“The energy system should not be on a knife edge”

The RWE CEO warns of the dangers of dark, cloudy days. He accuses the German government of pursuing the wrong strategy for the energy transition – and explains why no one wants to invest.

Mr Krebber, you recently issued a very urgent warning that the German power grid had reached its limits. Of all days, it happened on 6 November, when the world was looking first to Berlin for the results of the US elections and then, that evening, to the collapse of the coalition government.

Indeed. But that had nothing to do with politics and everything to do with the weather conditions. We had a dark doldrum and as a result, things got pretty tight on the German electricity market. Prices skyrocketed and the entire system was pushed to its limits.

What exactly happened on 6 November?

It was cloudy and windless, which meant that electricity production from renewables was very low. We were therefore dependent on conventional plants and on electricity imports from other countries. The shortage led to extremely high electricity prices.

Are more days like this to come?

I can't say how often that will be, but we can't rule it out. And the energy system should not be on a knife edge, because security of supply is a precious commodity.

What should the German government do to minimise such incidents?

Countries such as Poland, Belgium and the UK have established capacity markets in which power generators are paid to keep power plants available that can only be used to meet peak demand. Such an instrument is not expensive at all. But we don't have this investment framework, and that's why no one is investing in additional secured capacity. We have been waiting for a corresponding framework for years.

Germany wants to be climate-neutral by 2045. This requires a clear strategy from the German government, which has been lacking recently. What is the first thing the next government needs to tackle?

We need a different strategy for decarbonisation. We have to approach this major task in a much more economically rational way. We should start where CO2 savings are cheap. We then look at the expensive measures. The instrument for this is the trading system for CO2 emission rights. At the moment, we are trying to do too much at once and we are getting bogged down.

If we focus on the price of CO2 as a central instrument, it will of course have a huge social impact. Heating and mobility will become more expensive. These are politically sensitive issues.

That could be solved. In Europe, we currently have CO2 prices of around 75 euros. This brings the federal budget almost 20 billion euros in revenue per year. If this money is used in the form of climate money to cushion the social impact or to relieve energy-intensive industries, then it can be a success.

You have already mentioned the Power Plant Security Act. The key points should be new gas-fired power plants that can also be operated with green hydrogen. You have repeatedly criticised the lack of a meaningful vision for this strategy.

The idea was to use the Power Plant Security Act to build gas-fired power plants relatively quickly that can be converted to hydrogen. This is the right approach. However, it should be implemented as pragmatically as possible to ensure that it is as cost-effective as possible.

What does this mean?

For example, the power plants are allowed to use both hydrogen and gas. The current draft stipulates that after a certain period of time, the power stations may only run on hydrogen. If hydrogen is not available or is too expensive, the plants will come to a standstill. This makes it unnecessarily expensive and is detrimental to security of supply. It also leads to higher CO2 emissions, because instead of modern gas-fired power plants, we will then have to resort to older coal-fired power stations again.

At the time, you said that the first gas-fired power plants would have to be built by 2025 at the latest in order to achieve the climate targets and, above all, the coal phaseout in North Rhine-Westphalia by 2030. That won't happen now. Is the phaseout at risk?

We are continuing to push ahead with our projects. That means we are looking at which locations can be built on, what approvals we need, and what preliminary contracts we enter into with suppliers. That means we hope to be able to make up for some of the delay.

You want to switch RWE over to renewable energy by 2030. Nevertheless, two-thirds of the electricity produced still comes from fossil sources. Is this still achievable considering the slow expansion of renewables in Germany?

We are on the right track with our transformation. We are currently building new solar parks and wind farms with a capacity of around 12 gigawatts. That's as much as 12 large coal-fired power plants. These facilities will be connected to the grid in the next few years. This will make the electricity mix increasingly cleaner. We are continuing the trend: we have reduced our CO2 emissions by double-digit percentages year on year for two consecutive years.

We appreciate your optimism, but you wanted to invest around 55 billion in renewables by 2030, eleven billion of that in Germany. Now you are backpedalling and want to adjust the amount. Have you miscalculated?

We have made slight adjustments to two elements of our investment programme: in the US, where our offshore projects could be delayed because we are waiting for a number of permits there. And in Europe, where we are making slower progress than expected in expanding the hydrogen economy. However, I am confident that we will be able to implement our investment programme as a whole by 2030 as planned, with around eleven billion euros of investments in Germany.

The topic of hydrogen is finding more and more critics in industry: has politics set out on the wrong path here?

