Energy transition monitor reveals deficits in hydrogen and heat

27.05.2025

Source: E & M powernews

BDEW and EY have published their latest progress monitor on the energy transition. The analysis shows successes, but also a need for political action, especially in the heating sector.

The German Association of Energy and Water Industries (BDEW) and the consulting firm EY (Ernst & Young) have presented the third edition of the "Energy Transition Progress Monitor". It was published on May 26, ahead of the planned official monitoring by the new German government, and provides a large number of reliable key figures on the current status of the energy transition in Germany.

According to the analysis, the energy transition made significant progress in 2024. For example, the share of renewable energies in gross electricity consumption was 55%. Greenhouse gas emissions from the energy sector have been reduced by 61% compared to 1990. At the same time, the report calls for urgent political action - such as the expansion of controllable power plants, the ramp-up of the hydrogen economy and the further development of the electricity market design.

BDEW Managing Director Kerstin Andreae commented that the energy sector is on the right track, but the goal of climate neutrality is still a long way off. "The German government must consistently accelerate the expansion of renewables, create investment incentives for flexible forms of generation and improve the framework conditions for hydrogen," she demanded.
EY Partner Metin Fidan also emphasized the importance of a viable overall concept. This includes a clear power plant strategy, the simultaneous expansion of renewables and grids as well as market-oriented incentives for storage, heat pumps and e-vehicles.

The expansion of photovoltaics was particularly dynamic in 2024, with 17,000 MW of additional capacity. Wind energy, on the other hand, is still lagging behind - both onshore and offshore. Although approval procedures improved slightly, according to the progress monitor, the designation of land remains a key obstacle. The authors believe that compliance with the so-called two percent rule is necessary in order to create planning security for the industry.

The analysis underlines the growing importance of decentralized flexibility. The use of storage systems, heat pumps and electric vehicles is becoming increasingly important for a stable overall system. The digitalization of the energy system is also making progress - the rollout of smart metering systems was accelerated in 2024, but is not yet sufficient. The monitor calls for the development of a future-proof electricity market design that incentivizes flexible generation and consumption in a market economy.

The report also criticizes the sluggish development of the hydrogen economy. Of the 10,000 MW of electrolysis capacity planned by 2030, only 1,600 MW have been secured. Without a swift adjustment of regulatory requirements, the goal of decarbonizing industry and energy supply is at risk of failing.

Grid operators are facing increasing investments, but need a robust regulatory framework and a competitive return on capital, according to BDEW. This is the only way to finance the necessary grid expansion and synchronize it with the expansion of renewables. In the heating sector, the share of renewable energies stagnated at around 18%. Sales of heat pumps slumped significantly in 2024 due to political uncertainties. Stronger incentives and a reliable political framework are needed to achieve the target of 500,000 newly installed heat pumps per year. The transport transition is also not making any progress, according to the report. Despite major progress in the expansion of charging points, sales of electric cars are declining. Even without government funding, around 32,000 new charging points were installed in 2024, meaning that the installed charging capacity has now reached 8,400 MW. However, the expiry of national subsidy programs has had a direct negative impact on the sale of electric vehicles. "The pace must be significantly increased in many areas if climate neutrality is to be achieved by 2045," Andreae demands of the new German government.

The complete Energy Transition Monitor 2025 is available online.

Author: Susanne Harmsen