The German Energy Transition: Too Much of a Good Thing?

Germany wants to take a leading role in combating climate change. The German energy policy aims for a massive expansion of electricity generation from wind and solar energy. At the same time, cross-sectoral electrification is planned. However, the current electricity system is not designed for a high level of expansion of volatile electricity generation. The transformation is not making sufficient progress. Although day-ahead electricity prices do not include the main drivers of retail prices, their development indicates that the expansion of wind and solar power has already overshot the optimum by far.