Electrical networks are essential to the energy transformation

Reshipment measures are complex and expensive. The costs of load management, which translate into network charges, have increased significantly in Germany in recent years. In 2020, network costs amounted to EUR 240 million, and in 2022 this amount increased to EUR 2.7 billion: EUR 1.8 billion for the inclusion of fossil fuel power plants – due to the increase in fuel prices – and 0.9 EUR billion for financial compensation paid mainly to wind farm operators.⁸

Accelerating the expansion of the power grid infrastructure

Fluctuations in power supplied from renewable energy systems, new decentralized distribution of electricity generation and energy supply management require extensive adjustments and accelerated expansion of network infrastructure. The recently presented EU action plan aims to accelerate project implementation and improve long-term network planning to use more electricity from renewable sources and integrate electricity demand, including hydrogen, into the energy system. ⁹

Germany intends to speed up the planning process, among others. by taking over shares in the high-voltage network operator Tennet. Additionally, as an investment incentive for new investments in the distribution network, from January 1, 2024, the allowable return on equity will be significantly increased by changing the formula for its calculation.¹⁰ The allowable return on equity should also be adjusted for new investments in offshore wind farms and interconnectors.

Additionally, the network development plan in Germany envisages the construction of pumped-storage power plants with a capacity of up to 12 GW and up to 168 GW of large and small battery storage facilities, and hydrogen could also be used as an energy source for seasonal energy storage and renewable energy.¹¹

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¹IEA (2023). Electricity networks and safe energy crossings. September 2023, pp. 14, 91.

²Michał Huber (2022). Ist der Ausbau des Stromnetzes für die Energiewende unverzichtbar? (Is network expansion necessary for energy transformation) Celle. Version 01/04/2022.

³ IEA (2023). Electricity networks and safe energy crossings. September 2023, pp. 14, 91.

⁴ec.europa.eu/commission/presscorner/detail/de/IP_23_6044, accessed: 30/11/2023.

⁵IEA (2023). Electricity networks and safe energy crossings. September 2023, p. 13 43.

⁶TenneT (n.d.). https://www.tennet.eu/de/blog/redispatch-systemsicherung-im-uebertragungsnetz., accessed: 16/10/2023.

⁷bundesnetzagentur.de/DE/Fachthemen/ElektrizitaetundGas/Versorgungssicherheit/Netzengpassmanagement/start.html; Full-year data and quarterly reports for 2022, accessed: November 30, 2023.

⁸bundesnetzagentur.de/DE/Fachthemen/ElektrizitaetundGas/Versorgungssicherheit/Netzengpassmanagement/start.html; Data on network congestion measures in 2022, pp. 5, 9; accessed: 30/11/2023.

⁹ European Commission (2023). The Commission sets out actions to accelerate the construction of electricity networks. Published on November 28, 2023. To combine. Accessed: 04/04/2024

¹⁰^{bundesnetzagentur.de/DE/Beschlusskammern/1_GZ/BK4-GZ/2023/BK4-23-0002/BK4-23-0002_PlanFestlegung_EKZins_BF_download.pdf?__blob=publicationFile&v=4; According to the Federal Network Agency, the allowable return on equity is expected to increase from 5.07% to 7.09%.

¹¹netzentwicklungsplan.de/nep-aktuell/netzenwicklungsplan-20372045-2023; Power grid development plan 2037/2045, second draft, pp. 25. 23; accessed: 30/11/2023.}