„The energy transition is not at risk“

SZ: Mr Krebber, the German coalition government has just resolved the budget crisis, but now there is a lot less money available. Is it even possible for the energy transition to succeed under those conditions?

Markus Krebber: It is a positive signal that there is a solution, that the uncertainty has been resolved and the government can get back to dealing with other issues that need to be addressed.
It is also great to see that the ramp-up of the hydrogen economy is still being supported. However, it is difficult for both domestic and commercial electricity customers that the grid fee subsidies are being discontinued because this means that the promised relief is no longer there and electricity will become more expensive for many of them. This will not put the overall energy transition at risk, though.

SZ: Nonetheless: The government now has less money left over to fund the energy transition, doesn’t it?

Markus Krebber: It will not be more expensive overall just because state funding is smaller. At the end of the day, someone will need to pay for it. In one of the models this will be the energy consumer, in the other one it will be the taxpayer. The two groups are not identical, so the political distribution process must be right, but that is not the field I work in.

SZ: But you work in the field of building hydrogen-ready gas-fired power plants to ensure future security of supply in Germany for periods when there isn’t enough sun and wind. You want financial support from the government for these plans. Is this support now at risk?

Markus Krebber: This money does not necessarily need to come from the state budget, the cost can be apportioned directly to the energy consumers either. This is how it is done in other countries.

SZ: How the funding is organised is to be set out in the coalition government’s long-awaited power plant strategy. Are you hopeful that it will be passed soon?

Markus Krebber: You always need to be hopeful in this business. I expect the concept to be published early next year. In future, most of our electricity will be generated from renewable sources, but a control reserve must always be available. This must be remunerated separately. In the UK, for example, a total of 1.5 to 2 billion Pounds Sterling are being paid for providing this capacity every year.

SZ: So this is the equivalent of around 2.3 billion euros. Without new gas-fired power plants it will not be possible to shut down the coal-fired power stations in Germany by 2030. Are the new plants being built fast enough?

Markus Krebber: We already have concrete plans in place for hydrogen-ready gas-fired power plants at several German locations. However, we can only start to build once the details are set out for remuneration and the tendering processes are complete. It will not be our fault if the plans for exiting coal are not fully implemented by 2030.

SZ: Christian Lindner, the German Finance Minister, recently declared that he has doubts that coal will be completely phased out by 2030. Are you sure that you can stick to this ambitious schedule?

Markus Krebber: The future is uncertain, which is exactly what makes life so exciting. However, I think it would be a total embarrassment if we were to give up on our plans already, six or seven years before reaching the deadline. We will successfully exit coal within the set timeframe if the right decisions are being made now.

SZ: RWE wants to invest around 55 billion euros in the expansion of renewables and gas-fired power plants by 2030, but only eleven billion of this in Germany. Why not more?

Markus Krebber: We are an international company, our key markets are North America, the UK and the EU, the main focus there being Germany. In North America, the demand for electricity is up to five times larger, but our investments there are only slightly higher than in Germany. This means that our home market is still the most relevant one for us.

SZ: It must be very annoying, then, that the expansion of renewables is making such slow progress…

Markus Krebber: That is not entirely accurate. We are making substantial progress with onshore wind and solar power. We are being granted approval for these plants far more quickly and easily. The number of permissions has risen three- to fivefold. Some aspects were simplified, the principle of giving overriding priority to the expansion of renewables, for example, has proven greatly beneficial in this context. However, there are still a couple of things where improvements need to be made. Some authorities still need more staff. And the approval processes need to be digitalised through to final approval. That would save a lot of time and money.

SZ: There are regional differences – the expansion of renewables is slower in the south of Germany...

Markus Krebber: That is true. North Rhine-Westphalia, Lower Saxony and Schleswig-Holstein are faster. If approvals were granted as quickly in every German state, we would be well on the way.

SZ: Is Bavaria particularly slow?

Markus Krebber: Bavaria is not quite yet where it could be, but things are improving here, too.

SZ: So you are asking the Bavarian Government to speed things up?

Markus Krebber: Let’s put it like this: We see some movement in Bavaria, too. However, even if we were to build everywhere we could in the state, it would not be enough. The biggest problem are the new power lines from the north to the south of Germany that have not been built yet, the expansion of the grid must be ramped up.

SZ: Another problem are the difficulties wind turbine producers find themselves in. Siemens Energy, for example, needs subsidies from the government.

Markus Krebber: The guarantees from the government ensure that Siemens Energy can continue to generate new business. That is in all our best interests, in terms of the energy transition. Siemens Energy is a very relevant company when it comes to transforming our energy system.

