“Let’s Just Keep It Simple”

How to tackle a monumental task like the energy transition? An answer to this question was provided on 21 March 2024, at the “First-Hand Information on Economic Policy” event series at ZEW Mannheim, with around 100 participants. The evening’s guest, Dr. Leonhard Birnbaum, CEO of the energy provider E.ON SE, began with an engaging keynote speech, clearly illustrating the technical and economic implications of the energy transition. Following this, he engaged in a discussion with ZEW President Professor Achim Wambach, sharing his perspective on the electricity market.

The electricity market is expected to grow by 40 per cent over the next 15 years, which is already a considerable challenge. However, this task becomes even greater when considering that the grid will have to grow by significantly more than 40 per cent to ensure grid stability. For Leonhard Birnbaum, this seems feasible: “The energy transition is costly because an entirely new grid is being built. Technically, we can manage it. Capital is not a problem either. It will go where it can make money.”

His concerns lie with societal acceptance and political hurdles. “We need additional regulation, albeit of a different nature from what we currently have. We are operating at the wrong level. When a law contains too many sub-paragraphs, we lose sight of the bigger picture. We could dwell on a thousand details. But instead, let’s just keep it simple.”

Achim Wambach concurred, offering insights from his expertise in market design during the ensuing discussion. His contributions, together with Birnbaum’s insights, vividly shed light on the complexities of the topic in a compelling manner.