European power generation

Electricity is physically exchanged with nine direct neighbouring countries – Denmark, the Netherlands, Luxembourg, France, Switzerland, Austria, the Czech Republic, Poland, and Sweden (via a submarine cable). Germany exported around 82.7 billion kWh of electricity to its neighbours in 2018, while itself importing 31.5 billion kWh.

Germany has the highest installed power plant capacity in Europe and also generates and consumes the most electricity. Further information on the energy data of the countries of Europe can be found on the website of Eurostat, the Statistical Office of the European Union.

National power generation

The Federal Network Agency's (BNetzA) list of power plants .maps the power generation market in Germany. Currently (as at 7 March 2019) there are generating facilities with a net rating totalling 214.2 gigawatts (GW). Of this net rating, renewable energy sources account for about 118.8 GW; of this, approx. 42.3 GW is from solar and about 55.7 GW from wind power. The installed capacity of photovoltaic and wind power units together adds up to around 98 GW.

SMARD keeps users updated on current developments in the electricity market

SMARD, the new electricity market platform, provides information on the electricity market in a form that is transparent, easy-to-understand and well-structured.

The website www.SMARD.de (in German) presents key electricity market data for Germany and specific statistics for Europe almost in real time. Information on electricity generation and consumption, wholesale trade prices, imports and exports, and balancing energy can be found, combined, and downloaded for various periods of time. The data are presented in a user-friendly format. The platform also offers comprehensive analysis functions for experts. This allows users to follow developments in the electricity market and stay up-to-date on the energy transition and its progress.

Renewables becoming ever more important in electricity generation

In 2018, 226 billion kilowatt-hours of electricity were generated from renewable energy sources, attaining a 37.8% share of gross electricity consumption.

The electricity mix is changing

In Germany around 646 terawatt hours (TWh) of electricity were generated in 2018 – that is 646 billion kilowatt-hours (kWh). In view of an increasing contribution from renewable energy, the share of nuclear energy, lignite and hard coal in the energy sources mix in the German power supply is falling.

Current as of: 6 March 2019; totals may not add up due to rounding
1) Preliminary figures incl. some estimates.
2) Including generated energy consumption
3) Generation in run-of-river and reservoir power plants and from natural inflow into pumped-storage power plants
4) Only generation from biogenic part of municipal waste (approx. 50%).
5) Only generation from non-biogenic part of municipal waste (approx. 50%), pumped storage reservoirs without natural input, other gases, industrial waste, other energy sources
6) Including grid losses and in-house consumption

Sources: Federal Statistical Office, Federal Ministry for Economic Affairs and Energy, German Association of Energy and Water Industries (BDEW), Statistik der Kohlenwirtschaft e.V (an organisation tasked with providing the Government with statistics from the coal industry), Centre for Solar Energy and Hydrogen Research Baden-Wuerttemberg (ZSW), Working Group on Energy Balances.

In June and July 2016, the Bundestag and the Bundesrat adopted the Acts on the Further Development of the Electricity Market and on the Digitalisation of the Energy Transition. These Acts put the rules in place for competition between flexible supply, flexible demand, and storage, and also enable innovative business models to be developed for use within the electricity market 2.0.

In the future, renewables are to account for the main share of Germany’s energy supply. Their share is to amount to at least 80% of the electricity supply by 2050. For this reason, renewable energy must be continuously integrated into the electricity supply system so that it can increasingly replace conventional sources of energy. The legal and regulatory environment must properly accommodate an electricity system that is constantly evolving. It must also manage the transformation process in an intelligent manner. The reformed electricity market will optimally integrate the sun, wind, etc. into the market – whilst delivering security of supply.

Free price formation on the wholesale electricity market will ensure that there is sufficient investment to create the capacities required. The level of capacity maintained will be that demanded by the customers - no more, but also no less. This is the crucial difference compared with state-run capacity procurement mechanisms, where the state simply stipulates the level of capacity to be maintained. In many cases, this results in expensive overcapacities. In the energy-only market, in contrast, security of supply is delivered cost-efficiently by the market. For example, it can function like this: Customers can insure themselves against price peaks, paying a premium for this. Peak-load power plants use this premium as a constant source of income even if they only generate electricity during a few hours a year – i.e. at times when there is a real shortage of electricity. This business model can be mapped by cap futures. Ultimately, it makes sure that sufficient capacity is always available. The only precondition is that it must be possible to trade in electricity at every point in time in the future. The trading products for this exist on the EEX electricity exchange.

A new capacity reserve, which is strictly separated from the electricity market, will provide an additional safety net for unforeseeable and extraordinary events – it provides additional security for the electricity market. Unlike the 'capacity market', the capacity reserve consists solely of power stations which do not participate on the electricity market and do not affect competition and pricing.

The capacity reserve will be available from 1 October 2020 and will have a volume of 2 GW. The transmission system operators have already invited bids from power stations to take part in the capacity reserve (www.netztransparenz.de/EnWG/Kapazitaetsreserve [in German]). The relevant ordinance for this entered into force on 6 February 2019. At the beginning of 2018, the European Commission gave the go-ahead under state aid rules for the capacity reserve.

