Germany to face challenges to energy supply security in coming years – govt advisors
Clean Energy Wire
A projected increase in electricity demand and a reduction of power plant capacity able to supply electricity at any moment are set to represent concrete challenges for Germany' energy supply security in the coming years, the country’s key energy transition advisors said in a report. The shuttering of coal-fired power plants while the buildup of alternative gas-fired power plants is lagging is a key obstacles in this regard, the advisors said.
The outgoing coalition government had failed to adopt legislation to introduce subsidy auctions to build new gas power plants, which could ensure supply especially during periods of high electricity demand and reduced renewable power production when there is little wind and sunshine. Following the country's election in February, the law must be re-introduced in parliament, which will hold its first session on 25 March. The ongoing negotiations over the country’s likely next coalition government of conservatives (CDU/CSU) and the Social Democrats (SPD) could further delay the process.
The expert commission tasked with monitoring the energy transition’s progress said that tackling this issue is “one of the most urgent and time-critical areas of action" for a new government,” even though the electrification of sectors like transport and heating progressed slower than expected. In addition to the short-term support auctions, the country needed a capacity mechanism, through which operators are rather paid for keeping plants at the ready than for the individual kilowatt hour of electricity.
Germany has been building up renewable power capacity while steadily decommissioning coal plants and has phased out its nuclear plant fleet as part of the energy transition. The prospective next government has said in an initial agreement that it will aim to introduce incentives to build up to 20 gigawatts of gas power plant capacity by 2030.
The country's grid regulator (BNetzA) must greenlight plant closures before they can be fully shut down, instead of moving them into a backup security reserve. Moreover, Germany's likely next chancellor, Friedrich Merz, explicitly said he wouldn't shutter any old coal plants before altneratives have been put in place.
The experts’ report is a brief update on the status of the German energy transition. Since the last full-length monitoring report from mid-2024, areas that have seen slight improvements are the grid, energy costs and greenhouse gas emissions, although all three are still off track regarding the targets. The experts see only the expansion of renewables as being fully on track. The slow hydrogen ramp-up continues to be a major shortcoming identified by the commission.
The report also recommends splitting Germany’s single electricity price zone, which currently causes inefficient decisions on locations for new capacity and uneconomical operation of power plants of all kinds. Splitting the zone would incentivise building new capacities where they are actually needed, because operators can expect higher revenues there, said the experts.
The move would also allow for a more cost-efficient geographical distribution of new gas power plants or large-scale energy storages than in the single price zone. The report said that the average electricity price even in more expensive zones could in the future be lower than with a single zone, as redispatch and grid expansion costs would be lower overall. Germany could learn from other EU states like Italy or the Scandinavian countries, which introduced compensation for those who are put at a disadvantage by such a reform, said the report.
