Elections and Energy – Germany's path forward

Germany’s energy sector is at a pivotal moment, with political shifts, economic challenges, and the energy transition shaping its future. This week on the Montel Weekly Podcast, Katharina Johannsen, Montel’s Berlin reporter, and Tobias Federico, senior analyst at Montel Analytics, join us to discuss key issues ahead of Germany’s February election.

We’ll explore how political changes, including Elon Musk’s favourite German party and the prospect of a Trump presidency, could impact energy policy and markets. 

The episode also delves into the downturn in German industrial production, expectations for energy prices in 2025, and the critical challenges facing Germany’s energy transition.

 Host: Richard Sverrisson, Editor-in-Chief, Montel
 Guests: Tobias Federico , Managing Director, Senior Analyst, Montel Analytics; Katharina Johannsen – Berlin Correspondent, Montel News

Editor: Bled Maliqi

Transcript

[00:00:07] Richard Sverrisson, Editor-in-Chief, Montel: Hello listeners, and welcome to the Montel weekly podcast, where we bring you the latest news, issues and changes happening in the energy sector. As is now traditional for the first episode in a new series of the podcast, we invite Tobias Federico, a leading analyst at Montel, we will talk about the upcoming German election, our favourite word Duncan Flutter and the prospects of the same happening this year, Elon Musk's favourite German political party, and what a Trump presidency means for energy markets across the globe. But before we talk to Tobias, setting the stage for today's discussion is Katharina Johannsen, Montels Berlin correspondent, who will provide insights into the context of Germany's current energy landscape. So, Katharina, what are the most burning energy issues in Germany at the moment.

[00:01:01] Katharina Johannsen – Berlin Correspondent, Montel News: Hi Richard, I'm very excited to be here on your podcast and for the most burning topics at the moment. I think the energy sector clearly faces some challenges with negative prices. So, like last year, we've seen the most negative prices we've ever had. And it clearly brings some new projects towards a zone where it's questionable whether they're like, profitable or not. So there is some danger whether new projects are able to find like enough financial needs. And I think this is something that needs to be solved politically. And it's one of the topics that could still find like legislation before we have the new elections. And other than that, of course, we face the elections at the end of February, and then we will see what like what kind of things would change afterwards.

[00:02:03] Richard Sverrisson, Editor-in-Chief, Montel: So, Katrina, I mean, you're in the hotbed of German politics, which is Berlin. And what do you think is at the top of politicians' agenda in the German, Germany's capital city?

[00:02:16] Katharina Johannsen – Berlin Correspondent, Montel News: Well, I think certainly like negative prices or like volatility, like the so-called Dunkirk slaughter, also like high prices during the times we don't have renewable production. That went through the media a lot. So it is on the agenda. And I think overall, there are a lot of industrial consumers and households that worry about high energy prices. And all the parties have said that they want to lower energy prices. That some of the things that they have proposed are like very similar. And then certainly we need to find a way of like, how do we want our capacity mechanism, what it should look like in the future, and like the powerplant strategy. Like the first 10.5GW of power plants already, power plants that should come in the market somehow and in some tenders. And yeah, then like the CDU opposition party have also said they, they want to look more into nuclear power and yeah. Don't take any power plants like coal power plants out of the market anymore before we don't have new gas power plants. So, that's sort of the political landscape. I would I would see excellent.

[00:03:44] Richard Sverrisson, Editor-in-Chief, Montel: Katharina. I'm sure we'll go into all these factors in much more detail, but thank you so much for setting the scene for today's podcast.

[00:03:52] Katharina Johannsen – Berlin Correspondent, Montel News: Thank you.

[00:03:53] Richard Sverrisson, Editor-in-Chief, Montel: So a warm welcome to you, Tobias. It's great to have you back on the podcast in our traditional start of the year. The official episode.

[00:04:01] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Thank you, Richard and I just realised it's our seventh season of this podcast.

[00:04:06] Richard Sverrisson, Editor-in-Chief, Montel: Wow. I mean, I and it's been great to have you in every series to have you on the podcast. Tori, it's an honour and a privilege to have you on board. So and, and with your insights about Germany, I think if we start, I mean, so we've got these important elections looming in a few weeks time. Let's focus on, you know, why the government broke up. Was energy a factor in why that dissolved?

