Germany’s planned variable grid fees could curb renewable feed-in – report

Variable charges for using electricity networks depending on available capacity would only solve some of Germany’s grid bottleneck problems, according to a report by Aurora Energy Research. The authors concluded that so-called dynamic grid fees would only partially reduce the need for redispatch measures, when operators deliberately curtail renewable output to keep the grids safe, for example at midday on sunny days when there is an oversupply of solar power. 

Dynamic grid fees could play a key role in aligning electricity supply and demand, which is needed as Germany moves to a power system based on variable renewable energy. Large storage facilities, for example, could easily react to the price signals, and store electricity when nearby renewables generate a surplus, while feeding it back to the grid when there is spare capacity. Germany’s Federal Network Agency (BNetzA) is mulling their introduction from 2029 to encourage grid-friendly behaviour.

The report commissioned by a handful of energy companies, including RWE and Uniper, modelled the effects of regional dynamic grid fees on Germany’s electricity system as proposed by the BNetzA and found that their introduction could have significant side effects. 

All scenarios modelled by the authors resulted in decreases in renewable feed-in, with generation from conventional power plants and imports increasing. They argued that regional signals as proposed were not granular enough, leading to overreactions by power plant operators. Additionally, the need to publish grid fees a day in advance would inevitably result in forecasting errors. 

“This can result in only a portion of the actual grid congestion being reflected in the dynamic grid tariffs,” they wrote. The models only accounted for the effects of dynamic grid fees on electricity generators and storage units, and not on electricity consumers.

The German government is currently working on plans to cut electricity system costs with a “grid connection package”, against the backdrop of a growing number of wind farms, solar parks and battery projects queuing for grid connections and the rising need to switch off renewables during periods of peak generation. While researchers agree Germany must better integrate renewables with grid expansion, they have questioned the government’s approach.