Germany needs $325 billion of power grid investments by 2050, KfW says

By Christoph Steitz and Vera Eckert

FRANKFURT (Reuters) -Germany needs around 300 billion euros ($325 billion) by the middle of the century to equip its power grids for decarbonisation, state bank KfW said on Tuesday, adding this could not be funded by the government alone.

The investment highlights the growing relevance power grids have in the government's efforts to shift towards renewables, a process that requires new power lines as well as upgrades to critical infrastructure.

"The necessary expansion of renewable energies makes suitable and flexible transmission and distribution networks necessary and requires high investment," KfW said at a capital markets conference at its headquarters in Frankfurt.

"The means for that cannot come from public funds alone but must for the larger part be mobilised via private investors or the capital market."

The comments came as around 180 representatives of infrastructure and pension funds, insurers, banks and energy companies gathered at KfW to discuss investment opportunities as Germany pivots away from fossil fuels and towards renewables.

The event, attended by Deutsche Bank CEO Christian Sewing, Allianz CEO Oliver Baete, Uniper CEO Michael Lewis and German Economy Minister Robert Habeck, serves to gauge investor interest, KfW Chairman Stefan Wintels said.

Germany aims to be carbon neutral by 2045 and wants to raise the share of green energy sources in the country's power mix to 80% by 2030, from more than half in 2023.

"We will try and match the appetite of capital markets with the investments on offer," Wintels said.

Germany's overall stability, the acceptance of the energy transition and recent legal initiatives would ensure progress, he said.

Deutsche Bank's Sewing said removing bureaucratic hurdles and achieving the capital markets union in the EU were top priorities to stimulate investments, in competition with other regions.

"The risk-reward game must be a fit," he said.

Economy ministry state secretary Philipp Nimmermann said Germany had a big advantage: reliable network plans were being continuously reworked to give a stable framework for power, gas and hydrogen economies up to the mid-century.

($1 = 0.9238 euros)

(Reporting by Vera Eckert and Christoph Steitz; Editing by Rachel More and Arun Koyyur)