New German energy minister says 'reality check' needed for renewables expansion

Germany's new economy and energy minister, Katherina Reiche, has called for more pragmatism regarding the country's renewables expansion, which has been a "success story without doubt."

In an inaugural speech on May 7 during the handover ceremony from the previous minister Robert Habeck of the Green Party, she focused on pragmatic policies to revive growth in Europe's biggest economy after an unprecedented three years of contraction.

The Conservatives won the Feb. 23 election, but needed support from the Social Democrats to form a new coalition.

"We need a reality check in energy policy," Reiche said, referring to the speed of the expansion of wind and solar and where this needs to be synchronized with an expansion of the grid.

Reiche added that "high power prices are a burden" and need to be stabilized or lowered where possible, referring to an industrial power price, grid fee reforms and plans to use reserve power plants.

Approval from the European Commission could be a challenge, she said.

"We will ensure a thorough assessment and then address the issue with high priority," Reiche said, according to the text of her speech.

Reiche also highlighted the recent blackout in Spain and Portugal as a stark reminder of the vulnerabilities in electricity systems.

"The blackout on the Iberian Peninsula has shown how vulnerable an electricity system can be," she said. "We must be prepared to minimize risks of this kind. The expansion of wind and solar energy has advanced our climate protection efforts. However, system risks and costs have been underestimated."

Reiche outlined plans for a review of electricity demand as well as energy transition milestones before the summer break, as agreed in the coalition treaty.

German year-ahead wholesale power has rebounded to a two-month high, trading May 7 around Eur87/MWh on EEX.

The coalition plans to cut electricity tariffs, which are much higher than wholesale prices, by around Eur50/MWh.

Diversified gas supply

For gas, the new government wants to support companies to sign long-term gas supply contracts. More broadly, Germany needs energy partnerships, while it was important to diversify supply, Reiche said.

"Renewable energies alone will not be able to supply an industrialized nation like Germany with electricity reliably and at affordable prices," she said. "And as the largest electricity consumer in the EU, we cannot rely solely on our neighbors. We need controllable electricity generation at home. The coalition agreement specifies up to 20 GW of gas-fired power plants. The tender process for this must begin quickly."

Trade policy will be a key focus for Reiche, while climate policy was moved to the environment ministry to be led by Carsten Schneider from the Social Democrats.

"Trade disputes only have negative consequences for both countries. Once they are resolved, we will strive for a free trade agreement with the US and will vigorously advocate for this in Brussels," Reiche said, noting the German economy's dependency on exports. The US is Germany's most important trading partner, with Eur250 billion of goods exchanged in 2024.

Until September 2022, Germany was heavily dependent on Russian pipeline gas imports.

Berlin moved quickly to pivot to LNG, deploying three floating LNG terminals at Wilhelmshaven, Brunsbuttel and Lubmin, while increasing pipeline imports from Norway amid a sharp fall in overall gas demand.

While Germany has not imported any LNG directly from Russia, it is possible that regasified Russian LNG landed at terminals in the Netherlands and Belgium could end up in the German market.

The US has been the dominant LNG supplier to Germany since the first terminal came online at the end of 2022, with US LNG deliveries totaling 4.5 million mt in 2024, or 92% of total LNG imports, S&P Global Commodity Insights data showed.

So far in 2025, Germany's imports of US LNG have totaled 1.5 million mt -- or 91% of total LNG supplies.

German buyers -- including EnBW and SEFE -- have also contracted future LNG to be supplied from new US LNG projects, including Venture Global's planned CP2 facility. Uniper last month also agreed offtake from Woodside's planned Louisiana LNG facility in the US.