Focus: Mr Krebber, the hot topic at the moment is the battle for the boiler room. As an energy supplier can you, in good conscience, recommend heat pumps?
Markus Krebber: You'd be better off asking your trusted installation company about that. But in all seriousness, the Norwegians, for example, get around 60% of their heating from heat pumps – and it is definitely colder there in winter than here.
Focus: Do you have one yourself?
Krebber: Yes, I have, and it runs perfectly.
Focus: Are you surprised at how heated this debate has become?
Krebber: No, it was to be expected because the energy transition now directly affects citizens. Previously, it was mainly corporations that were affected but now every individual is feeling the consequences in terms of transport and heating. Naturally, the discussion is hotting up. And the more trying times of the energy transition still lie ahead of us.
Focus: Is that because you fear that we will be left in the dark due to lack of electricity?
Krebber: No, it’s not that. We will have enough electricity if the expansion plans for renewables and hydrogen-capable gas-fired power plants are implemented. The main problem is expanding the networks, especially in metropolitan regions. Urgent investment is required so that people can run heat pumps and also charge their cars.
Focus: Can you guarantee that there won't be a blackout even in the depths of winter?
Krebber: There will be no kind of uncontrolled power blackout because the systems are too stable for that. At worst there could be short-term, regional shortages but the grid operators are taking precautions by stocking reserve capacities to avoid this too. The main problem with scarce supply is that the resulting high energy prices lead to a decline in industrial production.
Focus: In other words, if energy is too expensive, the industry will decommission its plants in Germany. How serious is the danger of deindustrialisation?
Krebber: We are already experiencing creeping deindustrialisation. Germany has a serious problem as an industrial location. We do not have as much energy available as we need. This gap leads to high prices and from there to justified concerns about competitiveness.
Focus: And who is to blame for this? Policy-makers?
Krebber: That’s not for me to say. The fact is that discussion has almost exclusively been about which technologies should be taken offline, without enough thought being given to their replacement. This has begun to change significantly but it will not be resolved overnight.
Focus: Are subsidies via an industrial price brake, as suggested by Robert Habeck, a temporary solution?
Krebber: There are no simple solutions. The question is for whom the state would provide this subsidy – only for large companies or also for small and medium-sized enterprises? This is a question of distribution that must be decided by policy-makers.
Focus: One thing is certain: energy companies like RWE are making a killing by exploiting the shortage.
Krebber: Our investments lead to higher profits. At the same time, our earnings currently come mainly from abroad rather than from Germany.
Focus: You have announced a 50-billion-strong investment package, not even a third of which will go to the German home market. Is the location that unattractive?
Krebber: First of all, 15 billion euros is a lot of money. And basically, as an international company, we invest wherever attractive opportunities present themselves. If we get clarity in Germany about the regulatory infrastructure and the acceleration of the energy transition comes about as we hope, then we will also invest more than those 15 billion euros here in Germany.
Focus: Do we need a government programme worth billions in Europe, like the one US President Biden has presented with the Inflation Reduction Act (IRA)?
Krebber: It's not about the money. Climate-friendly energies are attractive for investors. Good projects don’t have problems attracting capital. For me, it's all about reliability. In the US, investors have clarity for the next ten years thanks to IRA, whereas in Europe people wake up every morning to discussions about changes in market design, new levies, new taxes and new funding ideas – in Brussels and nationally. This uncertainty delays investment decisions.
Focus: Has the seriousness of the situation finally been recognised by the “traffic light” coalition?
Krebber: Overall, everything is heading in the right direction, everyone is trying to accelerate the energy transition. Whether that will prove to be enough will be seen in 18 to 24 months.
Focus: The word “trying“ surely means the effort falls well short of the mark?
Krebber: I didn't mean it like that. Everywhere you look you can see that policy-makers are in the process of removing obstacles – whether it's a lack of staff in the authorities or speeding up permits and court proceedings. I wholeheartedly approve.
Focus: Like many in upper management, you were a fan of Robert Habeck at the start of the traffic light coalition. Is that still the case?
Krebber: I am a fan of my children. What I expect from politicians are focused discussions and promises that will be kept. If the solutions come this year as promised, then we will be on schedule as far as the infrastructure conditions for the energy transition are concerned.
Focus: The German Chancellor is even talking about a new, green economic miracle. Wishful thinking or reality?
Krebber: First of all, this transformation is an enormous challenge. If the restructuring succeeds, it will mean an increase in capital and labour. And it has to succeed.
Focus: Why does Germany fare so badly in international comparisons?
Krebber: Unlike other countries, we are having to do everything at once. We have to manage the massive expansion of renewables and networks, and ramp up the hydrogen economy. At the same time, for security of supply, we need to replace nuclear energy and coal-fired power plants that are to be phased out. Other countries are sticking with nuclear energy or already have large numbers of gas-fired power plants in place. We also need to build hydrogen-capable gas power plants of several gigawatts so that the phase-out of coal can succeed by 2030.
Focus: Why then, as head of the Group, did you not fight for your nuclear power plants to keep running?
Krebber: Because, like everything to do with energy supply, the phase-out is a political decision. Companies have to fall into line with that.
Focus: Even the head of a large corporation has to be an opportunist and adapt to the prevailing wind coming from policy-makers?
Krebber: I wouldn't put it that way. Ultimately, our citizens decide which technology is acceptable. We have to follow the political framework that emerges from the democratic process. It is as simple as that. In the 20 plus countries in which we are active, the infrastructure conditions are often very different.