[00:04:35] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Oh, well, yes it did. I mean, there is there was an official statement from Olaf Schultz from our Chancellor, that energy prices, high energy prices, have been in dispute for breaking up between the street coalition and the yellow part of it, which are the liberals. But we do also see some personal issues between the strong personality of Christianity and the strong personality of Olaf Schulz, but nevertheless the discussion has been around spending the governmental budget for the year 2025, and energy was definitely a topic on that. So yes, it was not the main reason, but it has been touched for the breakdown of this coalition.

[00:05:18] Richard Sverrisson, Editor-in-Chief, Montel: And what. You know, looking at the election in February, what are the main energy policy issues on the agenda?

[00:05:27] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Well, first of all, I mean, we've seen that Germany was quite strong in the green energy transition. The main definition of the green energy transition in Germany was increasing the growth of fluctuating renewables, in combination with some backup capacities. They have been planned to be mostly gas-driven, mostly gas-driven by Russian gas. And with the war in Ukraine, we just realised that it didn't really happen. Which means then that we needed to have a Power plant strategy for backup capacities. But that law didn't pass with the old government. And now with the Break-Up, it's not likely it will pass until February. So that is one point. And we see especially that all the ambitious growth we had regarding the transportation grid for electricity, regarding the hydrogen grid, the core hydrogen grid, as we call it in Germany, that there will be a lot of governmental spending. We see that it became too much in spending money in total, which means then that the new government will focus on reducing somehow the spending costs, I say somehow, because of course, now we have the political election campaigns where they promise everything, but when we break it down to certain developments, we will see that we will see a few changes there. But not that radical. What is going to be a promise now during the election period?

[00:06:58] Richard Sverrisson, Editor-in-Chief, Montel: So, so that's one aspect of this, this, this gas or this power plant strategy that's often, you know, that that didn't pass it. Hopefully, it will pass in February. But what does that mean in detail? This is basically, I think, what about ten gigawatts of gas-fired or, should we say hydrogen hydrogen-ready gas-fired plants. You know, that's also a little bit controversial, maybe. But that's basically around 10 or 11 gas-fired plants that Germany plans to build. I mean, is that realistic?

[00:07:27] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Not in the timeframe we are giving. I mean, we must bring this into a bit of a broader perspective. Germany wanted to become quite carbon neutral. Gas should have been on natural gas should have been the bridge technology. What was quite clear on the face of nuclear energy, what was quite clear is the face of coal. Here we have been shifting a bit between the year 2038, 2030, 2032, but it was somehow clear that if our electricity supply system is based on fluctuating renewable, we do need backup capacities, and these new backup capacities coming to the system have been missing somehow, especially because we see that we have a missing money problem, more or less.

[00:08:14] Richard Sverrisson, Editor-in-Chief, Montel: Can you explain that Tobias as well?

[00:08:15] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: A missing money problem is that if you want to build up backup capacities of on based on conventional technologies, irregardless, whether that's a green hydrogen-fired or natural gas-fired power plant, you are calculating your finances based on the run time hours of that power plant. But on a market where we are mostly weather driven, we strongly depend on the situation where God sends us the fuel, meaning that how much wind and solar will be there and you cannot bet on a steady cash flow return, because there might be a winter where you earn a little money because you're not producing so much. And there might be other winters where you earn a lot of money with your conventional power plant. Having securities for investors to invest into conventional power plants should have has raised the need for a different market design, meaning that we have been thinking about a capacity market mechanism which gives security to the investors. That was the powerplant strategy, and that is missing right now. What is clear is that we still phase out conventional power plants, and we might be missing some backup capacities. And we've seen the first glimpse this year with the extreme high price spikes in the so-called dunker floater.

[00:09:34] Richard Sverrisson, Editor-in-Chief, Montel: We've talked about that a lot in this podcast. Don't you worry, it'll be easier. There's a great German word that's now entered into the English vernacular. I say certainly within the energy markets. So that's what we can see happening without gas plants. But you know, there are there are several obstacles here. And they first of all the financing then the building. So, you know, the most realistic these these this backup capacity comes online is, you know, early 2030s.

[00:10:02] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Yeah. I would say the likelihood is quite low to come early 2030, honestly, because it takes another 3 to 5 years, and there are not any projects around right now. Maybe a few, but I don't see them. Maybe I miss them too. But nevertheless, we have the security of phasing out coal and the insecurity of new power plants. And that is a topic in the elections. And I bet that the new government, which will be mostly CDU-driven will refocus on certain technologies, but still being climate neutral, meaning that it's quite likely that they rethink the coal phaseout, that they postpone that. But then we have an issue becoming climate neutral. So that's why I think at least a thought and maybe also a step up in carbon capture and storage approaches for conventional fuels. Or conventional power plant technologies will be part of the election campaign and will also be part of the energy policy in the upcoming years.

