WirtschaftsWoche: There’s a prize-winning documentary called Blackout that deals with our energy supply. In it, an expert compares current energy policy plans to a parachutist who begins sewing their parachute only once they’re already in the air. Is this a fitting analogy?
Markus Krebber: It’s not a fitting analogy – the situation isn’t that dramatic. Within a European context the general system is robust enough that we need not fear any fatal outcomes.
WirtschaftsWoche: It sounds fatal when the president of the BDI, Siegfried Russwurm, says that the lights of industry are going out.
Markus Krebber: If we don’t swiftly increase the energy supply in order to also lower energy prices, then a process will continue to creep ahead, as we are already observing: As industry lowers its energy demands, production decreases.
WirtschaftsWoche: That process is moving at more of a gallop, though.
Markus Krebber: It’s true, there’s currently a pronounced slump in industrial production, and there are overlapping effects: the slowdown in global economic growth, particularly in China, is hitting us particularly hard as an export nation, and high energy costs are leading to production relocations.
WirtschaftsWoche: Do you see a plan for how the energy transition could succeed?
Markus Krebber: There is a plan, but it is in part not being implemented quickly enough, and it’s too complicated. Important building blocks are missing.
WirtschaftsWoche: Bring on an industrial electricity price?
Markus Krebber: That’s a political decision. To look at the facts: We have an energy shortage, and we can only eliminate this shortage with rapid investment into the expansion of our energy supply – not by subsidising the price of electricity. Nonetheless, large sections of energy-intensive industry along with small and medium-sized businesses are of course facing real problems with the current prices. The government ultimately has to decide who to favour because, in terms of industrial policy, you do also want to keep energy-intensive production here. The important thing for me is that the solution not hinder investment into renewable energies. The market must remain amenable to long-term power purchase agreements.
WirtschaftsWoche: You had to shut down your Emsland nuclear power plant in April. We’re importing the electricity previously generated by three power plants. Does that weaken Germany?
Markus Krebber: If supply is eliminated while demands remain constant, electricity will be produced throughout Europe where it is cheapest. French nuclear power has returned after its 2022 troubles; Scandinavian hydropower is cheaper than electricity from gas-fired power plants in Germany. That’s why we are currently importing.
WirtschaftsWoche: Southern Germany in particular now lacks the capacity to generate power, though.
Markus Krebber: We switched off faster than new construction was planned – we had been pointing out the consequences of that for years. Other countries such as Japan and Korea have taken lessons from German energy transition: They build the new facilities first, and then switch the old one off.
WirtschaftsWoche: The FDP is suggesting that the nuclear power stations should be started up again.
Markus Krebber: The facilities have been shut down, the operating licences handed back. Our mandate – in accordance with the German Atomic Energy Act – is to dismantle as fast as possible, and that’s what we’re working on.
WirtschaftsWoche: That’s the official line. We’re hearing from a lot of small and medium-sized enterprises that we should correct the mistake and turn things back on – would that even be possible?
Markus Krebber: It would be false to claim that that’s technically impossible, but that doesn’t mean a step like that would make sense, or be possible quickly. Nuclear power plants can’t be switched on and off like coffee machines – especially not when dismantling is still in progress. Plant components are taken apart and pipelines severed every day. In addition to the technical challenges, there’s currently no basis for the legal, safety, and licensing aspects. That’s not simple to come up with. Even in that theoretical case, there would presumably be objections made against it for years – and how long until that’s over? Two years? Five? Ten? Who then pays the bills? RWE has no interest in investing further into nuclear power in Germany. If the government wants to, it has to come up with a concept.
WirtschaftsWoche: They’re not about to do that. How convinced are you by Berlin’s approach to the energy transition?
Markus Krebber: The bigger picture is lacking. Communication takes place on a very small scale, geared towards individual measures that have direct impacts on citizens’ everyday lives.
WirtschaftsWoche: You’re talking about the Building Energy Act?
Markus Krebber: Discussions about banning things – the impression that something is being taken away from people; their heating, or their cars – are always problematic. It’s better to provide incentives for change. We should create an appetite for new technologies. They’re coming, in things like solar roofing and batteries, but it takes time. Showing first off that the new works is better than banning the old, which stirs fear and provokes defensive reactions.
WirtschaftsWoche: Many entrepreneurs are warning that they’ll be left suffering by a push through the energy transition at any cost. Are climate protection and prosperity at odds?
Markus Krebber: I don’t see the conflict as being that, because we are obviously in need of massive investments into energy supply – and that can’t come from fossil fuels. The conflict is more about whether policymakers are over-regulating on the tiniest levels, or if they are being pragmatic in allowing for broader solutions. The central question for industry is “How do we make our products green?”
