Germany is projected to be on track to achieve its national target to reduce greenhouse gas emissions by 65 per cent by 2030. According to the German Environment Agency or Umweltbundesamt (UBA), this is conditional on the implementation of climate policies including the rapid expansion of renewable energy sources (RES) capacity, the phase-out of fossil fuels and the switch to clean technologies across sectors. In the electricity sector, the objective is to achieve 80 per cent of the demand from RES by 2030 and ensure that the electricity sector becomes climate-neutral after the completion of the coal phase-out, which is legally set for 2038. In the long run, Germany aims to achieve complete climate neutrality by 2045 with a target of 400 GW of solar photovoltaics (PV), 160 GW of onshore wind and 70 GW of offshore wind (OSW) energy by 2045.

The RES targets can only be met with OSW infrastructure expansion, proper grid systems, defined routes and transmission lines. To facilitate this, in March 2024, Germany’s Federal Network Agency or Bundesnetzagentur (BNetzA) released its Netzentwicklungsplan (NEP) or network development plan, covering the period from 2023 to 2037 as well as up to 2045, detailing a robust strategy and outlining measures to connect OSW capacity to the onshore transmission system seamlessly. This is the first NDP that presents the electricity network the country needs to complete the energy transition.

The first draft of the NEP 2023-2037/2045 was published by the four German transmission system operators (TSOs)—50Hertz Transmission GmbH (50Hertz), Amprion GmbH, TenneT TSO GmbH and TransnetBW GmbH—on March 24, 2023 and put out for consultation. BNetzA received the second draft, which they subsequently revised, on June 12, 2023. The preliminary test results for the NEP 2023-2037/2045 were displayed from September 8, 2023, to October 20, 2023. BNetzA allowed the TSOs to comment by February 28, 2024, and the statements of the TSOs were taken into consideration in the final confirmation.

Following the NEP published in March 2024, BNetzA released the environmental report for the Bundesbedarfsplan or federal requirements plan in May 2024. The environmental report, together with the confirmed NEP, provides the basis for drafting a federal requirements plan, which is subsequently submitted by BNetzA to Bundestag (Parliament), which adopts it in the Bundesbedarfsplangesetz (BBPlG) or the Federal Requirement Plan Act. This legally establishes the necessity of all projects in the plan.

Through the NEP, BNetzA confirmed the need for an additional 4,800 km of network expansion for inclusion in the federal requirements plan. The environmental report contains 185 measures (including 74 new-build measures), comprising 143 overhead lines (OHLs), 15 underground cables (UGCs) and 27 submarine/UGC measures. Based on its assessment, BNetzA expects high or very high environmental impacts for around a third of the projects, particularly longer UGC projects and the OSW connections in the North and Baltic Seas. BNetzA also released a report which suggested that up to EUR35 billion could be saved if OHLs were installed instead of UGCs for grid expansion up to 2045. Currently, the government is preparing a 12-point plan to reduce grid expansion costs to submit to the parliament. Greater clarity is expected over the coming year.

Notably, after several years of lagging, the expansion of power transmission lines in Germany has picked up pace, a trend that is expected to continue in the coming years, backed by a series of new legislations passed in 2022 to simplify and speed up the planning and approval procedures of BNetzA. The planning process is expected to be shortened by around one year with the designation of new preference areas in place of the federal sector planning procedures. This will ensure the timely development of the required infrastructure to accommodate the accelerated RES growth.

Scenarios

The NEP takes into consideration six scenarios, three of which describe development paths up to 2037 or, for the first time, up to 2045 with complete climate neutrality. The increased RES expansion targets are reflected in all scenarios. Scenario A is about decarbonisation through a higher share of hydrogen, Scenario B considers decarbonisation through intensive electrification, whereas Scenario C reflects decarbonisation despite lower efficiency. Due to the increasing electrification of the building, transport and industrial sectors, the total gross power consumption is expected to increase from about 650-700 TWh in the previous plan (NEP 2035) to 899-1,053 TWh in NEP 2037. Compared to the last NEP, this corresponds to an increase of around 40 to 44 per cent. After 2037, the gross power consumption is projected to increase further to 1,079–1,303 TWh in 2045 depending on the three scenarios (Scenario A, B and C 2045). To cover this additional demand, the RES installed capacity will have to be expanded to 638-703 GW. This corresponds to a fourfold increase in RES installed capacity by 2045 compared to around 170 GW of capacity by the end of 2023.

To accommodate the shift in the generation mix and to address the expected increase in consumption, the NEP encompasses 12,700 km of lines as against the 13,650 km submitted by the four TSOs in the draft. Of this approved length, 6,600 km will be new alternating current (AC)/direct current (DC) lines, 500 km will be DC interconnectors, and 5,600 km will be for AC grid reinforcement. BNetzA underscores the need for 35 additional projects in the North and Baltic Seas to accomplish this goal. Once completed, these lines are anticipated to link up to 70 GW of OSW power to the mainland.

In line with the new planning procedures, BNetzA, for the first time, has also defined seven preferential areas for the large UGC projects, namely NordOstLink (DC31/DC32), Rhein-Main-Link (DC34, DC35, NOR-x-8 and NOR-x-4), NordWestLink (DC41) and SuedWestLink (DC42/DC42plus). The TSOs must plan the new routes for power lines within these 5-10-km-wide strips of land, though the exact routes will be determined in the planning approval procedure.

Investments

In recent years, network development to integrate the growing RES capacity has been a key focus investment area. The development of OSW connection lines has attracted a significant part of total investments. TSOs are also invested in the renovation and strengthening of the existing system.

Between 2024 and 2037, Germany is expected to invest over EUR 200 billion for the expansion of its grid. Of this, under Scenario B and C, EUR 103.5 billion would be invested in the offshore grid network, and for Scenario A 2037, the investment in offshore grid expansion stands at EUR77 billion. As per the second draft of NEP 2037, EUR106.1 billion (including interconnection) will be invested in the onshore grid under all three scenarios. This was an increase of EUR 12.5 billion compared to the first draft. This is attributed to the change in the scope of projects and measures as well as the adjustment of standard and project costs.

The four TSOs have individually also announced massive investment plans for the next few years. TenneT plans to invest around EUR106 billion during 2024-33 on German onshore and offshore grids. Amprion plans to invest around EUR27.5 billion during 2024-28, which is about 25 per cent higher than the EUR22 billion planned for 2023-27. 50Hertz plans to invest EUR20.7 billion during 2024-28 while TransnetBW will invest EUR5 billion up to 2035.

All in all, these investments planned for grid expansion, the NEP outlines a robust strategy to support increased power consumption and renewable energy integration, ensuring the timely development of necessary infrastructure.