Diversifying Deutschland

First corona, then the war against Ukraine have underscored the need to avoid one-sided dependencies. Politicians and businesses are placing a new emphasis on diversification – for energy, raw materials, supply and value chains, and more.

October, 2022

Ahmad Sharaf chose a complicated time to set up a business in Germany. As the second wave of the coronavirus pandemic took hold in the fall of 2020, the 38-year-old Egyptian engineer spotted a unique opportunity to start a small software development company offering artificial-intelligence-based language solutions for two separate, geographically distant client bases. And so DeepSource was born – simultaneously serving companies in the Middle East as well as Europe.

“Germany has long been a hub for advanced tech, including artificial intelligence,” says Sharaf, who had previously worked for major companies in Ireland and Saudi Arabia. “On the other hand, the pandemic paved the way for European companies to take advantage of remote talents as never before. Plus, Germany is the biggest economy in Europe, and we wanted to be in Europe. So we decided: Let’s go for Germany.”

Photo: Multipicture Kammann Rossi / Sources: Ørsted; Ørsted; Octopus Energy

In February 2022, Russia invaded Ukraine, causing horrific casualties, suffering and further disruption to the global economy, perhaps most prominently in the areas of energy and raw materials. Germany, which until recently sourced a comparatively large share of its imported energy from Russia, came under particular pressure.

Banking on renewables:

Firms like Denmark’s Ørsted and Britain’s Octopus Energy are supplying Germany with green energy.

Rethinking supply chains:

Companies in Germany are finding new sources for components like microchips.

Accelerating green goals:

Germany has increased its 2030 target for offshore wind from 20 GW to 30 GW (from 7.7 GW today). Also solar energy will see expansion rates of 22 GW per year. By 2030, there will be around 215 GW solar capacity installed.

Energy Security

To ensure greater energy independence, Germany is investing heavily in wind power, importing liquefied natural gas from Canada and elsewhere, and building a hydrogen economy.

The government’s reaction in the last few months has been swift and decisive. Almost overnight, diversification in the interest of energy security has been added to decarbonization as a main thrust of German policy, with the country formulating strategies to reduce and ultimately break its dependence on Russian natural gas, oil and coal. These have encompassed everything from floating LNG (liquefied natural gas) terminals and hydrogen to solar and wind farms. Within weeks, the German energy economy was repositioned and is now headed in new, far more diverse directions.

All this change will not come without sacrifice. At the same time, it will also bring unprecedented opportunities for innovative businesses to help shape a Germany better equipped to deal with whatever further challenges the future may hold. New players are finding new opportunities in the heart of Europe.