German government plans to limit grid priority for renewables – media reports

The German economy ministry is planning to scale back grid access priority for renewables in an upcoming reform of the country’s renewable energy support framework, according to media reports. The country’s renewable industry warned the changes could sharply increase costs and slow the energy transition. 

Priority grid access for renewables is a pillar of Germany’s central energy transition legislation, the Renewable Energy Act (the EEG in German). It stipulates that grid operators must not only prioritise connection requests from renewable energy projects, but also buy the electricity they generate. This guarantee provides investors with planning security and simplifies financing. Guaranteed feed-in support payments for renewable energy projects have been at the heart of Germany's energy transition since they were introduced in 1990, with similar schemes later adopted in many other countries.

The reforms detailed in a ministry draft dated 30 January would make the construction of renewable projects in regions with grid bottlenecks much less attractive, reported Spiegel. In areas where more than three percent of the previous year’s electricity generation could not be fed into the grid, renewable investors would only be granted immediate grid connection if they waive compensation for future curtailments for up to ten years. The draft also stipulates that grid operators would be allowed to partially charge renewable investors for network modernisation and expansion, further driving up investment costs, the article said.

At present, grid operators regularly shut down wind and solar plants at peak generation times to prevent grid overload, a process known as curtailment. Affected renewable plants currently receive compensation payments. Renewable industry insiders told Spiegel that waiving compensation was likely to “kill” many projects, given that Germany has “quite a few” areas with more than three percent curtailment. Renewable energy industry association BEE told newsletter Tagesspiegel Background the planned reform could block renewable expansion, potentially resulting in an energy shortage and higher prices.

The reform draft states that “connecting generation, storage and consumption facilities to the electricity grid is facing ever greater challenges”. It adds that grid operators are inundated by a “flood of applications” for large battery storage projects, of which “only a fraction” would be feasible. Given that industrial plants, data centres, charging infrastructures, telecommunications networks and other large consumers are also competing for grid connections, “operators currently lack the legal leeway to prioritise requests,” the draft states.

The ministry didn’t want to comment on details of the draft, but told Spiegel that it was working on measures “to better synchronise the expansion of renewables and grids” as announced in the government’s energy transition “reality check” last year.