WirtschaftsWoche: Which key elements are missing?
Markus Krebber: There is a consensus on extending renewable energies and networks – which now needs to progress quickly. A government strategy on power stations is missing. That would involve the building of new hydrogen-ready, gas-fired power plants, reliable capacity when wind and solar facilities are not producing. For that we need hydrogen networks, and hydrogen which is quickly available in sufficient amounts. Green hydrogen isn’t enough to start things off with, without blue hydrogen it won’t happen. We also have to be capable of capturing, transporting and storing CO2 on a large scale.
WirtschaftsWoche: Time is running short for gas power stations – by the mid-30s, we’ll need around 40 more.
Markus Krebber: We can’t bank solely on wind and solar. If the coal phase-out is to come in 2030, then we need to have clarity immediately on the parameters for new, hydrogen-ready, gas-fired power plants. The lead times for implementation are up to six years.
WirtschaftsWoche: Who can build them?
Markus Krebber: We can, of course. There are four to six further suppliers if the parameters are right, but the process already takes quite a long time. The financing framework and tender conditions are still unclear. A simple model is required; one which can increase capacities quickly, and as cheaply as possible. Detailed, small-scale specifications should be done away with. We want to build at least three gigawatts of capacity. More, if the parameters fit.
WirtschaftsWoche: What if it takes even longer?
Markus Krebber: Tenders need to be issued at the latest in the first quarter of 2024. If gas-fired power plants aren’t built fast enough, coal will have to remain part of the system for longer.
WirtschaftsWoche: That works to your convenience: Whether it becomes gas or remains coal that’s in use – RWE earns money.
Markus Krebber: Whichever way things go, 2030 marks the end for us. If coal is required beyond that, the government will have to hold the power plants as reserves – as stipulated in the agreements of the earlier coal phase-out by 2030. That will no longer be on our account. There’ll also be no significant income being generated by those power plants in 2030, as capacity utilisation will have sunk significantly.
WirtschaftsWoche: Nonetheless, others are banking on coal – such as energy holding company EPH, owned by Czech investor Daniel Křetínsky.
Markus Krebber: There are always different opinions on the market.
WirtschaftsWoche: Your business is doing splendidly, with analysts saying “buy”, yet investors are insisting you withdraw from coal early, because stocks will otherwise remain undervalued.
Markus Krebber: Those opinions are rarely voiced any more. Last year’s annual general meeting rejected a motion to this effect by a large majority – and that was before we had reached agreement with the German government on a 2030 phase-out. Our CO2 reduction plan is in line with the 1.5-degree target. It’s important for me also to emphasise our responsibility to our employees, who for decades have been doing a good job. We stand by our responsibilities, and will not lend support to any solution that does not comply with this.
WirtschaftsWoche: The capital market is demanding “Do something! Buy back shares!”
Markus Krebber: The capital market doesn’t speak with one voice – there are different positions. Our long-term investors say: “We’re holding onto our shares over the years. Why? Because of your clear business model with attractive investments into energy transition. Please – invest your capital!” Then there are those short-term investors – predominantly hedge funds – calling for a share buyback. We listen carefully to everyone, but we have to decide what we think is right, and at this point in time that means not buying back shares.
WirtschaftsWoche: You reinvented RWE with the ‘Growing Green’ strategy. The goal: 50 gigawatts of renewables by 2030, a 50-billion-euro total investment, 15 billion of that inside Germany. You’ve been growing abroad, but in Germany – hardly at all. Why’s that?
Markus Krebber: We are making every investment possible within Germany. We’re making progress with offshore wind power: Last year, we commissioned the only German offshore wind project – the Kaskasi wind farm in the North Sea. We’re also making good progress in onshore and photovoltaic systems. We have 200 employees working in a decentralised model to develop and implement the projects. I’m certain that we will achieve our expansion target of five gigawatts in Germany by 2030. Wherever things can go faster, we’re faster: We’re building the largest batteries, and our largest electrolyser project – in Lingen, Lower Saxony, with a capacity of 300 megawatts – is progressing well.
WirtschaftsWoche: In the USA, you’ve taken over the renewables division of Con Edison. Why aren’t you buying in Germany?
Markus Krebber: We look at all portfolios that are up for sale, including in Germany. In the end, however, it’s not about increasing size, but rather about increasing value. In other words, we ask ourselves “Is this company a good fit for us? Is this acquisition more attractive, or an organic expansion?” We only buy when we are otherwise lacking something. In our USA portfolio, we only had wind power, and no photovoltaics – that’s why we bought solar power there. In Germany we have a wind power pipeline, and a solar pipeline.