I am not surprised by the debate. The energy transition is a marathon, and there are easier and more difficult stages. If we look at the long-term goal, the decarbonisation of industry that cannot be electrified will not succeed without green molecules or decarbonised molecules. This means that now, after the hype, investments are also needed – and they are not coming as quickly as many had thought. But that is not unusual for new technologies.

Does this mean that the path to a hydrogen economy is still the right one?

Yes. But let's be pragmatic. Without over-regulating green hydrogen and also opening up to blue hydrogen, which is produced from natural gas using CO2 capture.

We talked about 6 November. That was also the day that Donald Trump won the US election. Trump wants to cut subsidies for green energy and stop offshore wind projects. Is the golden age over in the US?

The US market is very attractive because demand for electricity there will continue to rise significantly in the coming years. The main reason for this is the AI boom and the need for new data centres. And when I talk to customers, they only want green electricity in the long term.

The tech giants want to meet the growing demand for electricity primarily with nuclear energy. Microsoft, for example, is reactivating part of the old East Coast Three Mile Island power plant with a partner. Is this the beginning of a new mass movement?

Above all, I see a great demand for renewable electricity. Regarding nuclear energy: the question arises in all these projects as to who ultimately assumes the economic risk for the investments. The operators of the data centres will certainly not do that everywhere. In this respect, it remains to be seen which of these projects will actually come to fruition.

Demand for electricity is also increasing in Germany. And a growing number of decision-makers, including politicians, are asking themselves whether we need to return to nuclear power. What do you have to say about this as CEO of an energy company?

In this debate, we must not overlook something essential: we need a social consensus.

The majority of Germans would be in favour of it.

But it is a tight majority. A project like this would have to be supported by a much broader majority. I don't see that happening in Germany. As a company, we don't go against the social consensus.

But support is growing. In the face of a significant increase in demand for electricity, do we need a debate about whether nuclear power plants can contribute to the basic supply?

If you look at the investment cycles for new nuclear power plants, you quickly end up with 15 years or more. The construction of new hydrogen-ready gas-fired power stations, storage facilities and, above all, the expansion of renewables is significantly faster.

We still have three nuclear power plants that have recently been shut down. The suppliers of fuel rods say they can deliver within six months. Would that be an option?

That is a political decision. We need a completely new approval process for that. Furthermore, massive investments would be needed to update the facilities to the latest technical standards, and we are not talking about small sums here. Besides, there’s simply not enough staff for that.

So, the question is: if the government digs deep into its pockets, will you come on board?

I would rule out any financial risk for us.

The message has been received.

In the end, remuneration models would also be needed for this, with which the state would assume the economic risk. And when I look at it from a political point of view, I have to ask myself whether this effort is justified for three to four gigawatts. In any case, I know what decision I would come to.

Friedrich Merz, who is very much in favour of nuclear power, considers wind energy to be a transitional technology. He says that wind farms could eventually be dismantled. What do you think of that?

That's a hypothetical question for me. If fusion technology really works, then maybe we won't need wind energy in 50 years. But we have to solve today's energy problem.

What is the problem in Germany, then? Is it the lack of reforms? Is it the mentality? No matter where we look, we see a similar discussion.

I wouldn't limit it to Germany. If you look at the instruments in Europe, there is relatively little reliance on technological development and a great deal of ideological prescription. And there is a general mistrust of business and the free market economy.

For example?

Support schemes in the US are relatively simple. Anyone who produces a kilowatt hour of electricity or a kilogram of hydrogen is subsidised for the production. The market takes care of the rest. In Germany, it's different. First, we have to fill out 200-page applications and detailed business cases, which are then audited by auditors for 20 years to determine whether excess profits have to be paid. Nobody wants to invest in Germany anymore.

The USA wants to become even more pragmatic here. Elon Musk is supposed to scour the authorities for inefficiencies and smash bureaucratic structures. Would that also be an approach for Germany?

I can't judge that. But we should take a look at it in the coming months. And if it works, we can copy it.

What exactly would help?

I believe we would do ourselves a great favour in Germany and throughout the EU if we put a higher emphasis on market mechanism. Investment in clean technologies is not an ideology. It must ultimately be an economically viable business model. And it is. You just have to take out this detailed control, over-regulation and over-determination of the system. It only makes it more expensive and slower for us than it has to be.

What is your biggest concern when you look at the status of the energy transition now?

If a false narrative were to take hold. Along the lines of: the problems we have are because the energy transition isn't working and we just have to turn it back halfway. Then all our problems will be solved. That would be fundamentally wrong. No matter where we look in the world, whether it's China or the United States, investments in clean technologies are massive. This is unstoppable. That is what is in demand. And it is what is competitive. The energy transition is the right path.