The energy transition and Germany as an industrial hub: Why Germany must consider both together

Germany tends to debate the energy transition as though it were primarily a question of cost: Who's going to pay for it? How expensive will electricity get? Who can still afford it? What gets lost in this framing is that the energy transition is also one of the greatest economic and industrial growth opportunities Germany has had — or will have — in the coming decades. Or won't have. And it will determine, very concretely, which jobs will still exist here in the medium to long term — over the next 10 to 20 years.

This article is therefore not just about electricity prices and legislation, but about a central question: Does Germany want to be an industrial and technology hub for the energy transition — or primarily a sales market for technology made elsewhere?

Where do we stand today?

In 2025, renewables accounted for 55.9 percent of Germany's public net electricity generation. In the first quarter of 2026, according to Fraunhofer ISE, 54.5 percent of electricity came from renewable sources. That is a genuine achievement and should not be understated.

But alongside that figure stands another: 88 percent of solar modules imported in 2025 came from China. The import value was almost five times higher than the export value of German photovoltaic technology. Domestic module production alone collapsed by more than 60 percent in the first three quarters of 2025.

What this means: Germany is building the energy transition — but the value creation is happening elsewhere. We are installing what others manufacture. That is not a defeat as long as it is a conscious decision. It becomes a defeat when it is the result of policy failure and a missed industrial strategy.

We know the pattern — but we're telling it wrong

How Germany lost its solar industry is well documented. From 2012 onwards, under Environment Minister Peter Altmaier, support conditions for solar power were drastically tightened: feed-in tariffs fell, automatic reduction mechanisms slowed expansion. Annual new photovoltaic capacity dropped from nearly 8 gigawatts to under 2 gigawatts. Many manufacturers went bankrupt. The industry still refers to this collapse today as the "Altmaier Dent."

That is the familiar version. It is accurate — but incomplete.

At the same time, China was building its solar industry into a global heavyweight through massive state subsidies, cheap credit and targeted scaling. Production capacities exploded, module prices fell by over 80 percent. Today China manufactures more than 80 percent of all solar modules worldwide.

The uncomfortable truth: even with more favourable German support conditions, competing against this kind of industrial policy would have been extremely difficult. The Altmaier Dent worsened and accelerated the situation — but China's rise was not a by-product of German policy mistakes. It was the result of a consistent state strategy against which Germany had no comparable response.

Why does this matter? Because the right lesson from this story is not: "Better subsidies and it'll work out." The right lesson is: industrial policy decisions of this magnitude require industrial policy responses of this magnitude. Better feed-in tariffs alone are not enough.

The looming "Reiche Ravine"

With the draft for the new Renewable Energy Sources Act (EEG) 2027 — currently a working draft, not yet passed into law — Economics Minister Katherina Reiche is planning a fundamental reform. For new small rooftop PV systems up to 25 kilowatts, there will no longer be a fixed feed-in tariff from 2027. Electricity will only be sold at fluctuating market prices, minus marketing costs. For many homeowners, energy cooperatives and small businesses, viability becomes more uncertain and harder to plan.

Industry representatives and researchers are already warning of a "Reiche Ravine" — a direct reference to the Altmaier Dent. This warning is justified. But it does not go far enough.

More critical than individual changes to remuneration is the removal of binding expansion targets. The existing Section 4a of the EEG stipulated how much renewable energy must be added annually to reach an 80 percent share of gross electricity consumption by 2030. These volume targets are absent from the new draft. Without concrete target pathways, there is no planning basis for tender volumes, grid capacities and investment decisions. This is not a detail — it is the foundation on which investors decide whether to build or wait.

A second problem: the grid package being discussed in parallel would make investment in regions with high wind and solar output riskier. In so-called "capacity-limited" areas, new installations would no longer receive compensation for curtailments. Associations describe this as an "announced investment freeze."

Whether these drafts will come into force as written remains to be seen. But the direction of the signal is clear — and in investment planning, signals count for more than laws that have not yet been passed.

The real question: where can Europe still compete?