Focus: You have announced that RWE will be climate-neutral by 2040. Are you a closet green?
Krebber: Political preferences are individual and personal and ideology has no place in a company. As an energy supplier, you have to recognise the signs of the times: the desire and the necessity are there to implement the energy transition as quickly as possible. Doing so within economically viable parameters is our company’s task.
Focus: However, popular support for climate protection seems to wane as soon as it is linked to concrete sacrifices.
Krebber: Of course, that is a good point. The people’s willingness to pay is not unlimited as we see in the examples of transport and heating where the burden now falls on the citizen. And, for some, it is not possible without state support. That is why the question of how quickly Germany can manage the transition is pressing. Stubbornly saying it can't be done is not helpful but we must not overburden the people either.
Focus: When he was environment minister, Jürgen Trittin promised that the switch to renewables would cost no more per month than a scoop of ice cream. This could also explain the scepticism of the citizens today.
Krebber: I don't want to comment on that. For me, the debate as a whole is too negative. There are many positive examples of the energy transition. What doesn't help are constant debates about bans and penalties. The USA does it more cleverly. There, the transition from industrialism is rewarded with incentives. The goal is identical, but the roadmap is arguably more elegant in the US.
Focus: In order for the energy transition to work, we need to install four to five wind turbines per day in Germany; at the moment we can't even manage two. This is not even close to achieving the climate targets for 2030.
Krebber: We really need to stop this eternal discussion about targets. It is not decisive whether we build three, four or five wind turbines a day, there is no point in focusing on this. The important thing is to pick up the pace.
Focus: What do policy-makers specifically need to do to facilitate this?
Krebber: We need to speed up expansion of renewables and networks as much as possible and clarify how we will ensure security of supply when the wind and sun fail. For this, Germany needs hydrogen-capable gas-fired power plants, which requires a compensation policy and an expansion plan for the hydrogen network. Germany will have to plan for the import of hydrogen and can‘t avoid the application of CCS technology, which captures and stores CO2.
Focus: Sounds like a complete lack of plan. So how many new gas-fired power plants do we need?
Krebber: Lots of them with a capacity of 20 to 30 gigawatts. These gas-fired power plants will hardly ever run but will be needed for security for the two or three weeks, typically in February, when wind, sun and short-term storage are insufficient. The main purpose of these power plants is not to produce electricity but to be ready for emergencies.
Focus: And who pays for these back-up power plants all year round?
Krebber: It's like the fire brigade – they are not paid for individual fire-fighting operations but to be on standby in case there is a fire. This function of the backup power plants must be paid for, otherwise they won’t be built. In the context of the overall cost of electricity supply, ensuring supply security will not represent a large expense, around two to three billion euros per year. The time for clarity on expansion is pressing. With lead times of 6 years until commissioning, we are running out of time to achieve the coal phase-out by 2030.
Focus: Should we have seen this coming? Or were we simply seduced by cheap Russian gas?
Krebber: In recent years, Germany has been living on credit in some areas of energy supply. Security of supply was taken for granted, there was no support for diversification of gas supply. And instead of pushing for the construction of new plants, we have only talked about decommissioning – with committees focusing on nuclear energy and coal.
Focus: In the face of adversity, everyone, including the business community, turned to the politicians. Should the state once again be playing a stronger role in the energy sector going forward?
Krebber: No, this development worries me, so let’s be clear: the division of roles between the state and the private sector must be preserved. Where the state has taken over companies for good reason during the gas crisis, we now need plans as to when and how it will withdraw again. Private companies will certainly not compete with state-owned enterprises on a permanent basis; we cannot compensate for the competitive disadvantage.
Focus: So do you also oppose the nationalisation of the electricity grid, as is currently being discussed in the case of Tennet?
Krebber: I do not follow this line of reasoning. Germany will not achieve the necessary investment for climate protection if everything is organised by the state. The energy transition can only succeed if it is ultimately attractive for private companies and investors. And that is possible. The technologies are there and so is the capital.
Focus: RWE has been working alongside the state on LNG terminals. There are protests about this in Rügen, with the argument that overcapacities have already been built up. Were we too overzealous?
Krebber: No. You can’t tailor energy supply with exact precision. Buffers are needed. Winter can also become colder. However, the decision-making regarding capacities lies with the state. We help as much as we can, but we certainly won't remain involved in LNG terminals in the long term.
Focus: As green as you may appear today, RWE remains the enemy of most climate activists – as could be seen in Hambacher Forst and Lützerath.
Krebber: Lützerath was more about the symbolism than the concrete facts. There was a political agreement with the federal government and the state government in NRW regarding the necessary use of the former settlement. We adhered to that. Basically, companies cannot solve social conflicts.
Focus: What lesson do you take from these protests? How much dialogue is useful with radical and other groups?
Krebber: As a society, meaningful debate about the way we want to live and what we want to live on in the future is to be encouraged. Our country still depends on industry to maintain our prosperity. Radical climate activists are unlikely to be won over to such a discussion. They have a completely different view of the state, society and the economy.
Focus: Even moderate climate activists like Luisa Neubauer say that the powers that be, in other words people like you, will have to realise at some point that Germany can only survive if it gets rid of the car and chemical industries.
Krebber: That is not the way I see it, nor do I believe that there is majority political support for such views in Germany.