KfW Research: Half of all businesses in Germany already use electricity from renewables

• Special analysis of the KfW Climate Barometer on the occasion of the Day of Renewable Energy Sources
• Investment in the generation of electricity or heat from renewables is growing
• Green process heat and green heating for buildings still uncommon in industry

Private enterprises play an important role for the success of the energy transition because industry, commerce, trade and services account for around 42% of final energy consumption in Germany. In the lead-up to the Day of Renewable Energy Sources on 27 April, KfW Research carried out a special analysis of the KfW Climate Barometer. The analysis delivers new representative findings on investment in and use of electricity and heat from renewable energy in the domestic corporate sector. Fifty-four per cent of businesses in Germany reported that they used green electricity. They either take advantage of a corresponding electricity tariff, for example, or have set up their own supply from biomass, photovoltaic or wind power systems. By contrast, most of the heat used in the corporate sector is still based on the burning of fossil fuels. Only one in ten businesses indicated that they were using climate-friendly alternatives in this area.

According to the analysis by KfW Research, 4.3% of enterprises in Germany invested in the generation and storage of electricity or heat from renewable energy sources in 2022. That was around 160,000 enterprises. Compared with the previous year, the share of businesses adopting such measures rose by 1.6 percentage points. One of the drivers for this development was likely the strong increase in fossil fuel prices as a result of Russia's war of aggression against Ukraine, which made investments in renewables more attractive. In the manufacturing sector, that share already stands at 7% and is significantly higher than in other sectors. A disproportionately high share of larger enterprises operates in this sector, and larger businesses are more likely to invest in renewable energy generation.

A size effect is also evident in the use of both electricity and heat from renewables. Thus, 93% of large enterprises and 62% of larger SMEs – businesses with more than 50 employees and a maximum of EUR 500 million annual turnover – use electricity from renewables. Among micro-businesses that share is only 45%. A notable 37% of large enterprises are active in the generation of heat from renewables, while only 14% of larger SMEs and a mere 11% of micro-businesses are engaged in this area.

“Greater use of renewables is key to the success of the green transition in the corporate sector”,

said Dr Fritzi Köhler-Geib, Chief Economist of KfW.

“So, it is pleasing to see that businesses in Germany have expanded their investments in renewables in the past years. The use of green electricity, too, is already widespread. Half of all businesses are already active in this area.”

And yet, major challenges remain.

“There is a particular need for action in the provision of heat, which is still primarily based on fossil fuels”,

said Dr Fritzi Köhler-Geib.

“While the climate-friendly generation of building heat has strongly shaped public debate in recent years, it is now necessary to place a stronger focus on the decarbonisation of industrial process heat supply. The first thing that needs to be done here is to fully harness the existing energy efficiency potential in order to reduce the need for process heat. In addition, policy frameworks need to be put in place because many technologies for the provision of climate-friendly process heat in industry still have competitive disadvantages compared with conventional fossil alternatives.”

Besides a reliable and rising carbon price signal, further instruments are necessary for market penetration, such as those which the German Federal Government is already applying with innovation and investment promotion programmes, for example.

The current study can be downloaded from­ www.kfw.de/Focus