[00:11:01] Richard Sverrisson, Editor-in-Chief, Montel: So is, you know, what's being talked about at the moment in terms of, you know, an election manifesto. There's probably too early to talk about that or but what's what's on the table? How is the CDU and the CDU, CSU portraying itself as different from what went before?

[00:11:18] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Well, by coincidence, just one day before the government breakdown, the CDU has released at least the energy strategy. And this is quite likely to become also part of the energy campaign, which then mostly is focusing on reducing energy costs for the industrial sector to keep up economic growth or to pick economic growth. It's the third year of a recession for Germany, which never has happened before after World War two. So which means then reduce grid freeze for the industrial sector, maybe somehow reduced energy prices without having subsidies. So that is one thing. The other thing is really that we will go away from restricting certain technologies. So avoiding the gas power plants, or at least what's right now, carbon capture and storage for non-fossil fuel that's allowed. So for biomass, we can do carbon capture and storage, which really doesn't make a lot of sense for my personal opinion. But opening that then for coal and lignite power plants. So that's a manifesto. There's another thing which is not so wholesale energy market related, which is the law for household heating. The German word is quite long, the gebrüder in ag Gesetz which is basically the law for household heating, which obliged you to have, if there is no district heating available, 65% of renewable energies in your house, which in the end is the the death or the end of this local gas fired burners and teach us in the home, and the only way you could replace it today is by heat pumps. And that has been a long dispute on household owners, which is around about 10 million households. We have our houses, single-home households in Germany, which is around about 20 million voters. And there have been very unhappy about that. So that's something that will be definitely unwinding, but it's much more retail-focused.

[00:13:19] Richard Sverrisson, Editor-in-Chief, Montel: But that's also an issue in other parts of Europe as well. Certainly in the UK there's heat pump issue. There's there's been, you know, you know talking. You can talk about a backlash against heat pumps, against boilers, standard gas boilers and whether there's been a, you know, a, a certified or, or specific targeted campaign against the heat pumps is, you know, that's that's what some people will say. I'm not sure that's, that's, that's the case. But certainly that is an issue. Then you think in the election?

[00:13:52] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Definitely. And it will be an election driver. Plus, I think they will focus on, let's say, I call it voting campaign topics, which might collect some type of voters, which is first restarting the rethinking of nuclear energy.

[00:14:12] Richard Sverrisson, Editor-in-Chief, Montel: Are you serious?

[00:14:13] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Well, we are restarting to rethink. We are not restarting our nuclear power plant. I think they are going to keep this open, that discussion. This is one thing. And the other thing is, we in Germany had the energy feed in law, the EEG, which basically is the difference between the feed-in tariff and the wholesale electricity market prices. Since a few years, this is paid out of the state budget and not a transfer fee from the end users. And these costs are increasing currently because of course, the wholesale markets are decreasing somehow, especially due to the Cannibalisation effect, a capture rate which gives a high burden onto the governmental budget, and that is another voting promise that they are going to reduce these EEG costs, but they can't do it a quick win. It takes years to reduce those costs, because we have the feed-in-tariff guaranteed for 20 years. And the big boom of renewables we had, especially in solar panels, where in the year 2008. So we will see a significant decrease in the EEG cost after the year 2028.

[00:15:25] Richard Sverrisson, Editor-in-Chief, Montel: I think I'd like to return to a number of those topics to be especially, you know, the, the, the industrial sector and, and then the election as well, because a certain a car manufacturer, electric car manufacturer in the states has come. You know, if I, we can look at what's happening in Germany in terms of prices. You talk about cannibalisation where there is a massive prices down and hits profits, hits revenues and also hits investors in the long term or short to medium term anyway. If we were to say so, we've got that situation on the one side when there's an abundance of wind or sun, but yet when there isn't any wind or sun, and it's the drunken flood we're talking about, we see prices spike to extremes. What are your expectations for 2025 to be what you know? Is this something that's going to continue?

[00:16:18] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Yes. No, it's it has to been always expected somehow. I don't know why. It comes as a surprise for most of the market participants. Years ago, we've been speaking about the electricity prices. With that expected growth rate of fluctuating renewables and missing backup capacities will lead to binary electricity prices. So it's a cold. Duncan floater. Then we are having extreme prices, and that's a binary either-or. Of course, we have a situation in between, but that's increasing volatility. And honestly, that also increases market opportunities for a few participants. Flexible demand nurse battery storage system. We see a huge growth in battery storage systems due to that. But that is a let's say, short-term backup and not a long-term backup.

