German regulator power reserve figures assume Austria price-zone split by 2018-19

German energy regulator Bundesnetzagentur (BNetzA) is working on an assumption that the country’s winter power reserve needs will drop to 1.9GW by 2018-19 due to the split of the German-Austrian wholesale electricity price zone.

The split, which could be engineered to tackle congestion management on the German-Austrian border, is one of the recommendations BNetzA made in a report about winter reserve needs published on Friday.

The regulator presented its winter reserve need figures in a separate document on Monday, with the caveat that the 1.9GW figure was based on the price zone split going ahead.

In Friday’s report, the regulator had said: “Due to time-consuming preparations which would be needed in the run up to the introduction of a price-zone split [at the German-Austrian border], BNetzA would welcome it if transmission system operators began to take preliminary action now, by developing appropriate procedures for the implementation of congestion management.”

The Polish regulator has demanded the price zone split to reduce German loop flows via neighbouring countries which sometimes congest their networks.

But the Austrian regulator has voiced strong opposition to the split on grounds it would reduce liquidity on the Austrian wholesale power market and could lead to higher prices.

Currently, power flows between Germany and Austria have the same status as Germany’s internal flows. Hence, they have priority over flows on other national borders. Demand for German electricity in Austria can cause loop flows via neighbouring countries, which reduce commercial transmission capacity on respective borders.

Re-dispatch alternative

Austrian regulator E-Control does not consider the split to be the most efficient means of tackling loop flows, Sven Kaiser from its electricity department said.

“We think that improved and more coordinated re-dispatch is a viable transitional solution, until network investments can become operational,” Kaiser said.

But BNetzA disagreed. The problem of excessive trade on the German-Austrian border cannot be solved by Germany’s domestic grid expansion and hence re-dispatch is not a sustainable fix, the German regulator said.

The loop flows that have caused demands for the common zone to be split stem partly from increasingly unequal distribution of generation capacity within Germany alongside a lack of internal transmission capacity.

An increasing share of German power generation comes from wind power which is concentrated in northern coastal areas whereas a large chunk of the country’s nuclear power, which is to be phased out by the end of 2022, lies in the south. On windy days, loop flows carrying German renewables from the northern to the southern part of the German-Austrian zone might congest Polish and Czech networks, and reduce the possibilities of these countries importing German power.

German transmission system operators use re-dispatch to reduce the loop flows by asking some conventional generation to turn off in the north and come on line in the south in exchange for remuneration. If re-dispatch does not yield sufficient capacity, the TSOs can request some wind and solar plants to turn off or to request that network reserve plants come on line.

Regulators and TSOs in Germany, Austria, Poland and the Czech Republic have been in talks since last year to agree on a solution to loop flows.

But it is still not known when a final decision on the matter could be taken, German and Austrian regulators said on Tuesday.

Winter reserve needs

In winter 2016-17, Germany will need 5.4GW of network reserve to maintain power system stability. All this capacity has been secured, BNetzA said.

Winter reserve capacity can come from power plants in southern Germany which have been prevented from closing down for grid stability reasons and from plants located across national borders based on contracts with TSOs.

Grid upgrades have helped reduce the reserve need temporarily. In 2015-16, Germany’s winter reserve amounted to 7.5GW and it was used on 93 days, considerably more often than in the previous winter. laura.raus@icis.com