How Renewables and Distributed Resources Have Impacted Transmission in Germany

October 2014

ScottMadden recently joined the Solar Electric Power Association (SEPA) to lead a group of approximately 30 U.S. energy industry executives to the bellwether energy market of Germany to exchange information with electricity and solar market leaders who are adapting to change in this dynamic and controversial environment. This select group of executives met with energy industry peers with the goal of returning with insights and practical knowledge that can be applied to planning and business decisions in the United States. The trip featured face-to-face meetings with thought leaders and decision makers from the electric utility, transmission, and renewable energy industries; government, trade, and industry associations; and market experts.

During the Transmission Executive Forum West, Chris Vlahoplus, partner and clean tech & sustainability practice leader at ScottMadden, presented the case study, “How Renewables and Distributed Resource Penetration Impacted Transmission in Germany.” This presentation, based on the recent fact-finding mission trip, focused on Germany and explored how grid operations have changed and how transmission flows and utility revenues have been affected.

The report below provides an overview of German energy transformation, highlights the status of renewable generation penetration, and discusses the impact on transmission investment and reliability.

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How Renewables and Distributed Resources Have Impacted Transmission in Germany


  • Chris Vlahoplus Partner and Clean Tech & Sustainability Practice Lead
  • September 30, 2014

Fact-Finding Mission to Germany


  • SEPA and ScottMadden sponsored the fact-finding mission. Thirty U.S. executives attended, representing IOUs, public power, vertically integrated, PSC, solar industry, EEI, and EPRI. Three days were spent in Dusseldorf meeting with German energy participants, such as policy makers, utilities, and others. Overall Context Issues and Impacts Summary Observations

Germany What You Need to Know


  • Liberalization Shutdown of nuclear. High gas prices Increase in renewables. Not an island EU policies. Connections with neighboring countries. Carbon trading

The German Energy Transition


  • Energiewende Targets until 2050
  • Source: Costs and Benefits of the Energy Transition Dr. Martin Schpe, Federal Ministry for Economic Affairs and Energy

German Electric Market Structure Liberalization


  • Generators Utility scale Individuals Retailers More than 800 Distribution System Operators IOUs and municipals 20-year franchise Four Transmission System Operators (TSOs) Plan the transmission system Manage the supply market Energy-only market

Nuclear Shutdowns


  • All nuclear to be shut down by 2022 Incumbents made the bet on gasinvested heavily
  • Source: Energiewende and Grid Development in Germany Ulrike Hansen, International Affairs Energy, BNetzA

Renewable Energy Capacity Additions


  • Annual Renewable Energy Capacity Additions in Germany, 19902012
  • Source: Finadvice

Current Capacity and Generation


  • Net Installed Capacity Rating as of July 16, 2014
  • YTD Electricity Production through July 2014
  • Source: Fraunhofer Institute for Solar Energy Systems

Utility-Scale Wind in the North, Distributed Solar in the South


  • Source: SEPA Executive Fact-Finding Mission September 17, 2014 Netze BW GmbH, Gerhard Walker

Significant Variation in Load and Supply


  • Industrial south net user. Utility-scale wind in north with constrained transmission. Loop flows through Poland. Intermittency means significant reliance on neighbors Imports of French nuclear and Czech coal Dumping excess output
  • Issues and Implications

Significant Capital Investment Needed


  • Long-range plans submitted jointly by the four TSOs. Approval by the federal regulator. Recovery through kWhr charge Investment through 2030
  • Issues and Implications

Its Working with More Active Management of the Grid


  • Issues and Implications
  • Grid Interventions to Stabilize the Grid by Grid Operator TennetT 20032012

Significant Destruction of Value for Incumbents


  • RWE earnings down significantly

Summary


  • To understand Germany, must understand more than renewables. Have moved to a model much like ERCOT, but with TSO ownership of assets. Reliability has been maintained without significant investment, but with active management and reliance on neighboring systems. But, significant investments are on the horizon at both distribution and transmission levels. Short-term results are questionable (increased CO2 and higher rates), but focus is on long game

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