[00:17:09] Richard Sverrisson, Editor-in-Chief, Montel: So, Tobias, I mean, you have these periods of extremely low prices. And, you know, the as you mentioned, the Cannibalisation effect. Surely that's an incentive for operators of battery energy storage systems, or as they're sometimes called, to enter the market, and they could maybe come online much quicker than a gas-fired plant could.

[00:17:33] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Yeah. We see I wouldn't say a hype hype is negative, but we see a huge growth in battery energy storage systems. Especially because the business case has shifted a bit in the past. We saw battery capacity is coming to the market, which was 1MW to 5 megawatts. Right now, we are speaking about 100, 120, 200 megawatt capacities. And the interesting part is their main focus is not on the regulatory ancillary services, parts or the FCR market, but rather on the intraday market price volatility and on the day-ahead, market price volatility. So this high price volatility will also lead to new players which can handle flexibility.

[00:18:14] Richard Sverrisson, Editor-in-Chief, Montel: I mean, that's very interesting. And now I want to return to you know talking about the election that's coming up. We've sort of started talking about the election. I want to come back to it. And, you know, there's a lot been in the media about the alternative for Deutschland, the AfD. Do you expect them to have a play, a role potentially, in the next German government? I know that, you know, Elon Musk is certainly a fan, but but is the is the German population?

[00:18:43] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Well, it's it's a tough one. I mean, if you look into the current voting tests. I don't know whether this is the right word. They are the second strongest party, right? Directly following after the CDU. Far before the Green Party and the Social Democrats. And of course, it's those types of politicians who always try to find simple answers to complex problems. And that is a certain similarity which we see between certain US car manufacturers, Donald Trump and definitely this party. And they try to provide simple answers who's fault and what we are going to avoid? And I mean, these 20% does not come from somewhere. I mean, it's almost 20% as far as I know. So part of the German population, driven by a lot of high insecurity, are looking for answers. Help! It sounds a bit weird, because I'm definitely not a fan of that party because it imposes a lot of danger, but nevertheless, it provides simple answers. And currently I think this is a general movement in Europe, maybe also worldwide, that we have the tendency to giving simple answers to the increasing complexity of the today's world.

[00:19:59] Richard Sverrisson, Editor-in-Chief, Montel: And it's a more of a sort of populist backlash against what, you know, the world is increasingly complex. And people like you say, they want simple answers that they can easily understand. Whether that's true or not is it seems to be irrelevant at the moment. But what do they stand for? You know, electorally in terms of energy. Because, you know, you know, I spoke recently to some Italian colleagues in a video I did, and they said, you know, the guy from said, you know, when wind energy has become centre left and nucleus become right wing, I mean, does that hold for Germany?

[00:20:37] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Yes. Well, yeah, I would say so. If I were to summarise that from those nationalists, as the name says, focusing on national energy sources, where end security. And it seems somehow that nuclear energy seems to be quite national, which is absolutely wrong, but nevertheless so, of course, pushing nuclear energy, looking into local resources, but especially the AfD, together with the far left party in Germany. That's quite interesting. They are a very big fan of Putin. So they are really focusing on restarting gas deliveries from Russia and then using gas for the main fuel source in Germany. So somehow you have to this focus back on national power, but still relying on strong partners. In this case, especially the AfD, it seems to be Russia.

[00:21:34] Richard Sverrisson, Editor-in-Chief, Montel: That's very interesting. I mean, we, you know, you see in certain parts of Europe, you know, a French power for French people and, and in more ways, like cut the cables to, to neighbours because it should be, you know, cheap power for Norwegians. And is that also a discussion in Germany?

[00:21:48] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Well, not really, because Germany is not that isolated, somehow. We have a lot of interconnection with other countries. We are rather focusing on national fuels. By the way, I think fluctuating renewable energy is national, but that's that's another discussion. That's a fact. So cutting cables is not definitely an issue. It's rather increasing cables to France because they have reliable nuclear energy. At least that's the argument from the AfD.

[00:22:17] Richard Sverrisson, Editor-in-Chief, Montel: Yeah, absolutely. I mean, you know, so, you know, what's your gut feeling? You know, for late February, what's going to happen in terms of what kind of government can Germany expect to have and what impact will that have on the energy market in the country?

