German grid needs €300bn by 2050 finds KfW study

According to a forecast study on behalf of German bank KfW, additional investments of around €300 billion ($324.5 billion) will be required for the country’s grid infrastructure alone by the middle of the century.

KfW announced the figure during their first investor conference, held in cooperation with Deutsche Bank AG in Frankfurt on Monday.

According to the development bank, the funds for this cannot come from the public sector alone, but must be sourced, for the most part, from private donors or via the capital market.

Said Stefan Wintels, chief executive officer of KfW: “The German energy transition is highly attractive for international investors under reliable framework conditions. The strong interest shown in today’s conference is evidence of this.

“In order to take advantage of the opportunities offered by the ‘Investment Case Germany’, a strong capital market is needed, especially as this will play an even more important role in financing the transformation in the future. To this end, we are promoting dialogue between the financial industry, the real economy and politics, and we are advocating for investment-friendly framework conditions.”

KfW cites the expansion of renewables required for the energy transition as calling for suitable and flexible transmission and distribution networks, which then requires this significant investment.

KfW adds that, in the coming years, interesting investment opportunities will also arise in the area of hydrogen networks and storage infrastructure.

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Commented Germany’s federal minister for economic affairs and climate action, Robert Habeck: “Germany wants to be climate-neutral by 2045 and increase the proportion of electricity generated from renewable energies to 80% by 2030.

“With renewables covering more than half of the electricity supply in Germany for the first time in 2023, these binding climate targets are within reach. The next major milestone in the energy transition is the expansion of energy infrastructure.

“We have already noticeably accelerated the expansion of the grid, and the construction of the hydrogen core grid is starting. We are pursuing long-term goals and have embarked on robust paths that offer a reliable, long-term and rewarding investment field for investors.”

Added Christian Sewing, chief executive officer of Deutsche Bank AG: “The restructuring of the energy supply is one of the primary tasks that needs to be undertaken to secure the competitiveness of the German economy.

“At the same time, it is a major opportunity: Investing in affordable, reliable and sustainable sources of energy can contribute to the economic growth we urgently need in Germany.

“However, this requires both significant investments and a strong capital market to finance them. As a global bank with access to the international capital markets, we want to contribute to improving capital market structures in Germany and Europe and expanding dialogue with investors.”

The aim of the first Capital Markets Conference on Energy Transition for Germany, under the patronage of Dr Habeck, was to initiate a dialogue between institutional investors, the financial industry, energy companies and politics.

The participating companies included international infrastructure funds, pension funds and insurance companies, asset management companies, banks and companies in the energy industry.