German energy transition could be 300 billion euros cheaper with more efficiency, finds study

BERLIN (Reuters) - Germany could save more than 300 billion euros ($326.49 billion) by 2035 by implementing the energy transition more efficiently, according to a study from the Boston Consulting Group and the country's BDI industry association released on Thursday.

Germany is expected to spend hundreds of billions of euros on its transition towards greener energy sources in the coming years, with the goal of carbon-neutrality by 2045. At the same time, Berlin faces pressure from industry to bring down stubbornly high energy costs.

The BDI study calculated the savings based on current plans, which are expected to cost 1.57 trillion euros over the next 10 years in operation, expansion and maintenance of the energy system.

According to the study, investments currently planned in renewables, power grids and hydrogen far exceed foreseeable demand. This would result in avoidable additional costs.

At the same time, planning in many places relies on expensive solutions such as underground cables instead of overhead lines.

"With better coordination and planning, the energy transition could become more than 20% cheaper over the next 10 years – while simultaneously reducing emissions," said BCG partner Jens Burchardt.

The costs of the German electricity system have increased by around 70% since 2010 and further increases are foreseeable, the lobby said. Gas prices are five times higher, and electricity prices up to 2.5 times higher than those of international competitors.

A number of factors contribute to high energy prices in Germany, including the costly expansion of renewable energies and a drop-off in gas imports from Russia following the Ukraine war.

To replace those Russian supplies, Germany boosted imports from the United States and other suppliers in the form of liquefied natural gas (LNG), which can cost multiple times more than gas supplied via pipeline.

($1 = 0.9189 euros)

(Reporting by Christoph Steitz and Christian Kraemer, Writing by Miranda Murray; Editing by Sharon Singleton)