DNV’s first German Energy Transition Outlook (ETO) report forecasts that its energy mix by supply will shift dramatically. Imports, which currently make up 70% of Germany’s primary energy, will fall to 27% by 2050, making Germany much less energy import-dependent. Imported coal and oil will decline by 99% and 79%, respectively.

Moreover, by mid-century natural gas and hydrogen will be equal, with one-third of the hydrogen produced domestically, the report notes.  

As Germany is making major progress in reshaping its energy landscape, emissions are forecast to drop by 89% by 2045 and 95% by 2050 compared to 1990 levels. Although that nearly reaches the government’s net zero promises, it is still a little short, leaving policymakers with a challenge to plug the remaining gap.

The study finds that by 2050, 46% of Germany’s energy demand will be electrified – more than double today’s 19%. The electrification is driven by the declining cost of new technologies such as batteries and heat pumps and policy drivers such as carbon price. Electricity production is expected to double from today to reach 1,000 TWh by 2050 – 90% of which will be renewable.

‘Germany has long been a front runner in the energy transition and has established a national target to achieve a net zero energy economy by 2045. Our investigation finds that Germany will miss this target – but by a narrow margin. We forecast that emissions will fall by 95% by 2050,’ says Remi Eriksen, DNV Group President and Chief Executive Officer.  

‘That is a very big step towards decarbonisation and is largely facilitated by a more than doubling of electricity use across the country in the next 25 years. Overall, we forecast that Germany will achieve a very much more sustainable energy system while not sacrificing the other two corners of the energy trilemma: affordability and energy security,’ he continues.  

Underpinning this transition will be €3.3tn in energy infrastructure investment over the next 25 years, primarily split between market-exposed assets centred on renewables, hydrogen and storage; regulated assets such as electricity transmission and gas/hydrogen networks; and end-user fixed assets like new installations of heating equipment and rooftop solar PV. However, this will require long-term stable regulations, targeted subsidies and efficient de-risking measures to drive investment, DNV points out.

Claas Hülsen, DNV German ETO Project Manager says: ‘Germany is building a more sustainable energy system while maintaining a balance between affordability and energy security. The same principle applies globally: renewable electricity is expanding rapidly because it makes economic as well as environmental sense. This transition won’t be straightforward, but by building out domestic renewables, Germany can secure a cleaner and more resilient energy future.’

DNV projects that alongside renewables growth, energy efficiency improvements will be substantial. By 2050, the energy intensity of the German economy (that is, energy use per unit of GDP) will almost halve, while energy use per capita will drop by over 50%.

Crucially, energy prices will not place German industry at risk, though energy-intensive sectors will require support to adapt their business models to prioritise energy efficiency, electrification and CCS.

In the short term, these industries will also benefit from falling electricity and natural gas prices, following historic highs. 
 

Prajeev Rasiah, Executive Vice President and Regional Director, Northern Europe, Energy Systems, DNV, concludes: ‘As the largest economy in Europe, Germany’s role in the European energy transition is pivotal, and its progress and policies have a major effect across the continent. As our ETO report highlights, Germany is transforming its energy landscape by increasing renewable energy sources and phasing out nuclear and coal power. This shift will lead to cleaner, more abundant electricity powering a larger share of the economy. Additionally, Germany will enhance energy efficiency, reducing overall consumption and emissions. These combined efforts in electrification and efficiency will drive decarbonisation.’