Have law makers, regulator and energy consumers been misled about a crucial issue of the German energy transition (“Energiewende”): the must-run capacity of fossil-fueled generation to guarantee grid stability and security of supply? According to the news agency “Background Energie”, that has analyzed data from the German regulator´s SMARD platform, fossil-fueled power plants have recently proven to be a lot more flexible than the “official” scenario presumed, reacting to financially extremely painful negative prices due to high shares of renewable energy.
These findings heavily impact current, highly controversial issues of the German “Energiewende” which, hence, need to be re-assessed: the record-high re-dispatch (costs) as well as the dimension and rod map for grid expansion and coal phase-out. Law makers in parliament and ministries as well as the regulator “Bundesnetzagentur” to their own reports lack information, experience and control regarding must-run-conditions and the grid and power plant operators´ must-run-decisions – turning the must-run system into a black box. This black box needs to be opened, cleaned up and innovated urgently to protect consumers from costs and to enforce the renewables´ grid and dispatch priority.
Summary:
- Fossil-fueled must-run-capacity is significantly lower than presumed, undermining renewables´ grid priority and priority dispatch
- Crucial “Energiewende” issues need re-assessment: re-dispatch (costs), dimension and road map for coal phase-out and grid expansion
- Must-run decisions by grid and power plant operators are a black box as law makers and regulator lack information, experience and control
- Must-run black box endangers “Energiewende” and needs urgent clarification, clean up and innovation
- EU has to tackle must-run issues within plans for an “Energy Union”
Lignite -30%, hard coal -50% below official must-run scenario
According to the analysis lignite-fired power generation has been 30% below the official must-run scenario (‹5 GW instead of 7 GW). Hard coal has been even 50 % below (‹0,8 GW instead of 1,5 GW). In total numbers, only 15 GW of the 100 GW installed capacity of conventional power plants were running. So far, the “official” must-run-capacity presumed 20-25 GW. These facts disenchant – at least partially – the fairytale of high fossil-fueled must-run capacity.
“He that will not hear must feel” – The good side of negative prices
What happened? Short answer: extreme financial pain! According to the cited example the prices were mostly negative for three days in a row: up to minus 63 Euro per megawatt hour. The baseload-price for a whole day was minus 22 Euro. Consequently, an 800-megawatt-block´s operator would have had to pay 434.000 Euro for its all day generation – only to feed in the grid. A lot of generators decided to reduce production or even shut down blocks instead.
If “official” must-run scenario is false, then …
The higher flexibility of fossil-fueled generation strongly impacts key (highly disputed) issues of current German energy policy.
- … too many wind turbines were shut down, causing too high costs for consumers
On 1st Januar 2018y, the biggest German Transmission System Operator (TSO) TenneT shocked the public that it had “spent the record sum of one billion Euros to stabilise the power grid in 2017”. Almost 500 million Euros were compensation payments to operators of wind farms that had to be shut down. These 500 million Euros were passed on to consumers through their electricity bill as part of the “network charge”. This news was followed by the traditional media echo: “Too much wind generation in the north, grid expansion is too slow”.
Considering the now revealed flexibility of conventional power plants the story needs to be (partly) retold. The shut down of wind farms and the “record high costs” might be “illegal”. As one of its core instruments the German Renewable Energy Act (“EEG”) concedes grid priority and priority dispatch to renewable energy generation: in case of critical grid situations grid operators (TSOs, DSOs) have to reduce or shut down conventional generation first, reducing or shutting down renewables is only allowed as last resort – unless conventional power plants qualify as so called must-run-capacity. Following the analysis´ findings, more conventional capacity and less wind energy could/should have been shut down or reduced. The consumers´s bills would have been lower.
- … ambitious coal phase-out is no threat to grid stability and security of supply
The “surprising” flexibility of fossil-fueled power plants also impacts the discussion about the dimension and road map of the (lignite) coal phase-out that has been one of the most important and most disputed subjects during the (in the end failed) exploratory tasks of the so-called “Jamaica” government. Whereas the Conservatives (CDU) and Liberals (FDP) still cling to a high lignite-fueled must-run capacity, the Greens (and renowned think tanks) are convinced that more lignite power plants can be shut down immediately without any risk for the security of supply. The latter now have some hard facts on their side.