[00:22:31] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Well, most likely, I think we are going to have a so-called great coalition led by the CDU, together with the Social Democrats. On the other hand, maybe Olaf Scholz is picking up a few words, and then it will be a great coalition, mostly led then by the Social Democrats. I think the Greens are most likely out if the CPUs are driven; they are not really compatible. The liberals might not get into the whole voting system because they are below the so-called five percentage level threshold. And for the PSV, which is the new far-left party, they are decreasing right now. Currently, nobody is going to have a coalition together with the AfD. So it's most likely to have a great coalition. And then it's most likely that we'll have this economic focus-driven energy policy, which is open for new technology or for other technologies, not new technologies, which means carbon capture and storage for hydrocarbons.

[00:23:33] Richard Sverrisson, Editor-in-Chief, Montel: Interesting. And but the nuclear discussion, you say the restarting, the rethinking, but are we going to get anywhere along the lines where the rethinking again?

[00:23:45] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: No. Well, it's their restarting. Rethinking? They might write a concept paper. And it's not within this legislation, a legislation period. And I don't think at all that Germany ever restart nuclear power plants.

[00:23:57] Richard Sverrisson, Editor-in-Chief, Montel: I mean, you know, I'm not an engineer, but I also heard, you know, it's too late or massive would be massively expensive as well.

[00:24:03] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Yeah. And we see that nuclear power plants, even though they seem to be very reliable during the production time the costs, the total costs. Not mentioning Hinkley Point C or the Finnish power plant. Which name? I always forgot all three.

[00:24:19] Richard Sverrisson, Editor-in-Chief, Montel: It's a it's a tricky one. It's about the.

[00:24:20] Speaker4: Time. Yeah yeah yeah, yeah. No, but.

[00:24:22] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Nevertheless, we see that the total investment costs are quite high. Which means then in the end, no, will not do it.

[00:24:28] Richard Sverrisson, Editor-in-Chief, Montel: I mean, there's another important election. Well, no. Another important. We've seen an important election with a new president of the United States coming into power in January. You know, if we talk sort of global geopolitical factors here to us. What What how will that drive? You know, the energy markets? How will the imposition of Trump, Trump? President? What would that mean for, for, for. For European energy markets.

[00:24:54] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Well, it's definitely a surprise package. Yeah. I mean, it's what he recently has said regarding the Panama Canal renaming the Gulf of Mexico in the Gulf of America. Greenland. It's crazy things are really going happen there. But what is quite likely is that he wants to achieve a peace in Ukraine somehow the question is at what costs that might impose if it really happens maybe a start of or reduction of certain sanctions. Or maybe also, depending on the circumstances, that Putin will not stop there and he's going to test also the strength of NATO. And we see that maybe there will be a dispute within NATO. So that's something. I definitely see if the economic downturn of Russia will continue, that they will have much more attacks on sea cables and gas plans. We have seen that with wrestling. There might be more attacks from Russia to that. So increase of hybrid warfare. So it will definitely mean an increasing volatility in gas prices. Nevertheless, we will also see that I think the US will use LNG exports as a political weapon, maybe. Yeah. To impose certain thoughts from Russia. So we are going to export to your LNG. But you have to do this and this and that and that. And that's interesting. Seeing energy or LNG as a weapon, maybe as a weapon for political instruments from Trump towards Europe.

[00:26:38] Richard Sverrisson, Editor-in-Chief, Montel: Because historically, I mean, the position of Trump in his previous President. Presidency. And also the position of the USA more generally was. Take our gas. Don't have the do not go for Nord Stream or Nord Stream two because that will depend you become more dependent on Russia. Now that's going to be an interesting play. Now when when there is no Russian gas coming in and I think using LNG, weaponizing the LNG supply is going to be it's going to be interesting move. I mean, how can that play out? Because you know, we've got you know, not there's a limited amount of LNG terminals and Germany isn't it.

[00:27:18] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: So but it's yeah, of course. But we are increasing the amount of LNG terminals. We have LNG terminals all over the place in Europe. They are running at lower capacities right now. So we still have the potential to increase the capacity. I don't think that we have a capacity issue. I rather think really that in the in the first election of Trump, in the first administration, he was a dealmaker. And we do expect him to be the same right now. But what have you seen in the recent weeks? I think we have gone away from being a dealmaker rather than a troublemaker. Yeah, well, a troublemaker or implementing his political thoughts into the worldwide landscape. Yeah. And this dependency we are having now on us gas. I mean, just speak about the Strait of Hormuz. And if there's an increase in conflict between us, Iran and Israel and whatsoever, and we are closing the Strait of Hormuz, we cannot receive any LNG gas from Qatar anymore. And the only one which has really left a significant amount is the US. And then he has his political power to use energy as a weapon.

