Mr Krebber, RWE is the third-largest producer of green electricity in the USA. Donald Trump, who likes to crack jokes about wind turbines and is a fan of fossil fuels, has now been elected. Will Trump have a dampening effect on your business?
Investments in renewables positively impact the US economy and create jobs. This is also evident in many Republican states. I’m not concerned, and part of the reason for this is that Donald Trump has been the US president before. Renewables underwent significant expansion during his first term in office.
But not as much as under Joe Biden.
That is true, however the demand for renewables will continue to rise sharply. We are seeing strong economic growth in the USA. Furthermore, the demand for electricity is increasing enormously due to data centres and the AI boom. Tech companies want to buy green electricity. It’s not all down to politics.
So is everything just peachy with Trump?
Transfers of power bring more uncertainty, and this can be due to trade policy and consequences for supply chains. We are reining in our investments a little until there is more clarity, but this will have no impact on our existing business in the USA.
You recently announced that you will buy back shares for up to €1.5 billion, ultimately returning money to shareholders. Your justification for this is that investments in renewables are being delayed and funds are therefore not required immediately. Are these delays due to Trump’s election victory?
We are systematically pursuing our growth strategy and will continue to invest around €7 billion annually in the coming years. Nevertheless, we believe that offshore expansion in the USA could be delayed, as could the acceleration of hydrogen in Europe. We are therefore using the capital earmarked for this to buy back shares for the time being. This is favourable in view of current share prices and creates value for our shareholders.
Trump could introduce new tariffs and start trade wars. How would this affect RWE’s business in the USA?
Solar panels, batteries and wind turbine parts have complex international supply chains, which we have to reorganise in cases of doubt. However, we are already working to prevent bottlenecks at a later date in ongoing construction projects because missing parts may not make it into the country. We also started to make our supply chains more resilient some time ago. For instance, you can no longer import solar panels to the USA from China. We are now using other supply countries in Southeast Asia. Solar panels are also manufactured in the USA.
Will Trump’s intention to impose tariffs in order to bring factories and jobs back into the country work?
It will succeed to some extent, but there are considerable challenges involved. It is difficult to find qualified employees in the USA. It's no different in Germany. And tariffs won’t make things any easier. What’s more, tariffs make everything more expensive in the USA, which in turn drives up inflation.
The USA has voted. Elections are now set to take place in Germany at the end of February. Is this good timing or is it too late?
It is a good thing that fresh elections are just around the corner. German policy-makers must be able to act, not least to ensure that Germany can fulfil its role in the EU. A protracted stalemate could have undermined public confidence.
What things should the new government be quick to tackle?
Generally speaking, the energy transition needs to make better economic sense. The energy transition is the right course of action, but Germany is trying to do everything at once. We need to start by decarbonising in more cost-effective areas and then deal with more expensive tasks later on with more advanced technologies.
What are the more cost-effective areas?
This is not something a policy-maker should decide. We need to place more emphasis on the market-based system, which is CO2 emissions trading in the EU. What we don’t need is all this over-regulation.
Could you give us an example?
The government recently wanted to set a very strict deadline for new gas-fired power plants to switch to an environmentally friendly fuel, as well as to specify a very restrictive definition of when hydrogen or a battery is considered green. This does not bring about any additional reduction in CO2 emissions, as these are already enforced by emissions trading. Over-regulation makes the energy transition more expensive. There is also excessive bureaucracy, such as all the sustainability reporting. It involves a lot of working hours and achieves little. Nobody will read these reports.
How many people at RWE are involved in collecting and publishing sustainability data?
I would say around 100 – not all of them on a full-time basis. But that is still a large number considering that it is not clear what this is meant to improve.
Where does this love of detailed regulations come from?
There are two reasons, both of which I find concerning. Firstly, there is a misguided belief that we can determine exactly what should be done and how in the coming decades. However, planned economies do not work. Secondly, some policy-makers harbour a great deal of mistrust towards companies. This is different in other countries.
You bemoan over-regulation, other managers grumble over bureaucracy. But hasn’t Germany always been bureaucratic and pro-regulation?
Excessive regulation becomes a real burden when our economy is not performing so well. This is especially true when investment decisions have to be made. As a company, you have to think carefully about which country to invest in.
OK, so less regulation. Is there anything else that the new government needs to take care of?
It will certainly have to look at grid fees.
Grid fees finance the expansion and operation of the electricity grids, are part of the electricity bill for normal customers and are rising. Are there any changes you want to make to them?
The more electricity a household consumes, the more it pays in grid fees. Households with solar panels therefore pay significantly less because they supply some of their own electricity. Yet, solar panels sometimes lead to higher grid costs, for example when the sun is strong at midday and they produce more electricity than is needed. These costs are borne by those who cannot afford solar panels and thus pay the grid fees in full. This needs to change.
So, the many people who recently installed solar panels on their balconies or roofs will get less money for the electricity they feed into the grid?
No, existing contracts should not be affected – confidence protection is important. But if something is not working, you have to take countermeasures. Incentivising solar panel owners to install a battery in their cellar would be a good place to start and would prevent the grids from becoming overloaded.
The traffic light coalition wanted to subsidise the construction of gas-fired power plants to enable the country to phase out coal-fired power by 2030. The departure of the coalition could delay the tender for subsidies.
We are all aware that the tenders for new power plants need to be issued quickly so that we have a chance of completing these gas-fired power plants by 2029 or 2030. This is also reflected in the sharp fluctuations in wholesale electricity prices. We are moving ahead with the planning of these projects at full speed and can get started on them once we are acquainted with the compensation framework.
Do you believe that these tenders will be issued quickly despite the upcoming elections?
I don’t know, but this is what is urgently needed.
If the gas-fired power plants are not ready in time, will you keep your environmentally harmful lignite-fired power plants running in the Rhenish mining region?
Our plan to phase out coal by 2030 is in place. Yet the government has until 2026 to decide whether the last three gigawatts of generation capacity should be placed in reserve rather than decommissioned. However, this would be a matter for the government, not us.
You intend to invest around €55 billion in renewables, battery storage units and hydrogen-ready gas-fired power plants by 2030, of which €11 billion will be invested in Germany. Is the plan still in place, or would you rather transfer some investments from Germany to other countries?
We want to continue to carry out every project that makes economic sense. We just have our reservations about whether the acceleration of the hydrogen economy will succeed as quickly as planned.
There are plans for gas-fired power plants to be operated with environmentally friendly hydrogen. But green hydrogen is very expensive. Would it be cheaper to continue operating power plants with natural gas but to capture and store the emitted CO2?
These plants are also very expensive. Gas-fired power plants will only produce electricity for a few hours, as they are only designed to run when wind farms and solar plants do not supply enough electricity. It would therefore not be economically viable to fit gas-fired power plants with capture facilities at most locations. It is more effective to bring a decarbonised primary energy source to the power plant. And we should also use blue hydrogen in addition to green hydrogen.
Hydrogen is referred to as green hydrogen when it is produced using green electricity. It is called blue hydrogen when it comes from natural gas but the CO2 is captured and stored.
Exactly. We can’t just rely on green hydrogen to accelerate the hydrogen economy – we also have to be open to blue hydrogen. If we fail to do so, we will not have the volumes that hydrogen users need. In turn, this will result in a lack of investment in Germany’s hydrogen economy.
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