At a well-attended New Year’s reception of business leaders in Halle (Saale) in January 2026, a revealing contrast unfolded that captures the core dilemma of Germany’s energy policy. Around 800 entrepreneurs listened as outgoing Minister-President Reiner Haseloff joked that Saxony-Anhalt was “energy self-sufficient,” rich in renewables and still operating a coal power plant – even capable of supplying southern Germany during a “dark lull” of wind and sun. The audience laughed and applauded. Chancellor Friedrich Merz followed by striking a more serious note: Germany urgently needs more domestic energy supply capacity.
That same morning, however, a visit to Leipzig University revealed a different mindset. Stickers on a restroom door declared “Nuclear power? No thanks!” and “Coal, oil and gas can kiss my ass.”
The slogans raise a simple but uncomfortable question: if nuclear, coal, oil, and gas are all rejected, where exactly are electricity and heat supposed to come from – especially without sufficient storage? This tension between aspiration and physical reality lies at the heart of what many industry representatives now call Germany’s energy illusion.
Stability Is Not Optional in an Industrial Economy
Germany is still, for now, an industrial country – and therefore a wealthy one. But industrial production does not merely require electricity; it requires reliable, stable electricity. “Security of supply” means far more than power flowing at some point during the day. It means that during nearly all of the 8,760 hours in a year, electricity must be delivered within narrow tolerances of frequency and voltage.
In industries such as aluminum production or rubber manufacturing, even a momentary fluctuation can shut down entire processes, destroy materials, and cause enormous losses. This is not ideological preference but physics. Power grids need inertia – rotational mass provided by conventional power plants – to remain stable. Wind and solar energy alone cannot yet provide this stabilizing force at scale.
That reality is now reflected in policy decisions. Despite Germany’s coal exit plans, the Federal Network Agency has forced operators to keep coal-fired units online because they are deemed “systemically relevant.” Other sources simply do not yet suffice. Redispatch costs – the expense of constantly intervening to stabilize the grid – continue to rise, signaling growing structural stress in the system.
High Prices, Falling Competitiveness
The energy transition is not only technically risky; it is extraordinarily expensive. Electricity prices in Germany are among the highest in Europe. Beyond renewable surcharges, costs are driven by grid fees and a growing number of network-related levies. Compared to Germany, electricity prices in the United States are less than half as high, and gas prices only about a quarter.
One major reason is policy choice. While the U.S. benefits from fracking, which has dramatically lowered energy prices, hydraulic fracturing remains banned in Germany – even though expert commissions have repeatedly argued that it could be carried out safely under strict regulation. As a result, Germany’s shale gas resources remain untapped, while industries face soaring costs. This price pressure has consequences. Deindustrialization is no longer a theoretical risk; it is already happening. Nowhere is this more visible than in eastern Germany, particularly in the central German chemical triangle around Halle, Bitterfeld-Wolfen, and Leuna/Merseburg. Energy-intensive industries are losing competitiveness, investment decisions are being postponed or redirected abroad, and jobs are disappearing.
The gap between political promises and reality has become stark. In 2004, Green Environment Minister Jürgen Trittin famously claimed that the energy transition would cost the average household no more than “one scoop of ice cream per month.” Today, many families might joke that they could run an ice cream truck with what they pay in electricity bills.
Subsidies Are No Substitute for Supply
Chancellor Merz has acknowledged the problem, emphasizing that when demand cannot realistically be reduced, supply must be expanded. This is basic economics: scarcity drives prices. The proposed industrial electricity price, however, offers limited relief. It applies only to part of consumption, lasts only three years, and comes with conditions. Such temporary subsidies do not lower real costs; they merely redistribute them. They are unlikely to trigger a new wave of industrial investment.
Meanwhile, demand for electricity will rise sharply. Electrification of transport, heating, and industry is central to climate policy. While Germany has made progress in power generation – with renewables accounting for over 50 percent – other sectors lag far behind. Only about 8 percent of transport and 20 percent of heating have been decarbonized. As these sectors electrify, overall power demand will increase significantly.
According to a recent Frontier Economics study, if the energy transition continues on its current path without strategic correction, it could cost Germany around five trillion euros by 2045. This is an almost unimaginable sum. Worse still, such costs risk discouraging other countries from following Germany’s example, limiting any positive impact on the global climate.
There Is More Than One Path
Other countries are taking a more pragmatic approach. China is massively expanding renewable energy but simultaneously building new coal and nuclear plants. Finland’s Green Party supports nuclear energy because of its low CO₂ emissions. These examples underline a crucial point: there is no single solution to climate and energy policy. Germany’s current course risks replacing one dependency with another while undermining its industrial base. Climate protection without economic viability will not succeed politically or socially. Transformation only works if there is still something left to transform.
The lesson is not to abandon climate goals, but to ground them in physical, economic, and social reality. Energy does not appear because we morally desire it. It must be generated, stored, stabilized, and paid for. An industrial nation cannot afford to pretend otherwise. The time for honest debate is now. Every transformation needs energy – reliable, affordable, and sufficient. Without it, Germany risks learning the hard way that good intentions are no substitute for power.
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