Mr. Birnbaum, you have repeatedly warned that Germany is losing its industry...
… Yes, and at first I was accused of being a black person. Unfortunately, deindustrialization is a reality. Investments do not pay off enough in Germany. Companies' investments are lower than their depreciation. That means: We use up our substance.
What I actually wanted to ask: Do you also see positive signals?
I specifically see two positive points. Firstly, the federal government has put a proposal for a pension package on the table. It is a departure from the path of the past 15 years. Demographics were systematically ignored and reform after reform was made, which made pensions more unstable. Secondly, I think it's good that the government has presented a number of legislative proposals to adapt energy policy to make the energy transition more affordable. Both reforms must now be implemented in the next few months.
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Does Friedrich Merz's government still have the strength for major reforms?
Counter-question: If this government doesn't manage the reforms, then what will? I can't imagine someone coming along who would suddenly be able to do everything better. I generally remain optimistic.
There is a risk of a shift to the right in the state elections in East Germany. Is the AfD a topic when you talk to business representatives from other countries about Germany?
Surprisingly, this party hardly plays a role in the discussions. I've actually never been asked about the AfD abroad. Maybe because other countries have enough challenges of their own. In France there is Le Pen, in Great Britain there is Farage, in the USA there is Trump. On the other hand, what I am often asked internationally is: Will Germany manage to gain strength again? We are too weak. I want to be able to say abroad: I come from Germany – and I want to be envied for it again. I don't want to hear any sarcastic jokes about late trains or Berlin airport and no questions about whether the Bundeswehr is ready to defend itself.
Hybrid attacks on the power grid are a new problem. This week there were two cases of sabotage in Brandenburg and North Rhine-Westphalia. How can we address such threats?
Energy infrastructure is an interesting target because attacks on the supply directly affect companies and the population. We have to be very vigilant, the threat is real. Such attacks can never be ruled out – even with the best precautions. That's why the right answer now is not to build double or triple infrastructure, but rather less naive transparency requirements. Until now, an unnecessary amount of sensitive information about the power grid has been available to everyone online. In addition, our industry must become even better at managing crises together with government and security authorities.
The Iran war, in turn, has led to shortages of oil and gas on the global market. How critical is the supply situation?
This is regulated by the price. High prices are causing demand to fall, both for oil and gas. The markets work. But of course it hurts. First, the Asian industry will drastically reduce gas consumption, followed by the European industry. Europe will stock up on the LNG spot market, i.e. in the very short term. This will also lead to high gas prices in Germany and Europe; we may see even higher prices than currently. It's difficult to imagine why gas would become cheap in the next two years. However, I do not currently expect a physical gas shortage.
Germany is now heavily dependent on liquefied gas imports from the USA. How big is the Trump risk?
As long as Trump makes a deal with natural gas, he will deliver. But the fact that you're even asking this question shows what Trump has destroyed. He has damaged trust in the United States on virtually every dimension. Europe must do everything it can to become more independent as quickly as possible. For example, do we want our army to be dependent on Elon Musk's Starlink Internet and his whims? And we have to have a sensible energy policy. This also means: We have to become independent of oil and gas and electrify. Heat pumps instead of gas heaters, electric cars instead of gasoline and diesel.
Will Eon be able to reliably supply its customers with natural gas this winter?
Yes, our natural gas customers can rely on us. Eon has firmly met its needs in the wholesale markets. The importers with whom we have concluded contracts are obliged to deliver to us. We not only secured the necessary quantities, but also purchased them at fixed agreed prices. There will be no price increases for our customers until the end of the year.
This is the second oil and gas price shock in four years. Shouldn't the government therefore push the energy transition much more strongly?
Electrification is without a doubt the right path. But Germany underestimated how difficult it is to replace natural gas. It is primarily needed for heat generation. This is about gas boilers in apartments and buildings. The expansion of renewable energies does not automatically lead to heat generation becoming electric. The Scandinavian countries are ahead of us in the heating transition because they started earlier and relied heavily on district heating.
The federal government is putting the brakes on the heating law in particular.
I think that's a myth. The original heating law and how it was communicated caused an incredible loss of trust. That's why it had to be changed. In substance, however, the new regulation is not as completely different as it is sometimes made out to be. Installing a gas heater is no longer prohibited, but it still doesn't make economic sense. If green gas is added to natural gas in the future, as the government has now announced, then this gas will be expensive - and the electric heat pump will continue to be worthwhile.
What needs to change in the energy transition in Germany?
We need to align them more closely with reality. No one can predict the future, which is why it is important to regularly review and adjust plans instead of sticking to rigid expansion goals. I think it's good that the government is doing this now. For this purpose, she carried out monitoring. Everything currently indicates that Germany will need significantly less electricity in 2030 than expected five or six years ago. If we don't take countermeasures, we will have an oversized and therefore far too expensive electricity system. We would build too many offshore wind farms and oversized power lines.
Building power lines and substations takes time. You have to plan ahead.
And yet we can make planning more flexible. Approval procedures for the power grids should no longer take eight or nine years as they currently do, but three years or less. This applies in particular to the 110-kilovolt grid level, i.e. the regional electricity distribution networks into which the renewables feed. If we cannot react more quickly to changes, planning makes no sense.
Critics see power grid monopolists like Eon as part of the problem. What responsibility do you bear for the fact that the networks were inadequately expanded?
We presented a study in 2020 that clearly stated that we need to build more networks. At that time we were pilloried for it. Today the same people tell us: Why haven't you built more networks? In retrospect, our assumptions at the time were not too high, but far too low. We want to invest almost ten billion euros per year between 2026 and 2030. This has not happened at Eon and its predecessor companies for many decades.
Digital electricity meters are essential for a modern power grid. But only about six percent of German households in Germany have such smart meters. Eon can't do anything about that either?
The problem clearly lies in German regulation. In 2016, the Federal Network Agency found that there was no business case for smart meters. At the same time, a legal framework was created that practically said: Keep your hands off it. In Sweden, our company installed more smart meters in two years than in Germany in 15 years.
How can this be done faster than before?
I fear we have missed the moment for a simpler and cheaper roll-out. Now we have to follow through with it as it was set up. We will be equipping the customers who matter most with smart meters in the next few years.
In the Frankfurt area, data centers wait ten years or longer for a network connection. What's going wrong?
There are two big questions. First: Do we actually get the necessary power connected? Secondly: Will this service actually be used?
The data centers don't need such powerful connections as they request?
I received a call from an investor complaining that he was not getting a response to his data center application. It was about a very large connected load of 400 megawatts, which he wanted - about as much as the whole of Düsseldorf needs. I asked him how much he actually needed in the next five years. His answer was: 80 megawatts. It shouldn't be surprising that we can no longer allocate connections to large customers in many places.
Why?
Because German regulation has so far forced us to reserve capacity very early. If I promise 400 megawatts to one company, I cannot give this capacity to another at the same time - even if it is foreseeable that the first company will not initially need it. This means that everyone lays out their towel by the pool and then goes to have breakfast. We then stand there and say: There are no free loungers left, even though half of the loungers are actually unoccupied. But there is a towel on each one.
And how can the problem be solved?
Individual subsidiaries of ours, as well as other network operators, are currently piloting new network allocation procedures that are based on defined criteria. Due to the shortage, we can no longer automatically give capacity to the person who is the first to submit an application, but rather to the person who actually wants to go online with a project that is already ready for approval. This applies to data centers as well as battery storage systems and industrial companies. In any case, the fact is: we are not making any progress as before.
