The German energy industry is expecting additional billions in costs to stabilize the German power grid in the next few years. The main causes include delays in network expansion and the insufficient expansion of renewable energies in the south given the high demand.

According to associations, companies and economists, these factors will make complex “network congestion management” necessary in the coming years.

There are no figures yet on the costs of bottleneck management for the whole of 2023. According to the Federal Network Agency, in the first half of 2023 it was over 1.6 billion euros, and in the whole of 2022 it was 4.2 billion, partly due to the increase in gas prices.

The network operator Tennet assumes that it could take around ten years to reduce the costs of network interventions to a minimum. According to the Federal Association of the Energy and Water Industry (BDEW), it is difficult to predict whether the redispatch measures could possibly increase further. “In the short term, no relief in redispatch costs can be expected,” recently predicted Kerstin Andreae, chairwoman of the BDEW board of directors.

Regional differences

But what does “bottleneck management” mean? In the north more green electricity is produced than consumed, in the south it is the other way around. That’s why more electricity needs to be transported from north to south. Because the construction of the “Südlink” and “Südostlink” high-voltage lines has been delayed for years, the line capacity is often not sufficient.

Then green electricity systems – including many wind turbines in the north – will be “curtailed”. In the south, conventional power plants, which produce much more expensive electricity, have to be started up. “It is not always possible to transport electricity from the generation plants to the consumers,” says a spokesman for the Federal Network Agency diplomatically.

Included in the costs of bottleneck management is the remuneration for unused green electricity, which is essentially generated for the rubbish bin. In 2022, the four transmission system operators paid 900 million euros for this alone; in 2021, according to the Federal Network Agency, it was 800 million.

According to a spokesman for the authority, almost three percent of green electricity was curtailed in 2022; the interventions were small compared to total electricity generation.

The problem with the underground cables

But over the years this adds up to a double-digit billion sum. “Electricity prices are already rising throughout Germany due to the increasing network fees as a result of the large redispatch effort,” says energy expert Raimund Kamm.

Kamm is an advocate of wind energy, but is not alone in this assessment: “While costs for redispatch are expenses that are wasted and have no economic benefit, investments in the electricity infrastructure pay off in the long term,” says Tennet.

According to the original planning, the two large direct current lines (HVDC) should have been completed in 2022. Former Prime Minister Horst Seehofer (CSU) insisted on laying it as an underground cable, which will delay completion until 2027/28. A prominent opponent of the route was Free Voters leader Hubert Aiwanger, who is now even calling for a third line.

Laying underground cables not only takes years longer, but is also about twice as expensive as building overhead lines. The congestion costs are included in the uniform nationwide transmission network fees, and the electricity exchange price is also nationwide.

The fees for the local distribution networks vary regionally, but should also be standardized. According to calculations by the portals Verivox and Check24, overall network fees will be around a quarter more expensive this year, around 100 euros per year for a family of four.

“Reverse state financial equalization”

“Market prices corresponding to the actual costs would be lower in the north and higher in the south, and very high in Bavaria and Baden-Württemberg,” says economist Mathias Mier at the Munich Ifo Institute. “In this sense, the redispatch is a reverse state financial equalization, from which companies in southern Germany benefit greatly.”

When it comes to electricity supply, the whole of Germany shares in the higher costs in the south, including those caused by politics. “Private households in particular pay for this,” says the Munich energy expert. “Even if the power lines are completed one day, that will not solve the problem.”

There is actually only a long-term solution, says the scientist. “And that would be dividing Germany into two or more electricity price zones.” Northern Germany would then have a competitive advantage in terms of electricity prices.

Politics and business in the south naturally reject a division into two zones. Bavaria’s state government has now changed course and is supporting both the construction of the route and wind turbines.

“The network expansion and conversion must urgently be further accelerated,” demands the BDEW. “The large HVDC connections in particular must now be completed promptly.”

According to general estimates, new (gas) power plants would also be necessary for a secure electricity supply. Tennet estimates the need for 21 gigawatts of secured power by 2031, two thirds of which will be in the south.