- … less grid expansion needed
Though nobody questions the general necessity of expanding the German grid in order to transport and distribute the growing amount of electricity generated by renewable energy, the dimension of and road map for the grid expansion is very disputed. Considering the lower must-run capacity of fossil-fueled power plants, the traditional story of too much wind generation overloading the grid has to be retold. Less fossil-fueled must-run generation leaves more space for wind. Consequently, a lot more wind energy could (and should!) be transported to the industrial centres in southern Germany. There is no or, at least, not such a big lack of (transmission) lines than presumed.
Shall-run, must-run … want-to-run?
Under the German Energy Law renewables SHALL RUN as much as possible. Therefore, the law concedes grid priority and priority dispatch to them. Fossil-fueled MUST-RUN generation is an exemption to the core principle of “Renewables First!”. Only objective grid related (technical!) reasons qualify as must-run conditions. In practice, there is a bunch of other reasons why fossil-fueled power plants keep on running. Do they all qualify as must-run conditions?
Some of them do without any doubts, amongst them (commercial contracts for) the provision of system services like minute reserve and (negative) balancing power. But there is also potential for abuse: power plants might register only pro forma for system services to become “must-run”. Pure commercial criteria, e.g. a shortened lifecycle or high costs due to frequent capacity changes, do obviously not qualify as must-run-conditions. Inflexible power plants do not qualify as must-run condition either – in theory.
Mixed technical-economic reasons – must-run conditions in a greyzone
In practice, must-run is not (only) a technical decision for grid and power plant operators but also (or mainly) an economic one. A lot of these mixed technical-economic reasons are in a legal grey area, especially extra-market opportunities, such as heat supply, self-consumption and saved network charges, as well as contracts and price agreements with large customers. And there are also some tricks, e.g. conventional power plants sign heat supply contracts to become a CHP installation that also benefits from the dispatch priority. Where is the limit? “Background Energy”´s analysis is an indication – if not evidence – that a lot of reasons for must-run decisions by power plant operators do not or – better – should not qualify as must-run conditions.
Black box “must-run conditions” – law makers and regulator lack information, experience and control
The problem is: law makers, the German regulator as well as renowned think tanks lack information, experience and control. As a consequence, must-run decisions by grid and power plant operators are a black box. The German government, i.e. the ministry of energy, admits that there is hardly any declaration of must-run-capacities. It does not know the minimum fossil-fueled capacity that is needed to guarantee grid stability. It has no information on must-run-capacities, let alone detailed information on single power plants or blocks that have been reduced or shut down. The German regulator “Bundesnetzagentur” has only started to better understand and assess the must-run system. It has released a first (?!) report on must-run-capacities in 2017 – relying on a questionnaire sent to grid and power plant operators. That is obviously not sufficient: “To drain the swamp, don’t ask the frogs”. The “Bundesnetzagentur admits: “We have and want to learn a lot”.
Transparency, clean up, clarification – and innovation!
Transparency is the key and basic requirement to better understand and solve the must-run dilemma. This includes more compulsory information, reporting and plausability explanations by grid and power plant operators on their must-run decisions. At the end of the evaluation, there must also be a definitive list of clearly defined must-run conditions. And it is long overdue to enable (more) renewable energy sources to enter the markets for grid services, such as balancing power. Private small scale prosumers should also be entitled and empowered to take part in new markets, e.g. the provision of balancing power through virtually pooled battery systems.
Must-run disaster endangers “Energiewende”: Fix it Berlin – and Brussels!
With the must-run system a core instrument of the German “Energiewende” has derailed, putting the „Energiewende“ – especially its acceptance – at stake. Due to a lack of supervision nuclear and lignite-fired power plants keep on running at unprofitable or even negative prices undermining the renewables´grid priority and priority dispatch. Consumers and the environment pay the bill.
Law makers (as soon as there is a new government) have to bring the must-run system back on track by clarifying, cleaning up and innovating the regulatory framework. The regulator “Bundesnetzagentur” has to be tougher and more “inquisitory” regarding the grid and power plant operators´ must-run decisions, using all its current means and power.
The must-run system, grid priority and dispatch priority for renewables as well as compensation for re-dispatch are also subject to current EU-regulation within the plans for an “Energy Union”. The corresponding draft “Regulation on the internal market for electricity” is currently going through the EU-legislation process. Brussel must also consider the “surprising” flexibility of fossil-fueled power plants!
