What do you say?

Sweden also benefits when Germany produces a lot of electricity and exports its surplus power at low prices. The nuclear phase-out was a political decision that we have implemented.

And now we have to be saved by French nuclear power?

It is true that Germany occasionally imports electricity generated by French nuclear power. The last time it was two gigawatts. But that’s normal in Europe. During the energy crisis, Germany supported France with exports.

The CDU wants to restart the three most recently shut-down reactors if it comes to power. Would that be feasible?

The time is up for these three power plants, which accounted for six percent of Germany’s electricity production. The RWE nuclear power plant in Emsland has been shut down since 15 April 2023 and is being dismantled. At present, 480 employees are still working there to take the dismantling process forward. Restarting the three plants would require lengthy approval processes, massive investments in retrofitting and building up a qualified operating team. Is this what society wants?

The CDU also wants to consider the construction of new nuclear reactors. What do you think of that?

New construction takes up to ten years or more, so nuclear power won’t help solve the current shortages. Current nuclear power projects in other countries show that they are often twice as expensive as planned, costing tens of billions. It is unclear whether new technologies such as small modular reactors (SMRs) will ever pay off. Therefore, the state would have to assume the economic risk if it wants new plants to be built.

Politicians are now betting everything on green hydrogen. Do you really believe in it? Especially since major customers like Thyssenkrupp may not materialise.

We are pushing ahead with the expansion of hydrogen, albeit a little more slowly than originally planned. The new German government must get its power plant strategy off the ground immediately so that we can start building hydrogen-capable gas-fired power plants. We want to build at least three gigawatts in North Rhine-Westphalia alone.

German minister for Economic Affairs and Climate Action Habeck only wants to tender 12.5 gigawatts and prescribe in detail when natural gas and when green hydrogen is to be used. What do we need?

Politicians should not prescribe the fuel mix, but should leave it to the market. Emissions trading is the central control instrument for climate protection and is fully sufficient for decarbonisation. The German government should tender 15 to 20 gigawatts of new power plants so that we have enough backup capacity in the future.

Is the coal phase-out in 2030 still feasible in North Rhine-Westphalia? Many experts say no.

RWE is working on the coal phase-out by 2030 that we agreed upon with the federal and state governments. However, this will only work if we receive the tender for the gas-fired power plants in 2025. In 2026, the government will review the phase-out date as required by law. It is then up to the politicians to decide whether they want our power plants to run in reserve for a further three years after 2030. After that, lignite-based electricity generation in North Rhine-Westphalia will finally come to an end.

What does that mean for RWE Power? Do you want to spin off the division, for example into a foundation?

We already regard coal and nuclear power as businesses that are being phased out. A spin-off is not planned. As the parent company, RWE is liable for all business anyway. We stand by our responsibility for our employees and the recultivation of opencast mines.

Some utilities have just raised electricity prices for consumers by 18 per cent. Where is this headed?

The goal must definitely be to limit further increases because levels are already high. On the generation side, the further expansion of renewables and the necessary introduction of a capacity market will have only a minor impact on costs. The key will be to limit the costs of grid expansion and not always plan for the maximum. We currently see that demand for electricity is not growing as strongly and quickly as expected. In that case, it may be possible to keep costs stable overall.

Is that why you are also cutting back on capital expenditure and preferring to put your money into share buybacks? That’s a little unimaginative.

We continue to invest billions in the expansion of renewables in Germany and worldwide. When some businesses develop more slowly than expected, we postpone capital expenditure somewhat. That’s not unimaginative, it’s necessary.

Or is the US hedge fund Elliott, which has taken a stake in RWE and is calling for the share buyback, behind this?

We are in regular contact with all major investors. We decided to buy back shares because of the postponed investment plans and in view of the share price.

RWE’s share price is the same as it was ten years ago, at 28 euros. Are you satisfied with that?

I am confident that the capital market will recognise that RWE is more valuable than the current price reflects.

Now you want to sell your 25.1 per cent stake in the grid operator Amprion. Has the German government already made an offer?

In view of the high capital requirements for grid expansion, we are currently examining various options and financing possibilities with regard to our stake in Amprion. This will be decided in the next few months. We do not comment on possible transactions.

What does the reelection of President Trump mean for RWE? Are you afraid that he will now put a stop to the construction of new wind farms?

I’m not worried about Trump economically. RWE is the third-largest green energy supplier in the USA, and the market is growing very dynamically. The demand for clean energy among large consumers is unabated. We have also invested in many Republican-led states, where people are also happy about good jobs.

Russia has not supplied gas to Germany for two years. How did we survive the crisis?

The shortage of gas was avoided thanks to the joint efforts of policymakers and business. We quickly built LNG terminals and procured gas from elsewhere. The storage tanks are full, so no-one needs to worry this winter. For many customers, gas prices have returned to pre-crisis levels. Nevertheless, we must continue to expand the import infrastructure. We need reserves in the system.

What will happen with Russia after a possible end to the war in Ukraine? Can the country ever be a trading partner again?

It is much too early for such considerations. Now, the first priority must be to end the war under fair conditions.

What do you expect from the new German government?

Germany must resume a leading role in Europe and offer companies and citizens reliable conditions overall. The infrastructure must be expanded and bureaucracy finally reduced. And we need more dynamism in the labour market.

What do you mean by that? Reduced citizen’s income (“Bürgergeld”)? A higher retirement age?

A four-day week over only 30 years of work will not be enough to maintain today’s standard of living. The retirement age must be aligned with demographic change. And it is important that work becomes more worthwhile again. To this end, the citizen’s income should also be reviewed.

What would be a good coalition from RWE’s point of view?

It is up to the electorate to decide on the next government. What is important is that it is capable of taking action and quickly making the switch towards structural reforms and investments.