Germany needs $325 bln of power grid investments by 2050, KfW says (updated)

Elia SA

09/07/2024 09:32

* 
      Bill for German power grids alone runs to $325 billion
    

        * 
      Banking sources are confident that money can be raised
    

        * 
      Germany competes with other centres for investment
    

  
 (Adds comments from press conference)
    By Christoph Steitz and Vera Eckert
       FRANKFURT, July 9 (Reuters) - Germany needs around 300
billion euros ($325 billion) by the middle of the century to
equip its power grids for decarbonisation, state bank KfW
 KFW.UL  said on Tuesday, adding this could not be funded by the
government alone.
    The investment highlights the growing relevance power grids
have in the government's efforts to shift towards renewables, a
process that requires new power lines as well as upgrades to
critical infrastructure.
    "The necessary expansion of renewable energies makes
suitable and flexible transmission and distribution networks
necessary and requires high investment," KfW said at a capital
markets conference at its headquarters in Frankfurt.
    "The means for that cannot come from public funds alone but
must for the larger part be mobilised via private investors or
the capital market."
    The comments came as around 180 representatives of
infrastructure and pension funds, insurers, banks and energy
companies gathered at KfW to discuss investment opportunities as
Germany pivots away from fossil fuels and towards renewables.
    The event, attended by Deutsche Bank  DBKGn.DE  CEO
Christian Sewing, Allianz  ALVG.DE  CEO Oliver Baete, Uniper
 UN0k.DE  CEO Michael Lewis and German Economy Minister Robert
Habeck, serves to gauge investor interest, KfW Chairman Stefan
Wintels said.
    Germany aims to be carbon neutral by 2045 and wants to raise
the share of green energy sources in the country's power mix to
80% by 2030, from more than half in 2023.
    "We will try and match the appetite of capital markets with
the investments on offer," Wintels said.
    Germany's overall stability, the acceptance of the energy
transition and recent legal initiatives would ensure progress,
he said.
    Deutsche Bank's Sewing said removing bureaucratic hurdles
and achieving the capital markets union in the EU were top
priorities to stimulate investments, in competition with other
regions.
    "The risk-reward game must be a fit," he said.
    Economy ministry state secretary Philipp Nimmermann said
Germany had a big advantage: reliable network plans were being
continuously reworked to give a stable framework for power, gas
and hydrogen economies up to the mid-century.
    
($1 = 0.9238 euros)

 (Reporting by Vera Eckert and Christoph Steitz; Editing by
Rachel More and Arun Koyyur)
 ((vera.eckert@thomsonreuters.com; +49 30 2201 33654;))