WirtschaftsWoche: Why haven’t you disclosed the size of the German pipeline, as you did with the USA?
Markus Krebber: We did that in the USA because the market was interested in it as part of our acquisition. We will provide detailed information on our investment plans in Germany with our November strategy update.
WirtschaftsWoche: You invest more abroad than at home. Does RWE’s future lie outside Europe?
Markus Krebber: We feel perfectly at home in Germany and in Europe, but our line of business is full of uncertainties: Problems in supply chains, changing regulatory frameworks. We want to be broadly positioned as a company – across technologies and markets – with a robust portfolio. I don’t see anything problematic about the fact that a German company is also active abroad.
WirtschaftsWoche: The aim is for renewables to meet 80 percent of electricity demand by 2030: Can we do that?
Markus Krebber: I don’t busy myself with speculation on annual targets – it’s a waste of energy. 2030? 2031? 2032? That’s not what counts. What counts is that there is a dynamic unfolding, and things are moving forward.
WirtschaftsWoche: At “Deutschlandgeschwindigkeit“ (German speed), then. Do you see that anywhere?
Markus Krebber: Yes, in the allocation of space for offshore systems, and certainly on the planning and approval side in general. At this time though we do need to be just as prudent about grid expansion, otherwise in a few years we’ll have a lot of projects completed, but with no connections. We also have to ensure that suppliers increase their capacities, especially offshore: Foundations, turbines, ships.
WirtschaftsWoche: You spoke of the “perfect storm” in the offshore market: High interest rates, higher costs, delivery problems, first projects cancelled. Is the industry facing a looming collapse?
Markus Krebber: I’m not seeing any collapse, but massive delays could be a threat if we don’t take timely countermeasures.
WirtschaftsWoche: Are RWE projects at risk?
Markus Krebber: No, all of our announced and planned projects will be implemented as scheduled. We purchased all of the components on a long-term basis.
WirtschaftsWoche: What could possible catalysts be?
Markus Krebber: It is good that the German government is auctioning seabed areas as early as possible, this year more than seven gigawatts in the North Sea and Baltic Sea. Grid connections are important for that. If you don’t have that security, you don’t invest billions of euros into wind farms. The port infrastructure has to be expanded, and we need to consider how to turn most of the growth in future into good European jobs. There need to be incentives to build the supply chains here in Europe. Two elements can help with this: Wherever the state is involved – for example in the allocation of sea space – you should have to buy European. Not everything, not everything overnight – but at least a certain proportion. Suppliers should further be offered tax incentives to expand their capacities quickly, in the here and now.
WirtschaftsWoche: So the motto is: Buy European?
Markus Krebber: We do in part have to rely upon European products, yes. We’ll never make it by only doing that, and that isn’t the goal, but if the energy transition is to succeed everywhere, all regions must ramp up their production capacities. The Americans are promoting this with the Inflation Reduction Act – we Europeans should be making sure that something happens here in Europe. Good jobs in modern green technologies increase public acceptance of energy transition.
WirtschaftsWoche: The auction of seabed in the North Sea and Baltic Sea for a capacity of seven gigawatts caused a stir: Oil multinationals BP and Total Energies paid 12.6 billion euros. Did that surprise you?
Markus Krebber: Of course we would have liked to have been awarded the contract, and yes: The high bids surprised me. We can’t see how the projects could realistically be assumed to be built economically, but our competitors apparently see things differently. In that regard, the government and consumers can be happy: 90 percent of the proceeds are to be passed on to electricity customers in the form of relief.
WirtschaftsWoche: Let’s talk about Germany’s gaping wound: The gas supply. Is it safe for the winter?
Markus Krebber: On the storage side, we’ve done everything possible: The storage facilities are filled to capacity. On the LNG import infrastructure side the plan was to have more terminals ready in addition to the ones in Wilhelmshaven and Brunsbüttel, where ships chartered by RWE are being used. I have no knowledge of whether that will be accomplished before winter.
WirtschaftsWoche: You’re referring – in addition to the terminal in Lubmin – to the terminals in Stade, on Rügen, and the second terminal in Wilhelmshaven?
Markus Krebber: Exactly. It’s important that they’re ready on time. We have no buffers in the gas system. If there is a very cold winter, or individual supply failures, there could still be very critical situations – and then bottlenecks again, and significantly higher prices. I would therefore like to see the government continue to push ahead vigorously with the expansion of the LNG infrastructure. My current impression is that delays are looming.
Interview: Florian Güßgen, Horst von Buttler