Energy suppliers need EUR 535 billion for regional energy transition by 2045
German energy suppliers require EUR 535 billion for regional energy transition investments by 2045. A significant financing gap of EUR 346 billion necessitates new funding approaches.
Energy suppliers in Germany face substantial investment needs, totaling EUR 535 billion by 2045, to implement the regional energy and heating transition. A significant portion, approximately two-thirds of this amount, is expected to be required within the next decade.
A study commissioned by KfW and conducted by PwC Germany reveals that companies' internal financing capacities can only cover about a quarter of these investment requirements. This leaves a financing gap of EUR 346 billion, which will necessitate substantial external funding. The identified need will be met with EUR 299 billion in debt capital and EUR 47 billion in additional equity.
The peak of investment volume is projected for the period up to 2035, requiring EUR 218 billion in debt and EUR 40 billion in equity. These projections assume companies maintain an equity ratio of at least 25 percent.
Municipal utility companies, in particular, face challenges as their profits are often allocated to other municipal tasks, limiting their ability to co-fund the energy transition. Additionally, their capacity for traditional bank loans may be constrained. PwC estimates current bank loans to energy suppliers at approximately EUR 130 billion.
To bridge the financing gap, the study advocates for new financial instruments and partnerships. These include increased use of debt certificates, syndicated co-financings, state assumption of loan default risks, and securitization of loans to free up bank capital. Mezzanine capital and bundled funds from private investors are also proposed solutions to bolster equity and debt financing capacity.