German energy transition – 2017 update (part 2)

Continuation of the miniseries on the energy transition from the perspective of meeting targets in environmental and climate protection, security of energy supply and cost-effectiveness.

Since September 2012, consultancy McKinsey has regularly published the “Energy Transition Index”, which, based on an assessment of fifteen measurable parameters, clearly illustrates the current state of this complex transformation process and assesses the feasibility of meeting the political, environmental, economic and technical targets defined by the federal government by 2020.

The partial assessment of area (I) Environmental and climate protection was presented in the previous article (see part 1).

In today’s instalment, we will examine the assessment results for area (II) Security of energy supply, which is specified in greater detail by the following five parameters:

Area (II): Security of energy supply

• Electricity supply interruptions [min/year]
• Costs of grid measures [EUR/MWh]
• Provision of capacity reserves [%]
• Transmission grid construction [km]
• Delays in connecting offshore wind power [-]

Assessment: (II) Security of energy supply

This parameter aggregates interruptions to household electricity supplies lasting more than 3 minutes over the course of a year. The target value for 2020 was based on the requirement to maintain the 2008 baseline of 17 minutes/year.

In this case, the parameter increased insignificantly from 12,3 to 12,7 min/year, meaning that the results to date attest to the high-quality work of German grid operators and distribution companies. Despite the substantial increase in the capacity of sources with variable output dependent on current weather conditions (solar PV and wind power) since 2008, the quality of household electricity supply has not deteriorated. In terms of comparison over a longer time horizon, the positive trend has been maintained, given that this parameter stood at approximately 15 minutes/year in 2010 and 2011.

In view of the conclusions discussed above, achieving the 2020 target value was clearly assessed as “feasible” (F).

This parameter aggregates the costs of operational grid interventions by operators triggered by fluctuating solar PV and wind power generation (so-called redispatch and countertrading), as documented by the Federal Network Agency (Bundesnetzagentur). The target value for 2020 was based on the requirement to maintain the 2008 baseline value of 1,0 EUR/MWh.

In this case, an upward trend can be observed since 2008, with a temporary decline in 2009. Current actual values are already more than three times the original target, at 3,4 EUR/MWh. Achieving the 2020 target value is clearly assessed as “infeasible” (I).

In this context, the document contains information that annual costs of grid interventions are expected to increase from the current EUR 1 billion to as much as EUR 4 billion by 2025, based on data from the Federal Ministry for Economic Affairs and grid operator TenneT. The reason is the expected substantial increase in curtailment and redispatch associated with continuously growing renewable generation, compounded by the closure of currently operating nuclear and certain conventional sources by 2022.

Operators are well aware of weak points in the transmission grids they operate, which are under ever-increasing pressure owing to the sustained growth of weather-dependent, variable renewable output. For this reason, they pre-emptively secure additional generation capacity for redispatch so that they have the technical means to correct grid loading. For example, they have contracted reserve power plants in southern Germany and Austria.

Overall, it can be said that operators have so far been successfully adapting to the dynamic situation in the electricity market, so the parameter is currently being met with a margin. Maintaining the 2020 target value is assessed as “feasible” (F).

From a technical perspective, I consider it appropriate to reiterate my note on the previous edition: the parameter aggregates capacity reserves at national level. However, grid operators need to control generation sources at specific connection points to the transmission system, or in specific locations. In other words, a satisfactory value at an all-German level does not mean that all technical requirements of regional operators are being met. The problematic situation regarding grid construction and the contracting of reserve sources persists, particularly in southern Germany.

The 2020 target value for this parameter has already been revised several times based on adjusted requirements from grid operators. The latest version from the second half of 2016 calls for the construction of 1909 km of new lines. The current total is 632 km, while the interim target was set at 947 km. To achieve the target set for 2020, approximately 320 km would have to be built each year, which is not feasible, particularly in terms of settling property rights during project preparation. Achieving the set target is therefore classified as “infeasible” (I).

This parameter follows on from parameter “(2) Progress in offshore wind power construction” (see part 1) and indicates the number of projects with announced delays in connection to the transmission system.

For technically minded readers, I would like to recommend an older article on the offshore wind farm Bard Offshore, in which I described, using this specific example, the technical solution for transmitting power from large wind farms.

Wind farm construction is currently proceeding according to plan and no delays have been indicated, so achievement of the 2020 target is assessed as “feasible” (F).

Interim conclusion for area (II) Security of energy supply

German grid operators and electricity distributors have long made considerable efforts, incidentally usually unappreciated by the public, to integrate the growing renewables segment, particularly wind power and solar PV, into the power mix. Meeting the interim energy transition targets in terms of the duration of electricity supply interruptions and the provision of capacity reserves confirms this conclusion.

As already stated in part 1 of the series, offshore wind power construction is proceeding according to plan and no delays are currently indicated, so this parameter is also being met.

The situation is more complicated in transmission grid construction. Although the original mandate for construction of selected transmission lines was formulated under a special law (EnLAG) as early as 2009, interim results do not match the targets set.

Unsatisfactory interim results in the case of grid-measure costs demonstrate the initial underestimation of the economic aspects of integrating variable renewable generation, on a truly substantial scale, as current costs are 3,4 times higher than the set target value.

Overall, however, it can be said that, in the area of “Security of energy supply”, analysts’ data demonstrate satisfactory results.

To be continued in the next instalment: Assessment: (III) Cost-effectiveness

(Written for the iDNES blog and Oenergetice.cz)

Petr Nejedlý