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Current energy transition policy costs up to £5.4 trillion

New calculations show that the current direction of the energy transition will place a considerable burden on all industries in Germany until 2049. Costs running into the trillions are a challenge for companies, competitiveness, and the quality of the business location. A strategic realignment is therefore needed to ensure an economically viable transformation.

A study carried out by the research institute Frontier Economics on behalf of the German Chamber of Commerce and Industry (DIHK) concludes that the ongoing and future costs of the energy transition in Germany could rise drastically. Between 2025 and 2049, total costs are estimated at £4.8 to £5.4 trillion according to current calculations. The analysis highlights that without a fundamental readjustment of energy policy, significant burdens on companies, consumers, and public budgets are looming.

Energy Transition – Key Figures at a Glance (2025–2049)

Total costs under the status quo:

Germany would need to spend €4.8 to €5.4 trillion to implement the current energy transition policy. This amount results from investments, grid costs, operating costs, and energy imports.

Detailed cost breakdown:

Energy imports: €2.0 to €2.3 trillion – the largest single component.
Grid infrastructure (expansion & operation): around €1.2 trillion.
New generation capacities (CAPEX): €1.1 to €1.5 trillion.
Operating costs of power plants (OPEX): €495 to €498 billion.

Annual investment need:

To achieve the politically set energy and climate goals, for example by 2035, around €113 to €316 billion must be invested – more than double compared to today. Currently, annual energy transition-related investments average €82 billion.

Annual system costs:

From 2030 onwards, total costs for generation, grids, operation, and imports will rise to €212 to €229 billion per year – under less favourable technological learning curves, even up to €257 billion.

Savings potential with “Plan B”:

A technology-open, market-oriented approach could reduce total system costs by 2050 by €530 to €910 billion – equivalent to a 11 to 17 per cent reduction in costs.

Background and Purpose of the Study

Frontier Economics, commissioned by the German Chamber of Commerce and Industry (DIHK), has evaluated the long-term costs of the current energy policy. The analysis provides, for the first time, a comprehensive picture of all relevant system costs associated with the energy transition: from investments in energy generation, grids, and infrastructure to energy imports and operational costs.

According to the study's calculations, a total expenditure of £4.8 to £5.4 trillion will be required by 2049 to continue the current path of the energy transition (“status quo”). This amount includes £1.1 to £1.5 trillion for new generation capacities, approximately £1.2 trillion for grid expansion, and annual operating and maintenance costs of £495 to £498 billion during the reviewed period. Additionally, energy imports, a central cost driver of the energy system under the status quo, will account for £2.0 to £2.3 trillion in costs.

The study also reveals that annual investments required for the energy transition will rise to between £113 and £316 billion per year by 2035. This corresponds to up to 40 percent of today's total private gross investments in Germany. Currently, these investments amount to around £82 billion annually but must at least double in the coming years.

Grafik Investitionsbedarfe — Grafik: Jährliche Investitionsbedarfe der Energiewende auf Basis einer Meta-Analyse von zehn Studien

Why the Costs Are So High

A major cost factor is imports. Despite ambitious expansion targets for renewable energies, Germany will continue to rely on significant energy imports in the long term. According to the study, these import costs will amount to£2.0 to £2.3 trillion by 2049, depending on the underlying technology and price developments. These costs include the challenge of securing the energy system against geopolitical tensions and price fluctuations.

Additionally, the high capital requirements for grid expansion contribute significantly to the overall costs. The study estimates grid costs – including investments and ongoing operations in transmission and distribution networks – at approximately £1.2 trillion by 2049. This includes new lines, integration of new storage facilities, and extensive digitization of grid infrastructure required to accommodate volatile wind and solar energy generation.

The transition in energy generation to climate-friendly technologies also incurs substantial additional costs. For new generation capacities – particularly wind energy, photovoltaics, hydrogen, and replacements for fossil fuel plants – the study estimates additional expenses of £1.1 to £1.5 trillion (CAPEX) by 2049. Furthermore, operational costs of £495 to £498 billion are expected. Together, this results in a structurally more expensive energy system whose financing poses significant challenges over decades.

Grafik Gesamtkosten Energiewende beim Status quo — Grafik: Gesamtkosten des Energiesystems durch die Energiewende bei einer Fortsetzung des Status quo, 2025-2049

Impacts on Business and Location

Rising costs particularly affect energy-intensive industries. According to the study, energy prices in Germany are already among the highest internationally. Companies are facing further increasing costs: Currently, over one-third of all businesses and half of all industrial companies view the energy transition as detrimental to their competitiveness.

At the same time, industrial production in energy-intensive sectors is declining. The study points to a continuously decreasing production trend (see Figure 6) and cases of site closures and relocations in the first half of 2025 due to excessively high energy costs compared to international benchmarks.

Economically, this creates a cost-driving combination of rising energy prices, structural competitive disadvantages, and declining value creation.

Grafik Systemkosteneinsparung durch Plan B — Grafik: Reduktion der Systemkosten durch "Plan B" bis 2050

What Needs to Be Done Now

The study clearly shows that the energy transition will only succeed if it is economically viable. A technology-neutral, market-oriented approach – the so-called “Plan B” – could, according to modeling, reduce total system costs by £530 to £910 billion by 2050. Through international cooperation and flexible emission budgets, savings of well over a trillion euros would even be possible.

DIHK-Präsident Peter Adrian — Peter Adrian

-- President of German Chamber of Commerce and Industry

A more efficient energy system, demand-oriented grid expansion, flexible timelines, and a technology-neutral innovation environment could make the energy transition not only more affordable but also more resilient.