Expansion of Renewable Energy Defies Expectations – A Test of Patience

The energy transition seems more urgent than ever, yet the expansion of wind and solar systems proves to be a grueling marathon, as illustrated by the experiences of a leading industry representative. Michael Kohn, an expert in global project finance at Baywa r.e., confronts politicians and the public with a reality that is more time-consuming and complex than often assumed. Multi-year lead times in the planning and approval of solar and wind power projects are slowing the momentum of progress—a challenge observed globally. The German federal government's target to cover 80 percent of Germany's electricity consumption with renewable energies by 2030 calls for a faster pace of expansion, which, according to industry consensus, is primarily hampered by bureaucratic obstacles. Regardless, an increase in investment from the current 22 billion to a required 100 billion euros annually is forecast, which would mean not only an increased need for capital but also a significant additional burden on administration. Baywa r.e. sees the authorities already at their capacity limits today, with little room to accelerate the processes. Regional resistance in the form of objections and lawsuits contributes to the complication and unpredictability of the approval processes in Germany, where, according to Kohn, a focus on essential and protectable areas would be sensible. Additional bottlenecks arise from grid connection capacities, which also impede the flow of progress. However, there is also good news: the financing of projects in the eco-energy sector is more manageable in Germany compared to the international environment because German banks often manage without external consultants, thus saving time and complexity. For Baywa r.e., a subsidiary of the Baywa Group, which generated a turnover of nearly 6.5 billion euros in 2022 and whose parent company will soon disclose the figures for 2023, the prospects are optimistic despite market-related tensions and uncertainties. With a well-stocked project pipeline, the company looks forward to a future in which banks and investors maintain their willingness to finance energy transition projects.