Germany’s Energy Minister Katherina Reiche presented a “monitoring report” on the progress of the German energy transition. With this “reality check” her Ministry aims to keep the transition science-based and affordable. The report suggests targeted tweaks to German energy policy rather than a categorical reorientation. And most of Reiche’s 10-point Action Plan is well-judged. But the assumptions on electricity demand are timid, which means the Plan is missing something crucial – that Germany’s households and businesses should electrify to remain competitive and keep bills down.
This week Germany’s Energy Minister Katherina Reiche presented a monitoring report on the progress of the energy transition. On the back of it, Minister Reiche published an Action Plan with 10 concrete points to recalibrate the German energy system.
The report, conducted by researchers from EWI Köln and BET, analyses the system costs of renewables and how to optimise them. It concludes that Germany’s energy transition is largely on track. It provides recommendations to further accelerate the expansion and system integration of wind energy and identifies areas for political decision.
The report estimates Germany’s 2030 electricity demand at 600-700 TWh. Minister Reiche stressed that her Ministry expects demand to be closer to the lower end of the 600-700 TWh corridor. But Germany has started to revive its economy. This will lead to significantly higher electricity demand – fuelled by economic growth, the uptake of electromobility and electric heating as well as the growing electricity demand from data centres and renewable hydrogen production.
“The monitoring report sticks to the goal of Germany getting 80% of its electricity from renewables by 2030. And it identifies what’s needed to get there: more investments in grids, storage and flexibility. The report also sticks to the current build-out plans for onshore wind. But it’s hard to understand the big drop in the expected level of electricity demand. Does Germany not want its consumers, household and industrial, to benefit from the cheaper energy that would come from having a more electrified energy system?”, says Giles Dickson, WindEurope CEO.
Reiche’s 10-point Action Plan
The 10-point Action Plan sticks to Germany’s targets of 80% renewables in electricity by 2030 and climate neutrality by 2045. It underlines that the German energy transition is largely on track. A categorical reorientation is not necessary.
The Plan provides concrete measures to optimise energy system costs. Measures of specific importance to onshore wind energy include:
Auction design: Germany aims to move away from its current support scheme for onshore wind and towards two-sided Contracts for Difference (CfDs). This is in line with EU legal requirements. Power Purchase Agreements (PPAs) will accompany the new CfD scheme and reduce investment risks for both power producers and industrial offtakers.
Grids: Germany will experiment with different innovative measures to improve electricity grid performance and avoid grid congestion: network traffic lights, cable pooling, overplanting at individual grid connection points, and regional bonuses. They will give priority to overhead lines. The European Commission should take note for its upcoming EU Grids Package.
Grid queues: Crucially, Germany will tackle a major bottleneck across many European countries, grid connection queues, with new digital queue management systems. Across Europe more than 500 GW of potential wind energy capacity are waiting for an assessment of their application for a grid connection. Other countries will follow the German progress with interest.
Collocation: Germany encourages the collocation of renewables and battery storage. “Synchronising” the build-out of storage/grids and renewables must not lead to building fewer renewables. Instead, Germany must ramp up the rollout of grids and storage to match the speed of its renewables build-out. The monitoring report provides a number of recommendations on how to accelerate the rollout of storage and reduce permitting times for new storage projects.
Capacity market: To ensure the highest levels of security of supply, Germany will set up a technology-neutral capacity market by the end of 2027. Flexibly controllable renewable bioenergy and hydropower, large-scale storage facilities and new gas power plants will become the backup for the leading electricity generation technologies: wind and solar.