Flexibility key to ensure minimal increase in future power grid charges – energy providers

Ensuring that flexible electricity use is accounted for in Germany's grid fee reform could allow for lower electricity bills, a group of energy providers and mobility services which provide dynamic contracts said. Grid fees currently make up a significant amount of customer's power bills and minimising them could be made possible by examining cost efficiency, cost responsiveness, and cost drivers with regard to the time and place of grid use, they said.

In practice, this would mean keeping grid expansion to a sufficient minimum; involving the drivers of grid expansion needs in the associated cost to create an incentive to keep additional expansion as low as possible; and creating incentives for consumers to avoid using the grid at times and in places that could lead to an overload.

"The remaining costs of the energy transition will be largely determined by the infrastructure costs," the companies, which included 1KOMMA5°, Octupus Energy, Enpal and sonnen, said in a policy brief. "For an affordable energy transition, it is important to minimise this need for investment. This requires the right incentives in the grid fees."

Grid fees are added to electricity bills to ensure grid operators can manage the transport of electricity and cover investment costs that go towards expanding and modernising the electricity transmission infrastructure. This becomes increasingly important with the expansion of renewables and as heating, transport and industry transition from fossil fuels to being powered by electricity. Grid fees are thus set to rise steeply in future.

"The current grid fee system does not meet the challenges ahead," the policy brief stated. In future, grid fees should encompass three blocks, the companies proposed: variable grid fees which change depending on time and location could cover future investments "to create the right incentives"; grid operating costs should be passed on to those responsible; while historical costs could be covered by a time-variable connection price.

In addition, consumers or storage facilities who alter their behaviour to relieve the grid – for example by reducing electricity demand or feeding in power at times of low supply – should be rewarded with a negative grid fee, meaning a remuneration for their service to system stability.

Germany’s Federal Network Agency (BNetzA) has called for a wider reform of the system of fees that finance the country’s electricity grid and is considering an option where electricity producers pay, in a possible shakeup to the current framework built on payments by end consumers that could see electricity producers pay at times of excessive output. Germany's new government has pledged to reduce electricity prices to relieve households and companies.