Parts of northern Germany produce more electricity than they consume.
(Photo: dpa)
Berlin The availability of green electricity is a decisive location factor for businesses. The north of Germany, which has a lot of wind power, is doing significantly better than the south. This is confirmed by a survey of 924 companies by employer-friendly IW Cologne, think tank Epico and the Climate Economy Foundation. The findings are part of the “Location Advantage Renewable Energy” study, which is available to Handelsblatt.
Nearly 80 percent of companies rated the prospects for a climate-neutral energy supply in northern Germany as “fairly good” or “very good,” the survey showed. In contrast, only 30% of companies said so for the southern federal states.
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The study therefore sees a clear need for action in southern Germany, noting that where renewable energy is not available, the region’s competitiveness is at risk. In the south, there is a lack of wind turbines, as well as connections to new and existing electricity and hydrogen lines, the study authors wrote.
Energy-intensive industries in southern Germany in particular have a high demand for renewable electricity for a successful transition to climate neutrality. Solar capacity alone cannot meet this demand. “The South thus relies on an ambitious effort to build more wind turbines on land, which has so far been too slow to implement. Against the backdrop of slow transmission grid expansion and higher wind turbine capacity, the North has a clear locational advantage.” The author wrote.
Bavaria especially lacks wind turbines
In order to reduce electricity prices and increase security of supply, more sustained expansion is required in all regions of Germany. Southern expansions have often failed in recent years due to insufficient space due to excessive distance regulations, lengthy permits and inconsistent standards for species conservation requirements.
Bavaria has a large amount of solar capacity so far, but the expansion of wind power has faltered.
(Photo: IMAGO/Action Pictures)
In fact, southern Germany, especially Bavaria, runs a deficit in terms of renewable energy expansion. On the other hand, in the north, the development of wind power is particularly smooth. Some of the federal states in northern Germany generate more electricity from renewable sources in their regions than the respective states themselves consume.
A high share of renewable energy in electricity generation has also been identified as a decisive factor for industrial settlements in recent years. The construction of the Tesla factory in Grünheide in Brandenburg has been cited several times as an example. The study notes that the degree to which the business model is connected to previous locations plays an important role. For example, a lack of an adequate supply of green energy “could lead to the failure of on-site climate-neutral operations or provide an incentive to relocate”.
Bavaria has been trying to expand wind power for years. While photovoltaics, hydropower and biomass are prevalent there, the expansion of wind power has faltered. Due to the backlog of power grid expansion, the north-south power transmission is far from smooth, and the situation is even more difficult. Bavaria and Baden-Württemberg therefore only benefit to a limited extent from the excess electricity in the north.
The European Commission has also been dealing with this issue for a long time and has repeatedly called for the creation of at least two electricity bidding zones in Germany. Until now, Germany has had a unified electricity bidding area. A power auction area is a geographic area where market participants can trade electricity. The larger the bidding area, the farther the electricity has to be transported before it can be used, which involves huge costs.
If Germany were divided into two bidding regions, electricity prices would be cheaper in the northern region than in the southern region, because the northern region has a surplus and the southern region has a shortage. This could spur industrial settlement in the north.
In addition to accelerating the expansion of renewable energy, the authors’ recommendations for action include establishing broad-based climate-neutral hydrogen import relationships. In addition, better opportunities must be created for small companies to directly purchase climate-neutral electricity through contracts.
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