SZ: But this case is unbelievable, there have been crises and billions of euros in losses for years. Does that not worry you?

Markus Krebber: We are concerned more about the supplier markets overall than about individual companies. The capacities of suppliers in the renewables sector, for storage technologies and grid expansion, are not nearly sufficient in the global west. We urgently need more production facilities for solar panels, batteries, wind turbines, transformer substations, cables – almost everything. We must be careful that we do not become dependent on China, for example, in the long term.

SZ: So, it would be better to invest ten billion euros of state funding into these industries than into new production plants for microchips?

Markus Krebber: Building up a microchip industry would totally make sense. But European suppliers could be supported in other ways, without subsidies.

SZ: How?

Markus Krebber: The framework conditions could be changed. In the US, there are clear incentives for producing locally within the tender processes for renewables projects. That is an effective way for diversifying and preventing dependencies. However, there are no such stipulations in place in Europe yet.

SZ: This would mean that RWE would only be allowed to build a new solar farm in Germany if certain components are supplied by German producers – even if those are more expensive. The electricity consumers would then ultimately be paying for the difference, wouldn’t they?

Markus Krebber: Yes, that would be the price for avoiding dependencies. We can see that in the US. Solar panels there are more expensive than anywhere else in the world because of restrictive import regulations that have been put in place to incentivise local production. That makes solar power a bit more expensive there, but it also creates jobs in the country.

SZ: In Germany, electricity prices rose sharply in 2022. At the same time, RWE is making record profits. Are you profiteering from the crisis?

Markus Krebber: That’s not how I see it, RWE is not benefiting from the energy crisis. It has hit hardest in Germany, and Germany is our only market where our income has not increased. Our large profits are due to our international investments of 20 billion euros in the past three years alone. When we invest that much money in new plants, we must generate higher profits as well. Otherwise we would be in trouble with the investors.

SZ: How will the price of electricity develop over the next few years?

Markus Krebber: I think it will remain at the current level, at least if there won’t be any further geopolitical crises. But I am only talking about generation costs. The developments in terms of grid fees, taxes and surcharges will also be crucial.

SZ: Compared to other countries, electricity in Germany was already expensive before the outbreak of the war in Ukraine. Why was that the case?

Markus Krebber: The discontinuation of relatively cheap Russian gas supplies was only the last straw that made the problem worse. The root cause for our problems is that Germany did not invest enough money into the electricity supply system for many years. We have discussed exiting various fuel sources for 20 years and then followed through by shutting down all nuclear power plants in the country. The same is true for electricity generation from coal. But not enough new generation facilities were built and the grid has not been sufficiently expanded. Our country must increase the electricity supply. And Germany, with its energy-intensive industries, should have started to take action in this regard ten years ago or even earlier. We, as RWE, have always campaigned for discussing the expansion of renewables rather than discussing exiting coal. What we must learn from the mistakes of the past is that we need to build new capacities first before we can shut down existing power plants.

SZ: You are saying that Germany did not invest enough money into replacing nuclear and coal-fired power plants. But electricity customers have paid tens of billions in renewables surcharges since the year 2000. Why, still, were not enough solar and wind farms built?

Markus Krebber: Yes, quite a lot of money was spent. But a lot of it was invested at a relatively early stage when the technologies were still very new and thus also extremely expensive. However, very little was built in the past decade even though the technologies have become more mature and less expensive during that time. At least we have paid a great service to the rest of the world with our early investments.

SZ: What do you mean by that?

Markus Krebber: Because so much was built in Germany at the start, the suppliers were able to produce at a larger scale and reduce costs. We invested at a time when the industry still had a big learning curve ahead of it and everything was more expensive. Others, who started the expansion of renewables at a later stage, benefited from those investments. Germany should learn some lessons from this when it comes to building the hydrogen economy. There will still be enormous developments in electrolyser technology, so we should be measured with our investments now, in this early phase, and not get carried away.

SZ: The anger about the high energy prices is one of the reasons for the right-wing populist AfD being successful in recent elections. Evonik CEO Christian Kullmann has clearly spoken out against the party. Where do you stand on this matter?

Markus Krebber: I think the economic policy and the general party manifesto of the AfD are in no way positive. But I do not believe that companies should tell citizens which of the parties that have been approved for democratic elections they can vote for and which ones they cannot. Any appeals of this kind would not get through to AfD voters anyway. Instead, we should start to analyse more seriously the real motivations of AfD voters and their problems and offer better solutions.