In the mass production of solar modules, Germany will not catch up with China — that is realism, not surrender. The right question is therefore not whether to try, but where in the value chain Europe still has real opportunities: grid technology and system integration, battery storage, offshore wind, software and carbon management. In these segments, there are European companies with genuine expertise — and global demand. None of these opportunities will materialise automatically. They require planning certainty, skilled workers and industrial policy support. Germany is hesitating. The window is closing.

What is really at stake — and it's not about kilowatt-hours

The energy transition is often treated in Germany as a sector-specific issue: electricity, grids, installations. That is the wrong framing.

Steel and chemicals — two of Germany's and Europe's most important industrial sectors — will no longer be competitive in the medium term without affordable, green energy. Not because these companies are poorly managed, but because their production processes inherently require energy, and because that energy is either cheaper or already greener in other parts of the world.

Losing these industries means losing the foundation for everything that depends on them — mechanical engineering, suppliers, logistics, regional economic structures. And it means losing the industrial base that would be needed to manufacture energy transition technologies domestically in the first place.

This is not a textbook domino effect — it is a real dependency already visible today in investment decisions. Companies no longer assess locations solely on labour costs; they assess them on energy pathways. Where will affordable green electricity be available in five years, and at what price? The answer to that question determines where plants are located, and plant locations determine jobs.

Anyone who frames the energy transition as a question of cost has not understood this logic. The question is not who pays for the energy transition. The question is who can afford not to make it.

Jobs: what the numbers really say

Two figures worth remembering.

First: according to industry data, around 400,000 people were employed in Germany in the core renewables sector in 2023 — in manufacturing, planning, construction, operation and maintenance of installations. That is the highest figure in over a decade.

Second: in the broader GreenTech sector — including energy efficiency, sustainable mobility, water management and related areas — around 3.4 million people were employed according to the GreenTech Atlas 2025, approximately 7.5 percent of all employed persons.

Both figures are real, but they measure different things. The first describes the narrower core of the energy transition. The second shows how broadly the transformation sector has already grown into the wider economy.

What the IW/Bertelsmann study of 2025 additionally shows: the number of job postings relating to the energy transition more than doubled between 2019 and 2024 — from 173,000 to 372,500. While the total number of all job postings fell by around 16 percent in 2024, the decline in the energy transition segment was only around 8 percent.

That is a strong signal. But it should be read in full: more open positions also means those positions are harder to fill. Demand for GreenTech expertise is real — and so is the bottleneck. This does not contradict the growth argument, but it does indicate that training and upskilling are just as urgent as policy frameworks.

What this means in practice — for professionals and companies

The energy transition will happen. Not because policy drives it through, but because climate targets, ageing infrastructure and global competitive pressure make it inevitable. The open question is not whether, but how quickly — and who builds the industry behind it.

Germany knows the pattern: in the automotive sector, the country experienced what happens when a technology shift is underestimated while others have been laying the groundwork. Chinese electric vehicles are now pushing into the same market that German manufacturers dominated for decades — not because the shift came unexpectedly, but because the response took too long.

The energy transition poses the same question — but the window has not yet fully closed.

For professionals, this means: GreenTech expertise is a global investment, not just a German one. Those who plan wind turbines, digitalise grids, integrate storage systems or implement efficiency projects will be needed — in Germany, in Europe, worldwide. Political uncertainty does not fundamentally change that. It only determines where demand is drawn on first.

For companies, the picture is more sobering. Some will not survive the next few years — not because their business model is wrong, but because policy frameworks are blocking investment decisions that are long overdue. That is a reality that must be taken seriously. And at the same time: those who get through this phase will find themselves in a market that then picks up. A skilled workforce cannot be built on demand. The companies that can deliver when it matters are the ones that have invested in people now.

Sources: Destatis (PV import statistics 2025); GWS on behalf of BMWK (gross employment in renewable energies 2023); IW Cologne / Bertelsmann Foundation, "The Energy Transition as a Job Engine" (March 2025); Federal Environment Agency, "Employment in Environmental Protection" and GreenTech Atlas 2025; Cleanthinking.de, "EEG Amendment and Solar Trade"; Fraunhofer ISE, "Public Electricity Generation 2025 – Wind and Solar as Joint Leaders for the First Time"; BBH Blog / GÖRG (EEG Working Draft 2027).