Soaring Energy Costs Accelerate Energy Transition

Many German companies responded to the rising energy prices following the war in Ukraine by shifting to renewable energies or energy-saving technologies. This was the case both for energy-intensive companies and for companies that were only slightly affected by the energy price increases. Additional energy-related investments did not supplant modernisation and innovation activities. These are the findings of a study by ZEW Mannheim, which is based on data from the German Community Innovation Survey (CIS) and sheds light on adaptation strategies adopted by German companies.

“Our analysis shows that energy-intensive companies were particularly affected by the price increases in 2022 and consequently stepped up their investment in energy-efficient technologies,” says Dr. Christian Rammer, deputy head of ZEW’s Research Unit “Economics of Innovation and Industrial Dynamics”. “The adaptations did cause short-term cost increases, but in the long run they have promoted sustainable solutions through the growing use of renewables. At the same time, companies continued to invest in updating their portfolios and launched innovations. This means that long-term competitiveness has not been jeopardised by the adaptation measures that were needed in the short term.”