2013 German Election Energy Party Profiles – Part 3: Grid Extension, Electricity Storage and Smart Grids

Today we continue our series on the competing parties’ agendas for the upcoming federal elections focusing on the parties positions on the extension of grids and energy storage, the implementation of smart grids and of demand-side-management.  These issues generally relate to system operators’ obligations and therefore are subject to the regulatory framework governing transmission and distribution system operators.

Introduction

One upcoming challenge is to connect offshore wind farms with the onshore grid, which is an obligation of the transmission system operators, in particular TenneT for the North Sea and 50Hertz for the Baltic Sea. In order to transport excess renewable energy generated in the Northern part of Germany by onshore and offshore wind farms to Southern Germany, and to address challenge from a changing fleet of nuclear and conventional power plants, the current transmission system needs to be extended and modified in many other places as well. This will also lead to the introduction of HVDC transmission lines.

Caused by the immense decentralized increase of feed-in of renewable energy in particular in rural areas, grid stability and a steady energy supply are another great challenge in the course of the “Energiewende“, also for distribution system operators. For an efficient power distribution in urban areas particularly smart grids are expected to be of great importance. They integrate both, large centralized and small decentralized production units and consumers in an elaborate system. Through two-way communication between all involved components in the current market, smart grids may assist in managing power production and avoid network congestion, because only as much power as needed is produced. In connection therewith we therefore also address the parties’ concepts on the matter of demand-side-management, if any, which is closely connected to the installation of smart grids.

CDU/CSU (Christian Democratic Union/Christian Social Union)

The CDU/CSU emphasize the importance of grid extension with respect to the connection of offshore wind farms, transmission of power from Northern to Southern Germany, and the installation of smart grids. According to CDU/CSU’s election program, especially smart grids can be expected to decrease energy costs as they provide the possibility of demand-side-management, which leads to a situation, in which energy is consumed, when the market price is low. Additionally, the CDU/CSU emphasize the effect that demand-side-management based on smart grids leads to a steady energy usage and reduces the risk of interruptions.

The CDU/CSU pursues technological progress as well as economic profitability of energy storages, concentrating on pump storage, hydrogen (“power to gas”) solutions and compressed air reservoirs. However, the CDU/CSU also sees some storage potential in electric cars. The development of new storage technologies shall be supported as part of the “Hightech-Strategy” of the new government.

SPD (Social Democratic Party of Germany)

The SPD’s concept wants to eliminate the traditional tensions between the Department of Environment and the Department of  the Economy and Technology, which both are in charge of aspects of energy policy, by bundling the respective competences and units – including all questions related to grid extensions, storage expansion and new back-up power plants – in a newly created Energy Ministry, and create a separate Committee for Energy in the Federal Parliament, the Bundestag.

As regards the importance of grid extension at the national and regional level, the SPD’s concept is similar to the one of the CDU/CSU. However, again it goes a step further as regards the future of the current four, more or less privately owned, transmission system operators: The SPD’s concept wants to combine their transmission networks within a German Grid Company (Deutsche-Netz-Gesellschaft). The German state shall become a shareholder in this company by publicly funding the connection of offshore wind farms and other major projects, and thereby shall assume a steering function at the TSO level.

Furthermore, the SPD stresses that in order to promotes the construction of smart grids, power storages and complementary  capacities by distribution system operators, the incentive-based regulation needs to be redesigned so that also DSOs are duly reimbursed for their investments.

The SPD also endorses funding for research of storage technologies and the building of these. Additionally, the SPD stresses that solutions need to be achieved on a European scale, also benefitting from water storages in Scandinavia and in the Alps.

FDP (Free Democratic Party – Liberals)

The FDP focuses in its election program on the reduction of bureaucracy as the FDP endorses a shortened authorization process for grid-expansion projects, and gives the Federal government even more competences in this regard at the expense of Länder (state) governments.

Additionally the FDP wants to abolish the feed-in priority for new major renewable generation facilities if this is helpful in removing unstable grid situations, as this also will provide an incentive to plan and integrate such plants better in accordance with regional demand.

As the other parties, the FDP endorses the installation of smart grids to promote demand-side-management. In terms of energy storage the FDP wants to set an easy framework to support the development and realization of “power to gas” as well as pump storage facilities and short-time power storages, such as batteries. However, from the program it is unclear whether such framework shall be based on direct payments or an according regulatory framework. As the FDP also is the only party to stress that the provision of capacity needs to be paid for, such concept could become part of a new capacity market design.

On an institutional basis – and in contrast to the proposal of the SPD to establish a separate Department of Energy – the FDP wants to bundle all responsibilities concerning energy markets and energy regulation within the Ministry for the Economy and Technology, which historically is held and dominated by Liberals.

B’90/Die Grünen (The Green Party)

The Greens’ proposals differ from the ideas of the other parties in many ways. The Greens endorse grid expansion, however focus especially on the burdens for local residents. They do not only promote a very close participation of the public in the planning and execution of grid-expansion projects, but also clarify that new 110-kV grids shall in principle be built under ground. New 380 kV lines shall be build underground at least if they are in sensitive areas regarding population and nature.

The Greens agree with the SPD that a “German Grid Company” shall be established. The German state shall become a majority shareholder of this grid company. It shall combine the currently four regulatory zones (whether only on an operational level, or also as a system owner remains unclear), and play an important role in the grid extensions and offshore connections. Additionally the Greens want to develop a more ambitious concept to let the local residents profit from the grid expansion in their region.

As the others parties, also the Greens support the development of smart grids and the implementation of more demand-side-management.

In terms of energy storage the Greens want to expose all storage technologies to level-playing field technological competition, rather than subsidize certain technologies.

Die Linke (The Leftist Party)

The Leftist Party agrees with the other parties in terms of the development of smart grids, however opposes the connection of offshore wind farms as it opposes offshore wind farms as a whole. Additionally, the Leftist Party wants to focus on the development of energy storage, as that would decrease the necessity of grid expansion.

In its energy concept, the Leftist Party does not further elaborate on aspects discussed here by the other parties. However it becomes clear, that they see demand-side-management as a key remedy.

Conclusion

In conclusion all parties, with the exception of the Leftist Party, promote the extension of the grids, especially the connection of offshore wind farms and interconnections within Germany. All parties agree that demand-side-management based on the development of smart grids and modern storage technologies will play an essential role in solving the problems in terms of energy supply.

However, the execution of those solutions differs from party to party. Whereas CDU/CSU and FDP promote a more incentive-based model within a clear regulatory framework, SPD and the Greens endorse a more planned approach, in which major power is within government agencies. They also favour the state also assuming a role as direct investor and even operator of a “German Grid Company”, which both, SPD an Greens, want to establish to combine most of the current four transmission system operators. In that regard the Leftist party goes even further, stating that all energy related responsibilities have to be socialized, whether within a state agency or within cooperatives, excluding any private corporation from that market.

Smart metering is not mentioned in any election program as such, but it appears that the parties see this as part of an approach improving demand-side-management elements based on smart grids. There is no party who calls for a nationwide roll-out of smart meters, which would be in line with a recent government study which suggested that such a roll-out would not make sense for most German household consumers, but it would be more efficient to focus on industrial and certain commercial customers.

In the next part of the series “2013 Election Energy Party Profiles”, we will analyse the parties’ positions on how to close the supply gap renewable energies leave and what will be the future of conventional power plants.

Sources: CDU/CSU, SPD, FDP, B’90/Die Grünen, Die Linke

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