Energy study: Uncertainty slows down investments by industry and utilities in Germany

Düsseldorf, February 20, 2025 - The uncertainty surrounding the energy transition is slowing down investment activity among industry and energy suppliers. Top decision-makers in both sectors are calling for a clear course. This is shown by the study “Energy Outlook 2025: Success factors for the energy transition” by the international consulting and auditing firm Baker Tilly. According to the study, almost 40 percent of the companies surveyed in both sectors state that they are holding back on investments (industry: 39 percent / energy suppliers: 38 percent). Both industry and utilities cite uncertainty about the technologies that will be used in the energy sector in the future as the main reason for this. Uncertainty about the future legal situation is the second biggest obstacle. “The reluctance of a considerable number of companies is leading to an investment backlog,” says Hartmut Müller, energy expert and partner at Baker Tilly. “It will take years to resolve this.”

In any case, the energy transition requires increased financial commitment in many companies. For example, 78% of industrial companies and 82 % of energy suppliers agree with the statement that the energy transition has increased operational investment and financing requirements. According to the respondents, the break-up of the traffic light coalition in November has reinforced their wait-and-see attitude. 86 % of industrial companies and 54 % of grid operators state that the end of the coalition has led to uncertainty regarding future legislation and possible investments.

Industry and utilities assess challenges differently

Every third company in the energy-intensive industry sees negative consequences for their own business. Despite all the uncertainties and the associated investment backlog, industry and energy suppliers have a generally positive stance towards the decarbonization path (energy supply companies: 93 % / industry: 62 %), although a majority support the postponement of climate targets to 2050 (65 %). 63% of industrial companies and 75 % of utilities see network expansion as the top priority.

“There is a discrepancy: while the industry is under great pressure to change, energy suppliers consider themselves to be well positioned,” says Müller. From the energy industry's point of view, investments would be facilitated in particular by increasing the regulatory interest rate and expanding funding procedures (70 % each), followed by reducing bureaucracy in tendering and approval procedures.

78 percent of industrial companies would like to see long-term targets for the energy transition in order to facilitate investment. Among utilities, as many as 85 percent agree with this point. “Industry will only be able to expand investments once the legislator has created clear targets as well as reliable and, above all, affordable paths for the energy sector’s transformation,” says Müller. “This could result in production capacities being relocated abroad.” This is something that 73 percent of industrial companies can imagine, especially as other countries offer better local conditions such as lower energy costs, taxes and regulations.

Technological openness, flexibility and freedom of innovation

The most important requirement with regard to remaining in Germany is low energy costs – 45 % of industrial decision-makers advocate this. Only a minority consider it expedient to prioritize individual technologies. 79 % of industrial companies and 85 % of utilities advocate technological openness. “Both groups have a clear preference for a future energy strategy that remains flexible and promotes a broad range of technologies,” says Müller. “This reflects the desire for freedom of innovation and the ability to adapt to different future requirements. The “how” is not the main focus. Above all, it must be affordable and support the economy.” Solar energy and hydrogen are seen as key future technologies in both groups, but there is also support for at least a temporary return to nuclear energy (industry: 53 % / energy supply companies: 75 %). The majority of energy supply companies and industry currently assume that the benefits of the energy transition will be outweighed by the necessary costs.

Industrial companies prefer the European Union to take responsibility for the energy transition. Almost two thirds (65 %) are in favor of establishing a European energy union. This idea is also supported by a clear majority of suppliers – around three quarters (73 %) of them are in favor of a European solution. “There is a common desire for clear objectives across Europe,” emphasizes Müller. Subsidies for renewable energies are considered a reasonable measure by 78 % of suppliers. “The industry is more critical of subsidies due to their short-term effects. Industry decision-makers expect a holistic structural reform in the form of long-term subsidy programs with stable framework conditions,” says Müller.

About the study

In December 2024, Baker Tilly surveyed 200 top decision-makers from German energy suppliers and grid operators as well as industrial companies from energy-intensive sectors, including metals, chemicals, OEMs and pharmaceuticals, on the competitiveness and future expectations of the energy transition in Germany.

About the Study