Climate neutrality and energy security: Fast and massive expansion of renewable energy sources is needed

• Drive to electrify transport and heating and decarbonise industry will cause electricity needs to grow significantly by 2030
• Onshore wind energy capacity must be doubled by 2030, photovoltaic solar energy roughly quadrupled
• Wind energy expansion means sites need to be made available and public acceptance must be gained
• Great potential for rooftop PV systems

Renewable energies are a key building block not just for achieving climate targets. Russia’s invasion of Ukraine has also shown how vulnerable Germany is as a result of its dependence on fossil energy sources. The fast and massive expansion of renewables, particularly of wind and photovoltaic solar energy, is therefore not just important from a climate policy perspective but an important strategic key to securing energy supply in Germany. At the same time it is imperative to continue significantly improving energy efficiency in all sectors of the economy so that lower energy consumption reduces pressure to free up land for renewables expansion. With a view to the year 2030, a current study by KfW Research illustrates options and perspectives for shifting away from coal, oil and natural gas and making Germany’s electricity system climate neutral.

Achieving the goal of greenhouse gas neutrality depends entirely on the availability of sufficient electricity from renewables. The electrification of large parts of the transport sector and heating for buildings and industry as well the production of green hydrogen will significantly increase Germany’s electricity needs by 2030. The federal government plans to increase the share of renewables in gross electricity supply from currently 41 % to 80 % by 2030 – in less than nine years. In order to achieve this goal, onshore wind energy capacity must be doubled from today’s level and offshore wind as well as photovoltaic capacity nearly quadrupled. These figures illustrate the magnitude of the task Germany faces in expanding renewable energy. The current pace of expansion must be greatly accelerated.

Dr Fritzi Köhler-Geib, Chief Economist of KfW, commented: “Energy security and climate neutrality are two sides of the same coin. Russia’s attack on Ukraine has led to considerable risks for Germany’s energy security and to sharp rises and greater volatility in prices of fossil energy sources. That makes a systematic shift to greater investment in renewables and energy efficiency even more important – for Germany’s energy security but also as a way to overcome uncertainty-induced investor restraint.”

The key challenge for the expansion of wind energy is to make land available and gain the necessary public acceptance. In solar energy we need to develop the great untapped potential of rooftop photovoltaic power generation. Additional incentives need to be provided for homeowners to install photovoltaic systems on existing or new buildings.

Furthermore, grid development must be accelerated, European electricity trade must be expanded and the flexibilisation of electricity demand and storage expansion must be pushed forward to be able to ensure high electricity supply security even with high rates of weather-dependent renewable energy uptake.

The Focus on Economics No. 376 by KfW Research entitled “Klimaneutralität und Energiesicherheit zusammendenken: Kapazitäten Windkraft bis 2030 verdoppeln, Photovoltaik rund vervierfachen“ is available in German at www.kfw.de/fokus