By Dr. Erich Merkle
For years, Germany was seen as a global pioneer in the energy transition and a driving force behind renewable energy innovation. However, recent policy decisions and strategic missteps now threaten to squander this leadership. While countries around the world are accelerating the expansion of wind and solar power, the German government—under the leadership of Minister for Economic Affairs, Katharina Reiche—is committing to a massive build-out of new gas-fired power plants. In doing so, it risks repeating the very mistakes that once sidelined Germany’s solar industry.
A Look Back: How Altmaier’s Policy Gutted the Solar Industry
Germany’s solar industry is a cautionary tale of missed opportunities. In the 2000s, the country was a global technology leader in photovoltaics. But this momentum came to a halt with Peter Altmaier’s appointment as Environment Minister in 2012. Cuts to subsidies, political instability, and a series of poor industrial policy choices led to the collapse of once-prominent solar firms like Q-Cells and Solon. Meanwhile, China strategically nurtured its solar sector and swiftly rose to global dominance. Germany, in contrast, lost its lead in just a few years—not simply due to international competition, but because of domestic policies that prioritized short-term market dynamics over long-term transformation.
The “Renaissance” of Gas: A Predictable Setback
Today, under Minister Reiche, history threatens to repeat itself. Instead of pushing forward with decisive support for wind and solar, the government is putting the brakes on renewable expansion and pivoting towards gas. At least 20 gigawatts of new gas capacity are planned—exceeding coalition agreements and notably lacking the originally intended hydrogen readiness. The official rationale? Supply security and price stability. But this approach risks locking in billions of euros in fossil infrastructure—undermining climate goals and increasing dependency on imported fuels. Experts warn: investing in gas now creates new fossil dependencies and stifles innovation in storage and grid technologies.
Electricity Demand in 2045: The Overlooked Challenge
One of the most critical—and most ignored—issues is the projected electricity demand for 2045. While independent institutes such as Fraunhofer ISE and Agora Energiewende estimate that electrification of transport, heating, and industry will push demand above 1,200 terawatt-hours, the Federal Ministry for Economic Affairs has outsourced its demand forecast to the Institute of Energy Economics at the University of Cologne (EWI)—an institute with historical ties to the fossil fuel industry. Even more concerning is the Ministry’s directive that EWI should consider only current consumer demand, excluding foreseeable increases from heat pumps, electric mobility, and data centers. This artificially underestimates future electricity needs by up to 45%, and downplays the actual expansion requirements for renewables. The result is not only scientifically questionable but also jeopardizes energy security and Germany’s industrial competitiveness.
Battery Storage: The Undervalued Key Technology
While gas dominates political discourse, a cornerstone technology of the energy transition—battery storage—is being overlooked. Yet storage is critical to balancing weather-related fluctuations in wind and solar generation, ensuring grid stability, and enabling higher renewable integration. Batteries allow for time-shifting energy use, provide ancillary services, and increase self-consumption efficiency. Market studies show that large-scale storage is already economically viable, with payback periods steadily declining. Still, targeted support and market frameworks are largely missing.
Lessons from History: The Risk of Misguided Forecasts
History shows how dangerous it can be to rely on short-sighted trends and misguided expert opinions. In strategic forecasting, I often cite famous misjudgments: In 1876, Western Union declared the telephone unsuitable as a communication tool. IBM’s Thomas J. Watson predicted in 1943 a global market for perhaps five computers. In the 1930s, GM’s Alfred P. Sloan was convinced car demand would soon be saturated. Time Magazine in 1966 claimed online shopping would never work. In 1932, Albert Einstein believed nuclear energy would never be viable. And in 2007, Microsoft’s Steve Ballmer said the iPhone would never gain significant market share. If policymakers and business leaders had followed these predictions, many of today’s greatest innovations would never have happened.
Energy Policy at a Crossroads
Germany stands at a pivotal juncture. Current energy policy risks repeating the failures of the past—threatening competitiveness, supply security, and climate targets. The future demands courage, innovation, and honest, science-based planning. Or, as Molière once put it:
“We are not only responsible for what we do, but also for what we fail to do.”
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