As of: March 25, 2024, 3:06 p.m
By: Bleranda Shabani
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During an interview, BASF CEO Martin Brudermüller caused a stir: He spoke out in favor of nationalizing the electricity grids in Germany.
A requirement that is closer to feasibility than expected.
The energy transition remains a central issue.
In an interview with the
Frankfurter Allgemeine Zeitung,
Martin Brudermüller, CEO of the chemical company BASF, makes a radical suggestion: He advocates making the networks available to everyone free of charge.
Brudermüller believes that complete nationalization would be necessary to achieve this.
He draws a comparison between networks and roads and argues that both are essential for a successful economy.
Although he admits that a government purchase would entail high costs, he believes that discussion about it is essential.
Brudermüller also proposes a public-private partnership to share costs.
Nationalization of electricity grids
Initially, nationalization seems rather unlikely given the current budget situation and the participation in government of the FDP, which is per se against nationalizations.
But that could change if you take a closer look at the ownership structure of the network operators.
The German development bank KfW has already acquired various minority stakes in the transmission system operators operating in Germany, which are responsible for investments in the major electricity highways.
According to the company, the federal government already indirectly holds 20 percent of the shares in 50Hertz and 24.95 percent in TransnetBW.
According to the current annual report of the Belgian network operator Tennet, the German activities are reported as “discontinued operations”.
This means that business areas are facing extinction in the short or medium term because management has decided to either sell them or shut them down.
Negotiations with KfW regarding a sale have been ongoing since February 2023.
Electricity pylons in Germany.
© Klaus-Dietmar Gabbert/dpa
Amprion boss rejects nationalization
Only the network operator Amprion would remain completely in private hands if the company were bought back.
Hans-Jürgen Brick, Managing Director of Amprion, told Handelsblatt
in 2020
that he fundamentally saw no need to nationalize network operations.
He has considerable doubts that a state-owned company can muster the innovative strength required for the energy transition.
If, in addition to Tennet, 50Hertz and TransnetBW were to sell their transmission networks, the federal government would already control almost four-fifths of the state's area in the area of the transmission networks.
Given that a large part of the distribution networks, i.e. the electricity networks at regional level, are owned by municipal companies, the idea of complete nationalization may no longer seem so unlikely.
High investments for the energy sector
In the interview with the
Frankfurter Allgemeine Zeitung
, Brudermüller, CEO of BASF, does not argue based on personal assessments, but rather bases his call for nationalization on concrete data.
It illustrates how the energy transition is fundamentally changing the chemical company's current power supply.
Like many other large industrial consumers, BASF has previously relied on its own gas power plants to obtain electricity quickly and in large quantities.
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As part of the energy transition, the company has also invested a significant sum of one billion euros in a wind farm in the North Sea.
Brudermüller emphasizes: “Our wind farm was the first that didn’t need any subsidies.
If only these costs made up my electricity price, I would build five parks.”
Last year, the industry had to raise an additional 12.5 billion euros due to the federal government auctioning off parking spaces.
Added to this are the rising network fees.
In January 2024, network fees more than doubled, from 31 to 64 euros per megawatt hour.
This results in the industry going from a mid-single-digit cent per kilowatt hour to almost 20 cents.
According to the CEO of BASF, this price is unsustainable and decarbonization is no longer feasible: “It is dead before it has even begun.”