The placing of 13% of lignite-fired capacities on “security stand-by” with subsequent decommissioning will help us to meet our climate targets in the electricity sector by 2020. On 1 October 2016, the Buschhaus lignite-fired power station was the first power plant to be provisionally closed down and placed on security stand-by. On 1 October 2018, two blocks at the Niederaußem power plant in North Rhine-Westphalia and one block in the Jänschwalde power plant in Brandenburg were placed on security stand-by. In consensus with the Environment Ministry, the Economic Affairs Ministry has evaluated the emissions saved by the placing of lignite-fired power plants on security stand-by. The report can be downloaded here (in German), as can the related study by the researchers (in German).

We are taking a truly European approach to the energy transition

The energy transition will only be successful if we adopt a pan-European approach to it, and if it is designed in conformity with EU law. This is especially true since Germany lies at the heart of what is an interconnected European electricity system that is subject to the rules of the internal market.

The Federal Government has ensured that its energy policies are in line with EU law, has engaged in intensive discussions with the European Commission, and has agreed on the adoption of an energy package (which is subject to the official Commission process). On 15 December 2016, the Bundestag adopted the law which implements the agreement reached on the main energy subsidy dossiers. Further information about this agreement with the European Commission and the need to transpose it into national law resulting from this can be found (in German) here (PDF, 68 KB).

We are in a permanent dialogue with our neighbours about the future development of the electricity market, since we are convinced that the energy transition can only take place efficiently in the context of the internal market. This allows us, for example, to combine hydroelectric power from Scandinavia and the Alpine countries with wind power and photovoltaics from Germany.

In a Joint Declaration on Regional Cooperation signed in June 2015, the Federal Ministry for Economic Affairs and Energy and the energy ministers of 11 neighbouring countries agreed not to intervene in free pricing and cross-border electricity trading – even in times of scarcity and high prices on the electricity exchanges. Germany and its neighbours believe that the internal market offers major advantages because it can deliver security of supply at lower costs.

‘Electricity 2030’ discussion process

Germany has set itself ambitious targets: it wants to increase investments in efficiency technologies and to eliminate greenhouse gas emissions as much as possible by 2050. The time up to 2030 is crucial. In its ‘Electricity 2030’ paper (published in the summer of 2016), the Economic Affairs Ministry looks to the future. This paper outlines twelve long-term trends in the electricity sector based on current studies. It has been drawn up in order to identify how the climate targets can best be reached, and how a secure and affordable supply of electricity supply can be guaranteed. A consultation has held, and the input paper was discussed in detail in the working groups of the Electricity Market Platform and the Energy Grids Platform up to the spring of 2017. The conclusions were published in a paper containing the results. Further information can be found here.

The core energy market data register – enhancing transparency in the energy sector

A core energy market data register is being set up to improve the data situation and transparency in the energy sector. For the first time, the register – which can be used by everyone – covers all generation installations – new and existing ones, installations to generate electricity from renewable and conventional energy, from electricity and gas – as well as certain consumption facilities and the facility operators. It facilitates monitoring and helps to cut red tape by replacing or simplifying existing reporting requirements.

The legal basis is the Core Energy Market Data Register Ordinance (PDF, 132 KB, in German), which entered into force on 1 July 2017. The Federal Network Agency operates the register as an online database. Further information can be found here from the Federal Network Agency. Comments on the draft ordinance can be found here (in German).

Redispatch as an interface between the market and the grid

If it is not possible to transport all the volumes of electricity via the grid, the transmission system operators undertake redispatch measures. That means that, at certain points in the grid (“ahead of the bottleneck”), they instruct generating installations to reduce (“curtail”) the amount of electricity they feed into the grid. This reduces the amount of electricity flowing through particularly congested powerlines so that the grid remains stable. However, the curtailed volumes of electricity are then missing from the electricity system, e.g. less electricity is being generated than had previously been sold. In order to offset this, the transmission system operators instruct other generating installations (“behind the bottleneck”) to increase their output.

Redispatch thus forms the interface between trade in electricity on the electricity market and the infrastructure of the electricity grid via which the transactions are physically carried out. In this context, a number of questions arise, e.g. about the efficient management of redispatch measures (in German). A very fundamental question is how the transmission system operators can purchase the required redispatch volumes. The way they opt to purchase the electricity can impact on electricity market trading and provide incentives for market players to invest.

Study into the purchase of redispatch measures

The Economic Affairs Ministry therefore commissioned a study into the purchase of redispatch measures in 2017, which was completed by the presentation of a final report in November 2019. The study presents and evaluates various concepts which the transmission system operators can use to purchase the necessary redispatch quantities. This is followed by reports by Neon, Consentec and Connect explaining the findings reached in the various work packages.

