A Painful Lesson: Germany’s Energy Dependence
Almost four years ago, Germany learned a painful lesson: relying on the energy of a geopolitical rival poses significant risks. The Russian gas crisis, exacerbated by the invasion of Ukraine, forced Germany to make extensive sacrifices while transforming its energy model. As 2026 approaches, the new government under Friedrich Merz finds itself in a similar predicament, facing the daunting challenge of reducing its reliance on another major player—China.
The Roots of Dependence: Solar and Wind Technology
The same stone twice. Although Germany has managed to break free from Gazprom’s gas pipelines, its solar panels and grid technology continue to bear the unmistakable mark of Chinese manufacturing. Recently, Berlin has acted cautiously in response to revelations about potential financial operations that could deepen this dependence. The need to scrutinize every watt entering its energy system has become imperative to avoid repeating past mistakes.
A Trigger for Concern: Investment and National Security
The trigger. The Italian company Snam SpA recently aimed to acquire a minority stake in Open Grid Europe (OGE), one of Germany’s largest gas network operators. While the investment appeared to be between European partners, the German Economy Ministry quickly identified potential risks linked to Chinese involvement. Snam’s involvement was concerning, given that the state-owned State Grid Corporation of China holds a 35% stake in Snam’s major shareholder, Cassa Depositi e Prestiti. As a result, Snam withdrew its offer, highlighting Berlin’s intense scrutiny of foreign investments that could threaten national security.
A Shift in Policy Direction
A clear message. This recent decision marks a shift from the more liberal stance taken during Olaf Scholz’s administration, which had previously permitted significant Chinese investments. The current government prioritizes national security over capital, indicating a strategic pivot towards more defensiveness in energy policy.
The Challenge of Decoupling
Too late? Blocking the acquisition of a gas network may seem straightforward, but untangling technological dependence on China emerges as a logistical nightmare. A staggering 95% of photovoltaic cells installed in Germany originate from Chinese manufacturers, while the wind industry’s offshore capabilities heavily rely on rare earths primarily controlled by China.
The German energy transition is, therefore, inextricably linked to Asian hardware. To achieve its climate goals, Germany requires Chinese technology, which paradoxically now poses a systemic risk as flagged in various international forums.
Is Decoupling Possible?
Is decoupling possible? Previous attempts to mitigate risk—such as when the German government intervened to ensure the KfW state bank acquired a stake in 50Hertz to prevent it from falling into Chinese hands—have proven insufficient. The challenge now lies in not just “patching” individual acquisitions, but addressing a deep-rooted structural dependency.
If the experience with Russia serves as a lesson, the German government appears determined to invest in security ahead of time, ensuring it is not once again left vulnerable. However, the stark market reality remains: replacing Chinese hardware is not only costly but also time-consuming, adding further complexity to Germany’s renewable deployment.