Dena Study on Integration of Renewables: Fossil-fueled Power Plants Needed to Provide 60% of Secure Capacity in 2050

The German Energy Agency (dena) presented a new study examining the consequences of the German energy policy shift of 2011 and the challenges lying ahead. The agency predicts that electricity prices will considerably rise until 2050 and conventional power plants will still be needed to a large extent to ensure the security of supply and balance the increasing amount of fluctuating renewable energy input.

The study was carried out in light of Germany’s target to increase the share of renewables energy sources in the electricity supply to at least 80% until 2050.  According to the Atomic Energy Act (AtG) as amended in 2011, Germany will have phased-out its remaining nuclear power capacity by the end of 2022 (Section 7 para. 1a no. 6 AtG). For the study dena cooperated with the RWTH Aachen University. It was commissioned by RWE AG.

1. 2050: Total installed capacity of 240 GW with 170 GW renewable energy und 61 GW conventional, conventional plants provide 60% secure capacity

The study concludes that installed power capacity in Germany will amount to 240 GW in 2050 in total, with 170 GW provided by renewable power plants and 61 GW provided by conventional fossil-fueled power plants. This means that conventional capacity will only decrease by 37% compared with 2010, the reason being the need for secure capacity that is available at all times to ensure the security of supply. By 2050 efficient gas and coal-fired power plants will provide roughly 60% of secure supply capacity, whereas renewable power plants deliver 24%, dena estimates.

2. 49 GW of new conventional power plant capacity needed by 2030 at the latest

To ensure the security of supply 49 GW of new conventional power plant capacity is needed preferably by 2020 and by 2030 at the latest (plus 12 GW of fossil-fueled CHP plants) dena estimates. Yet given the priority for renewables under the Renewable Energy Sources Act (EEG) and combined-heat and power pursuant to the Combined Heat and Power Act (KWKG), is was uncertain if these capacities were built, as they were becoming less and less economically viable, dena points out.

 3. Despite temporary oversupply, Germany will become net importer of electricity

As of 2020 it will increasingly come to situations in which the renewable power production exceeds the demand, dena says. The excess of renewable electricity for which there is no demand in Germany or abroad may reach 66 TWh or 15% of the electricity generated in Germany until 2050, according to dena. Despite the temporary oversupply, Germany will become a net importer of electricity in the long-run, dena believes. By 2050 Germany will import approximately 134 TWh or 22% of the electricity consumed, unless additional power plants are built, dena says. Imports would entail costs for the expansion of the existing distribution and transmission grids and a new overlay grid, dena points out.

4. Higher electricity costs by 2050

In view of the above need for new conventional power plants, the expansion of the grid infrastructure including the connection of offshore wind farms, spinning reserve energy and new storage capacity, dena assumes that electricity prices will considerably rise until 2050.

5. European capacity markets and EEG reform needed 

Without a new market design, renewables would not be competitive by 2050, dena says. The agency therefore demands a complete overhaul of the EEG that promotes the input of renewable energy into the German grids by granting fixed feeed-in tariffs that are higher than the electricity prices at the exchanges and proposes a European capacity market to incentivise investments in power plants that provide secure capacities.

6. Energy efficiency and internal European electriticity market

The authors point out that they assumed that power consumption in Germany remained stable, but advocate for more efforts to increase energy efficiency. Besides, they say they worked with the assumption of a functioning internal European electricity market, which was in reality not the case and should be considered when deciding on a new electricity market design.

Shareholders of dena are the Federal Republic of Germany (50%), KfW development bank (26%), Allianz SE (8%), Deutsche Bank AG (8%) and DZ Bank AG (8%).

Source: dena

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