Despite all political declarations of intent on the energy transition, the construction of new wind and solar power plants remains, according to one of the leading companies in the industry, a laborious process that takes years – but not only in Germany.
“Unfortunately, the expected speed in the expansion of renewable energies does not yet match reality,” said Michael Kohn, head of global project financing at Baywa r.e.
“For solar systems, it often takes up to five years from planning to construction. Wind systems are more complex in terms of approval. It can take even longer.” However, the manager emphasized that this also applies to other countries: “Not just in Germany, but in many markets.” The Munich-based company plans and builds international wind and solar parks with 5,400 employees worldwide.
Expansion has to go faster
The federal government wants to cover 80 percent of German electricity consumption from renewable energies by 2030. There is a consensus in the industry that the expansion would have to progress more quickly in order to achieve this goal – as well as the fact that bureaucracy is one of the stumbling blocks.
The Federal Association of the Energy and Water Industry, the Association of Municipal Companies and the management consultancy Deloitte estimated in the autumn that annual investments in the energy transition would have to increase almost fivefold by 2030 compared to 2022: from 22 billion to 100 billion euros.
Aside from the capital requirement, this would also mean more work for the authorities. But according to Baywa r.e. At the current pace, it is already at the limit of capacity: “This cannot be accelerated from now on and aligned with the expansion needs, among other things because of a lack of staff in the offices that process the permits,” said Kohn.
Procedures often incalculable
In Germany, contradictions and lawsuits also made the proceedings more difficult and unpredictable in terms of time and content. Opportunities for objection and legal action are very important, but “in our opinion, they should be limited to the important areas that are worthy of protection,” said Kohn. “We see complaints from residents who have legitimate concerns, for example regarding noise and shadows cast by a wind turbine.”
These concerns would best be addressed beforehand through dialogue or as part of the approval process. “However, it is often the case that lawsuits are often filed for the sake of the lawsuit, even if there is no chance of success. A lawsuit usually means a delay of up to several years.”
The next major obstacle in many markets is the grid connection. “This often creates a bottleneck in the availability of grid connection capacity. In some cases, connection points are assigned that are far too far away from the actual project.”
Easier financing
However, according to Kohn, the financing of new green electricity systems is generally less complex in Germany than abroad: “Instead of requiring extensive external advice – including legal, tax, technical, insurance law – as is quite common in the international environment, the project appraisal takes place in Germany “As a rule, within the bank without the help of external consultants,” said the financing expert. “This shortens work packages that are very time-critical and often complex in terms of content.”
Baywa r.e. emerged from the green electricity business of the Baywa Group, which was originally active in agricultural trading, and generated sales of almost 6.5 billion euros in 2022. The parent company will publish the figures for 2023 at the end of the week. “At the moment we as an industry are dealing with very tense market parameters, still high inflation rates, high interest rates, high investment costs and one or two uncertainties in the supply chains,” said Kohn. However, banks and other investors are still willing to invest. “Overall, the industry in Germany continues to grow, and we are very confident about the future due to our well-filled project pipeline.”
