Renewables Action Plan

Germany draws up strategy for grid optimisation and expansion

The progress of Germany’s energy transition policy, popularly known as Energiewende, has been sluggish. The country’s plan to completely phase out nuclear by 2022 and increase the share of renewables in power consumption to 65 per cent by 2030 is in danger due to the inordinate delays in the implementation of grid expansion plans. The federal government has taken several measures in the past to accelerate grid expansion to accommodate the rapid growth of renewable capacity, but they are yet to translate into real progress on the ground. Besides integrating renewable energy, the existing transmission network has also come under stress due to the opening of cross-border lines as part of the creation of the European internal market. During 2017, congestion management and redespatch costs amounted to Euro 1.4 billion. Importantly, these costs are allocated to consumers through network charges. These costs are expected to rise further as the existing networks are reaching their limits.

In yet another attempt to resolve the grid challenge, the federal ministry for economic affairs and energy (BMWi) announced the Electricity Grid Action Plan (Aktionsplan Stromnetz) in mid-August 2018. Under this, the ministry plans to adopt a dual strategy of optimisation and better utilisation of the existing grids, as well as accelerate network expansion. To ensure the latter, BMWi proposes to streamline planning procedures by amending the Network Expansion Acceleration Act (NABEG 2.0) in autumn 2018 (September-November).

Electricity grid action plan

The proposed NABEG amendment will include measures such as fast notification procedures for small network reinforcement measures instead of approval procedures; a waiver of federal planning, where an existing route is used; limiting the state governments’ right to propose time-consuming alternative planning; and allowing the construction of the first part of a new line before the approval of the final stretch of the entire route.

The action plan also suggests economic incentives for faster grid expansion and the optimisation of the power grid. Currently, the return on expansion projects is not dependent on whether the power line is put into operation as per the original schedule, or later. Further, there are no economic incentives to minimise the bottleneck costs. In the short term, the existing networks must be optimised with new technologies and operating concepts. Two levels of actions are proposed to minimise network bottlenecks – implementing control and monitoring measures with available technologies, and testing new technologies and using them widely if feasible.

To reduce grid intervention costs, all generation plants including renewable and combined heat and power as well as power plants in neighbouring countries (which can be redespatched) must be included in an optimised concept for bottleneck management. Better cooperation among transmission and distribution network operators will help exploit the potential in the distribution grids.

Industry reaction and the way forward

The industry reaction to the latest action plan has been positive. In fact, industry associations are of the view that these provisions are long overdue. Some opine that the legal measures must be implemented quickly for progress on the ground. The German Renewable Energy Federation expects the government to announce an appropriate plan for storage and provisions to further reduce the conventional minimum generation.

Meanwhile, the government is reportedly examining the revitalisation of the feed-in priority for renewable energy to save network congestion costs. In early 2018, the new coalition government made further expansion of renewable capacity contingent on the grid’s capacity to transport additional electricity. The government is under pressure, as it cannot use inadequate grid capacity as a reason to slow down renewable development. Further, the phase-out of coal-based generation (as committed by the government) may be essential to alleviate stress on the grid.

Undoubtedly, the rapid expansion of a well-developed network, along with new renewable capacities, is critical for the success of Energiewende. While the government has been intent on achieving a smooth energy transition, the pace of transmission grid expansion has been dismal. Although several of the government’s previous attempts and measures have failed to yield results, it is hoped that the latest action plan and the proposed legislation will help accelerate grid development.

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