Germany’s energy regulator will increase returns for investors in electricity and gas grids by 40% as it seeks to attract more capital to fund a vast expansion in infrastructure needed to support a move away from fossil fuels.
(Bloomberg) — Germany’s energy regulator will increase returns for investors in electricity and gas grids by 40% as it seeks to attract more capital to fund a vast expansion in infrastructure needed to support a move away from fossil fuels.
The regulated return on equity for grid operator will be set at 7.09% for new investments, according to the federal regulator the Bundesnetzagentur. Handelsblatt reported the news first.
Germany needs to massively expand its energy networks to support a increase in renewable generation as it shoots for 80% green power production by 2030. The shift will mean power produced locally rather than at big power stations and transported to demand centers. Grid reinforcement is needed to accommodate a boom in electric vehicles and heating systems that is expected in the next two decades.
The rate of return on equity — which is defined by the regulator — is key for operators as it defines the return that they are allowed to offer investors. German grid operators have long complained that the rate, that will be implemented next year, doesn’t mirror the surge in interest rates in the past years.
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