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Germany is lagging behind in expanding its electricity grid. It is expected that only a third of the planned lines will be in operation by 2030. Experts are calling for a reform of the electricity market.
Andreas Eggensberger had a huge solar system installed on the roof of his hotel around ten years ago. On average, he generates a third of his electricity consumption per year himself. He gets another third of his electricity from hydropower, and he has to buy the remaining third from the local energy supplier.
Despite this one third, he notices the price increase clearly: “We have now had a 66 percent increase in electricity prices,” calculates the hotelier. That’s 68,000 euros that he paid more. “That’s pretty crazy.” The hotelier fears that electricity prices will continue to rise in the future. That’s why he wants to generate even more solar power himself. His problem: He no longer has space on his roofs.
Business between brothers?
However, his brother Josef would have it in his barns: they are only a few minutes’ drive from the hotel. The majority of the electricity that farmer Eggensberger does not use himself is fed into the domestic grid. For this he will soon only receive six cents per kilowatt hour (kWh). Then the system no longer pays off, he says. Then it “perhaps becomes uneconomical if, for example, the inverter is broken” and a repair is required.
He could still install solar systems that generate a peak of 30 kWh on his roof: exactly the amount that his brother Andreas lacks for his hotel. The obvious idea: The farmer Eggensberger sells his excess electricity to the hotelier Eggensberger. Depending on negotiations with his brother, he could get paid more for his electricity than the guaranteed electricity prices from the state. And for the hotelier, the electricity would cost less than from the local energy supplier.
Limited lines, limited power
But at the moment the political framework is slowing things down, says Andreas Eggensberger frustrated. There is currently no legal regulation that allows direct electricity trading between him and his brother. A side effect of “Energy Sharing”: direct consumption on site would relieve the burden on the power grid. Because this is already reaching its limits today.
The engineers at network operator Amprion feel this almost every day in Europe’s largest main switching line. One of them is Matthias Livrozet. Limited lines mean limited amounts of energy that can be transported, he explains. This creates situations in which so-called redispatch measures are necessary. This means that, on the one hand, generation plants are switched off; On the other hand, where there is no electricity, plants are started up at the same time, “which then generate the energy, so that the balance remains the same,” says Livrozet.
“Will drown in solar power”
In the first half of 2022 alone, around five percent of renewable electricity was blocked in this way. This corresponds to the electricity consumption of all households in Berlin, Brandenburg and Mecklenburg-Western Pomerania. At the same time, the redispatch measures tripled: the costs rose from 500 million to one and a half billion euros – a sum that is passed on to all electricity customers.
Experts like Volker Quaschning, professor of renewable energy systems at the Berlin University of Applied Sciences, fear that the power grid will have problems and reach its limits in just three or four years. The share of renewables is expected to double by 2030. “That means that in the future we will be drowning in solar power at midday when the sun is shining,” predicts Quaschning.
Uniform price zones make electricity the same price everywhere
The electricity market is currently set up as a so-called single price zone system. This means that it is assumed that the renewable electricity generated can be distributed anywhere across the country. Because that is not the case, the EU regulatory authority ACER made a proposal last year: Germany should be divided into different zones instead of a uniform electricity market. This means that the amount of electricity actually produced in the respective zone can be used better. Another consequence: Where a lot of renewable electricity is generated, it would become cheaper.
However, the issue is politically sensitive, says Lion Hirth, professor of energy policy at the Hertie School in Berlin. “Because, of course, electricity prices would be cheaper on average in the regions where there is a lot of wind energy and solar cells, and in the areas where little renewable energy has been developed, for example in Bavaria or the southwest, they would tend to be a little higher.”
The board of the network operator Amprion, Hans-Jürgen Brick, is against the proposal and considers accelerated expansion of the electricity networks to be the most important means of reducing costs. But despite all efforts, things are stalling in Germany. According to a forecast by the Federal Network Agency, only 5,000 kilometers of the necessary 14,000 kilometers of power lines will be in operation by 2030.
Politics doesn’t want to change anything
Martin Weibelzahl, director at the FIM Research Institute for Information Management, also believes that in the future the price of electricity will be based on regional availability. With the switch to renewable energies, a uniform electricity price for Germany as a whole makes no sense. “Market prices not only have to fluctuate over time, but also have to be differentiated spatially,” says Weibelzahl. “In this way, the industry can produce at more competitive prices and in this way transform itself overall.”
But so far politicians have not wanted to change the foundation of the electricity market. This could come at a price for all electricity customers, says expert Hirth. Because it will ultimately lead to “the electricity system becoming more expensive for all of us. We will block more renewable energies, we will pay more money for network expansion. We will pay higher network fees.” That works, says Hirth – but: “It just becomes more expensive.”