[00:28:22] Richard Sverrisson, Editor-in-Chief, Montel: Absolutely fascinating to us. And, you know, I'd like to return to that subject another time on this podcast. But we also you also mentioned German industry. And, you know, German industry, you know, is the backbone almost of European production of of production across Europe. But we've seen a big downturn, certainly in energy demand from the sector and also industrial production in Germany is falling. What are your expectations for this year? And, you know, maybe, you know, into the coming years?

[00:28:55] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Well, there's hope and there's reality. Yeah. I hope that we might pick up might come back to this part where Germany has been famous with a lot of innovation and a lot of optimisation. Also, that is missing a bit, especially if we look into potential trade wars worldwide or within Europe. But I think the reality will be that we will see an increasing unemployment rate in Germany that will reduce the domestic demand, and then we are having to start a spiral. Usually, we had a very good social welfare system, which we still have, but somehow it must be financed. And here we have certain limitations in Germany right now. So I hope that we are going to pick up. But I think that it will be this year, which will definitely be the third or fourth year with an economic downturn in Germany. Have never happened before, since 1949, since the beginning of the German Republic.

[00:30:00] Richard Sverrisson, Editor-in-Chief, Montel: And the other aspect, of course, with the Trump presidency is the tariffs and trade war factor. And the implication there, you know, could be very negative for German car manufacturers, for example. And for German industry, I mean, that could we could see even a further down downturn.

[00:30:20] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Absolutely. I mean, with the car manufacturing, there are maybe some housemate problems that we missed a bit. These electric vehicle developments. We have been relying on a lot of what Germany was good in engineering engines, but in an electric car, you must be. You are generating an entertainment package on wheels. And Germans are not really good in entertainment packages. So that's a, that's a bit of the issue, and we will see the implications. I mean, Volkswagen starting with that. And it's not only the car manufacturers, we have all the suppliers and the whole chain in that. And that's a very productive chain which gave a lot of economic welfare to Germany. And here we see a certain downturn. It's not over. I think we can pick up, but maybe not in 2025.

[00:31:08] Richard Sverrisson, Editor-in-Chief, Montel: Absolutely. I think there's there's other factors here with the potential trade and tariff or trade war, and increased tariffs. Is that could Europe be a dumping ground for cheap solar panels, cheap batteries, which will which could, you know, increase as Germany hit the milestone of 100GW of installed solar capacity last year? Was it? Was it solar? Yeah. Solar capacity? Yeah. And, you know, could that continue at an accelerated pace, which then would drive prices down further, potentially for the industry as well?

[00:31:39] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Well, yeah, it could happen. But the problem is a bit that the industry needs to have a production not only baseload, but a continuous production somehow. And we have been speaking about these binary electricity prices. It brings electricity prices down at a time when we have the sun. But in combination with the missing backup capacities, it could also lead to certain price spikes again. And at least looking into our scenarios, it's quite interesting that the yearly average prices over the next years might not deviate that much, but the volatility within a year, meaning the seasonality of electricity prices, they are changing quite a lot. And we've seen that with this extreme price spikes, there are certain industries have had their issues there. So I think reducing grid costs and grid tariffs, and that is something which could help the industry much, much more than increasing the installation of renewable energies.

[00:32:42] Richard Sverrisson, Editor-in-Chief, Montel: That, you know. Absolutely. And I think we'll come to all these issues. I don't I I'm sure we'll talk before January 2026, Tobias, on this podcast, at least I hope so. But, you know, and I think the other factor is, is, of course, as you said, the gift from God, the weather. I mean, we should be praying that we don't have a, you know, a beast from the East again or a sustained period of very cold weather.

[00:33:04] Tobias Federico , Managing Director, Senior Analyst, Montel Analytics: Yeah. I mean, it's interesting that we had a discussion that the gas storage levels in Germany, within Europe, have been decreasing quite significantly by the end of last year. And there was a fear that we had missed gas. Then, for the upcoming second part of the winter of this winter. I don't see that really. I mean, of course, a very long period of cold weather then might be an issue, but I don't see that. It could well be that.

[00:33:32] Richard Sverrisson, Editor-in-Chief, Montel: Thank you very much to our guests, Katharina Johannsen and Tobias Federico, for their insights