The rising redispatch costs in Germany highlight the challenges in the energy sector. Despite a slight decrease in costs in 2023 compared to the previous year, the overall burden on the electricity grid and consumers remains high.
19 TWh were lost in 2023 due to grid bottlenecks
In 2023, wind turbines were increasingly curtailed as the grids did not have enough capacity to transmit the electricity from the north to the south. This Grid bottlenecks led to the fact that about 19 terawatt hours of electricity were lost, which is about four percent of total German electricity generation. Wind farms in particular were affected, while coal and gas-fired power plants in the south had to generate additional electricity to meet demand.
Redispatch costs have been rising rapidly since 2020
The costs of the redispatch including feed-in management amounted to around 2.35 billion euroscompared to 2.7 billion euros This represents an increase of 2,345 percent compared to 2013. The analysis of data from the Federal Network Agency shows that balancing measures for congestion management are becoming increasingly necessary. Compared to 2021, the total need for regulation in 2022 has increased by 19 percent to 32,772 GWh increased. The costs for this amounted to 4.2 billion euros in 2022, two thirds of which (2.7 billion euros) were attributable to redispatch alone. The costs fluctuated greatly between July 2021 and July 2023 in particular, ranging between 32 and 477 million euros depending on the month. Another decisive factor in 2024 will also be the Omission of the planned Subsidies of 5.5 billion This was necessary as part of the budget reorganization in December 2023.
Reasons for the rising redispatch costs
Various factors are contributing to the rising costs, including the Delay in grid expansion and the insufficient expansion of renewable energies in the south. While bottlenecks in the transmission grid mainly occur in the south, more green electricity is produced by wind turbines in the north than is needed, which leads to additional challenges in electricity transmission. On a windy but cloudy day, for example, a lot of electricity is generated in the north, while less flows in the south. A high line capacity would therefore be needed to transport the electricity from the north to the south. However, this is not yet sufficiently available, especially in Bavaria.
The lack of transmission capacity are also a problem for climate protection, as the power plants, which are usually ramped up as part of redispatch, burn fossil fuels. Although the feed-in priority for renewables applies in principle, coal and gas-fired power plants are usually still used to stabilize the electricity grid if there is not enough renewable electricity available.
This means that the TSOs have to intervene more and more often to prevent the electricity grid from becoming overloaded. These processes and the so-called Control energy drive up redispatch costs. Depending on the time of day and weather conditions, volatile electricity generation from renewable energies in Germany currently fluctuates between 3 and 55 gigawatts. In good months, around 300 interventions are sufficient and in changeable months, up to 4,500 deviations have to be compensated for.
Direct impact on the electricity price
The effects of rising redispatch costs are far-reaching. Firstly, they are included in the standardized nationwide calculations of the four German TSOs which they then pass on to the approximately 900 regional distribution system operators pass on. From here, the costs for using the electricity grid vary considerably depending on the region and provider, and price differences of up to 300 percent with the Electricity grid charges arise. The redispatch costs are usually reflected directly in grid fee increases for private households. For energy-intensive commercial and industrial customers in the medium voltage range, who usually conclude highly individual electricity supply contracts, the increase is usually not felt until somewhat later.
Conclusion
The current challenges in the German energy sector urgently require solutions to drive forward grid expansion and reduce electricity costs at the same time. A fundamental reform of grid fees could enable a fairer distribution of costs and create incentives for a more flexible use of electricity. Measures should also be taken to increase transmission capacities and reduce the use of fossil fuel power plants. Concerted action at a political and economic level is required to tackle these challenges and successfully drive forward the energy transition.