Habeck plans power system of the future
The overhaul of the German power system will cost billions. Networks must be expanded and new power plants built. Now, the Federal Minister of Economics and Climate Action presents his plans for the overhaul.
More and more power from wind and sun, more and more heat pumps and electric cars: This has consequences for the power system. Reforms are necessary. Now, the Federal Ministry of Economics and Climate Action has presented a comprehensive paper on a "power market design" for the future. The goal is a secure, affordable, and sustainable power system.
The overhaul will cost billions, for example for the expansion of power grids and investments in new gas power plants. The costs should be kept as low as possible, as stated in the paper. Public consultation on the proposals for the new power market design will take place until the end of August.
Germany's power system is currently undergoing a comprehensive modernization, according to a paper from the ministry led by Minister Robert Habeck. Germany aims to be climate-neutral by 2045. The share of renewable energy in power consumption, such as wind and sun, is to increase to 80 percent by 2030. In the first half of this year, it was 58 percent according to industry figures.
New "operating system"
Now begins the phase in which it should be possible to cover the power supply 100 percent with renewable energy, according to the paper - and in which there will be a "massive electrification" of energy supply in heat and transport, and coal, oil, and gas as fossil energy sources will be finally phased out.
The paper speaks of a new "operating system". The weather-dependent, "variable" power generation from wind and photovoltaics (PV) leads to a paradigm shift. "While previously, generation followed demand, in the decarbonized power system, demand will orient more strongly towards supply." Large parts of demand - for example, e-mobility or certain parts of industrial processes - will shift their consumption to time windows with a high supply of renewable energy and low prices. "The electric car will use the midday hours when the supply of PV power is high and the car is anyway parked."
However, there are times when there is no wind and no sun - the "dark doldrums". Even in these times, a secure power supply should be guaranteed. For this purpose, a "technology mix" is planned, also to balance seasonal fluctuations in the generation of renewable energy.
Gas power plants as backup
On the one hand, it is about "flexible loads" such as heat pumps or electric cars, which could shift their power demand to a certain extent, as stated in the paper. Storage systems will balance short-term fluctuations in wind and PV generation. In addition, "controllable" backup power plants are planned - they should step in when wind and PV, as well as short-term storage and flexible loads are not sufficient.
The federal government has been working on a strategy for building new gas power plants as backups for some time, as investments must be profitable for operators. State funding is planned for the new gas power plants, which are later to be operated with hydrogen.
By the year 2028, a new pillar of the power system is to be introduced: a "capacity mechanism". The ministry presented various, complex models for this in the paper. At its core, it is about rewarding providers for providing so-called controllable power plant capacities - even if the power plants may only run a few hours a year. A competitive approach is planned, involving pumped storage, battery storage, bioenergy plants, and backup power plants, among others.
A capacity mechanism is to supplement the existing wholesale market. The basis is the "Merit-Order" principle, which essentially states: always generate electricity from the most cost-effective power plants to meet electricity demand.
The details of how this mechanism should look are open. A "central capacity market" is possible, where a central entity determines the need for controllable capacities and procures them through auctions. However, this mechanism would involve costs passed on to consumers through a surcharge, as stated in the paper.
To reduce this surcharge, the Ministry of Economics favors a combination with a "decentralized capacity market". In this, suppliers are responsible for securing their power supplies with capacities. They could, for example, use incentive models to reduce their customers' consumption during peak demand times with little wind and PV power.
Four Action Fields in the Power System
The Ministry of Economics lists four action fields in the paper on the transformation of the power system. These include a reform of the promotion of renewable energies. The current system, which provides a market premium in addition to the achieved stock exchange price, is still approved under European law until the end of 2026. A switch to an investment cost subsidy is now planned, among other things.
In addition, there should be more flexibility in electricity use. This also includes incentives for users to charge their electric vehicles when there is a lot of wind and solar power produced and electricity prices are favorable. Consumers could also be rewarded with lower grid fees, as stated in the paper.
The goal, according to the paper, is to use "green" electricity locally better instead of having to regulate plants - which happens in case of impending power shortages. Measures to prevent overloads of the power grid cause high costs. Background: The wind power produced mainly in the north needs to reach large consumption centers in the south, for which thousands of kilometers of new power lines are necessary.
More flexibility in the power system requires smart meters. Their introduction is to be accelerated. The Federal Network Agency is responsible for the design of the grid fees.
I'm not going to argue about the necessity of new gas power plants as backups, despite the focus on renewable energy. The Ministry of Economics is planning state funding for the new gas power plants, which will later operate with hydrogen.
Given the "dark doldrums" when there's no wind or sun, I'm not convinced that flexible loads and storage systems alone can guarantee a secure power supply, especially during seasonal fluctuations.
