Germany’s Infrastructure Spending Spree Won’t Solve Its Energy Problems

In one of the most important energy deals in its history, Germany is purchasing its single largest power grid thus far. It plans to acquire Dutch state-owned operator TenneT Holding BV for $20 billion Euros. In doing so, it hopes that this will help it realize its goal of 100% renewable energy by 2045 through the nationalization of its power grid and utility system. However, local politics and an inflexible energy policy may turn out to be Germany’s worst enemies.

Germany is still recovering from a self-inflicted crisis which spurs its spending spree. After it halted Gazprom’s gas deliveries in September 2022 due to Russia’s invasion of Ukraine, the largest economy in Europe was forced to scramble for coal and ad-hoc energy arrangements from around the globe to buttress its energy baseload. Electricity prices went up over 500% in 2022 before dropping. GDP is also stagnant, with 2022’s GDP growth lagging at 1.8%. One may think that in the midst of the worst energy crisis since the 1974 Arab oil embargo, Germany would be happy with all of the energy it could get. It was not.

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