Study by BCG and BDI: Energy Transition can Save Germany 300 Hundreds of Billions by 2035

Germany could save more than €300 billion by 2035 by implementing the energy transition more efficiently, without jeopardizing its climate targets. A recent analysis shows that a more cost-efficient transformation could strengthen the country's industrial base. The study “Energiewende auf Kurs bringen” (Getting the energy transition on track), which was commissioned by the Federation of German Industries (BDI) and conducted by the Boston Consulting Group (BCG), examines the energy costs of industry and identifies 20 levers for reducing these costs.

Since 2010, electricity costs in Germany have risen by 70%, and gas is five times more expensive than for international competitors. These high energy costs weaken the competitiveness of the location. It is particularly problematic that energy costs could continue to rise as a result of the energy transition. The study points out that inefficient investments, such as the planned expansion of underground cables instead of overhead lines or the early use of green hydrogen, could cause unnecessary burdens.

Better coordination and planning of the energy transition could make it 20% cheaper over the next ten years. Despite falling costs, electricity prices would not return to their pre-energy transition levels. The study proposes several measures to make the energy transition more cost-efficient.

One key proposal is to adapt infrastructure planning and align the expansion of electricity grids, renewable energies and hydrogen with actual demand. Such an adjustment could accelerate the expansion and reduce costs. In addition, electrification in areas such as transportation, industry and heating in buildings would have to be driven forward more quickly in order to make better use of existing investments. Security of supply and demand flexibility should also be increased to avoid expensive energy bottlenecks.

The study also argues for avoiding unnecessary costs, for example by not using expensive underground cables and by avoiding early reconversion of hydrogen before 2035. Further savings could be achieved through increased European cooperation and regional incentives for renewable energies and storage. At the same time, gas costs should be reduced by reviewing the green gas quota and possibly exempting the financing of seasonal gas storage.

The study also emphasizes the need to provide long-term, reliable relief for electricity-intensive sectors in order to remain competitive. The development of the hydrogen economy is seen as an important growth area for German industry. However, green hydrogen will remain more expensive than other alternatives in the long term. Therefore, the plans for the hydrogen economy should be more strongly aligned with economic realities, and cheaper alternatives such as blue hydrogen, bioenergy or CCS should be promoted.

Overall, the analysis shows that a more cost-efficient implementation of the energy transition would enable significant savings while achieving the climate targets.