The final report on the second work package (in German) considers fundamental questions relating to the organisation of the electricity market and the grid. It looks into how best to manage the scarce resources of the electricity grid. The experts present various ways to handle congestion and to adapt the electricity market design in view of the grid situation, and discuss them on the basis of a series of evaluation criteria.

The final report on the third work package (in German) contains a technical and economic analysis of the additional potential for redispatch in Germany which could be leveraged by a redispatch market (e.g. storage and flexible consumers). The findings are also used for the empirical modelling in work package 6.

The final report on the fourth work package (in German) describes the range of possible purchasing concepts for redispatch measures. Here, the authors have looked into how the issue is handled in other countries. They have developed evaluation criteria and undertaken an initial assessment of the concepts on the basis of qualitative criteria.

The final report on the sixth work package (in German) contains an empirical simulation of the German electricity system in 2030. The experts use detailed electricity market and grid flow models to examine the theoretical findings of the preceding work packages. Not least, they show the effects that market-based redispatch would have on redispatch and its costs: The demand for redispatch can increase by a factor of 7 and the costs of redispatch by a factor of 3. This would be a massive challenge for the management of the grid. The higher costs would have to be paid by the consumers.

The final report from the study is available online in German and English. In it, the experts summarise the findings of the overall project and derive recommendations for the Economic Affairs Ministry on how to organise the purchase of redispatch measures in future. The conclusion reached is that it is recommended to retain cost-based redispatch and to develop certain aspects of it further. Because of their serious drawbacks, redispatch markets should not be introduced at transmission system level.

Grid reliability at a record level

In Germany, the transmission system operators (TSOs) are responsible for ensuring that grid operation remains secure (Section 12 of the Energy Industry Act). They plan and maintain the ultra-high voltage grid, organise the grid operation and coordinate electricity generation and demand.

The reliability of the electricity supply is measured in terms of the average time for which electricity is unavailable, i.e. the length of time in a year during which end users are not supplied with electricity. In Germany, the unavailability data, which is collected by the Federal Network Agency, has been indicating a downward trend since 2006. In 2017, the average time for which a household or business in Germany had to go without power was just 15 minutes on average. This shows that the electricity supply is not being affected by even a large share of renewable energy.

Ongoing monitoring of security of supply

Every two years, the Federal Ministry for Economic Affairs and Energy undertakes monitoring of the security of the grid-based supply of electricity in accordance with Section 51 of the Energy Industry Act. As part of the monitoring process, the current supply situation and its development over time are examined taking national and international market conditions into account. The findings are then published in a report. The report looks at whether and to what extent companies have taken sufficient precautionary measures – in relation to electricity generation, transmission and distribution – to ensure that demand for electricity is being and will continue to be met at all times, including in extreme situations.

Combined heat and power

Combined Heat and Power Act (CHP Act) (in German) is a key element for making the energy transition a success. CHP plants generate heat and power simultaneously whilst keeping carbon emissions low. The heat that is captured as part of the power generation process is used directly on-site, or by feeding it into a heat network. As the fuel is used for generating both heat and power, CHP plants are much more efficient and require less fuel.

Since 2002, the Combined Heat and Power Act (CHP Act) has been the legal basis for funding CHP plants. The Act provides a framework for funding the highly efficient technology of combined heat and power generation based on the application of a surcharge. Pursuant to the CHP Act, the operators of funded CHP installations are entitled to a payment of a supplement based on the amount of combined heat and power kilowatt-hours they produce and that they receive for a limited period of time.

The Federal Ministry for Economic Affairs and Energy is thus creating incentives for investment in what are highly efficient, low-carbon CHP installations with the aim of raising the level of CHP-based power generation.

Amendment to the Act on Combined Heat and Power Generation (CHP Act)

The Federal Ministry for Economic Affairs and Energy has made several amendments to the CHP Act to ensure that the highly efficient and climate-friendly technology of CHP continues to play a key role in the implementation of Germany’s energy transition.

The 2016 amendment to the CHP Act (PDF: 309 KB; in German) aims to increase the amount of net generation of electricity from CHP installations and to boost investment in particularly efficient, flexible and low-carbon CHP installations.

The amendment to the CHP Act, which entered into force in early 2017, introduces more competition into the funding system: since the end of 2017, the funding rate for electricity from combined heat and power (CHP) plants of between 1 and 50 MW has been determined via auction. A separate auction will be held for innovative CHP systems in order to provide funding for highly flexible, low-emission CHP plants that use heat from renewable sources. This new category of funding is intended to open up promising new prospects for combined heat and power and to provide incentives for necessary investment in flexible technologies. Find out more.

At the end of 2018, the Omnibus Energy Act extended the CHP Act until 2025. Find out more (in German).

The Electricity Market Platform consists of a plenary group, as well as four topic-based working groups. The groups are made up of representatives from the authorities, associations, non-governmental organisations and scientific institutions. The plenary group meets regularly and mainly discusses topics that are relevant for all of the Working Groups. Find out more about the platform here.