Nuclear issues driving German cross-border cuts – market participants
Nuclear power outages could be the reason why Germany’s day-ahead export capacity to France has often being restricted even at times when wind power is low, traders and analysts have said.
Low output from turbines means wind power should not be causing cross-border capacity to be curtailed via loop flows.
When there is interconnector maintenance, loop flows caused by high wind power in Germany are typically considered the main reason behind low commercial cross-border capacity on its borders.
Loop flows have priority grid access and often transport electricity from Germany’s northern areas, where the country’s wind power is concentrated, to southern regions, which have less supply.
But any correlation between wind power and German-French export capacity appears to be at best inconsistent, even though there have been no outages on interconnectors between the two countries, based on information from the Joint Allocation Office.
Transmission system operators (TSOs) in centralwestern Europe publish hourly data on how high day-ahead transmission capacity will be on each border of the flow-based market coupling (FBMC) region. The model is a more advanced means of coupling prices across markets, introduced in May 2015.
This publication gives an idea of the capacity restrictions that influence the outcomes of the FBMC model calculation – exchange-based, day-ahead prices for Germany, France, Belgium and the Netherlands.
In the first five months of 2015, the correlation coefficient between hourly German wind power forecasts on a day-ahead basis by ICIS analysts and German-French export capacity was -0.4.
This indicates a weak link between the two factors although capacity was on average lower during hours with higher wind power.
But for the first five months of 2016, the correlation coefficient was 0.2, which gives no indication of what to expect in the relationship between wind power and available export capacity.
Correlation coefficients range from -1 to 1 with 0 meaning no correlation and 1 and -1 the strongest link.
But recently, German-French export capacity has been low on several days with low wind power. Overall, capacity was down 45% in April and 35% in May compared to the same months of 2015.
In the first three months of 2016, the year-on-year capacity decline was lower, at 23%. The general downwards trend in available capacity is probably at least partly due to Germany’s increasing wind power generation.
But, although traders and analysts continue to grapple with the question of why capacity would be so heavily restricted when wind power was low, some did offer suggestions.
In April and May Germany had more large conventional power plant outages than over the same period last year. “This has possibly influenced the entire network,” a trader at a European electricity company said.
This could happen for one of a number of reasons, Bengt Longva, analyst at consultancy Nena, said.
• Nuclear outages in southern Germany might increase the region’s need for wind power from the north, which could mean higher loop flows.
• Longva also agreed that, on days with very low wind and large outages in the north, there might be a need to transport solar power from southern Germany to the north via loop flows. Germany’s solar power capacity is concentrated in the south.
Germany had three of its eight nuclear units offline for most of April and May. It also has one unit less than last year due to the closure of the 1.3GW Grafenrheinfeld plant at the end of June 2015.
• But some traders said plant outages would reduce capacity via a different mechanism. On days when Germany has large outages and low renewables, France might be better supplied. So in this case German-French export capacity could be restricted to achieve higher capacity from France into Germany, a trader at a European energy management company said.
This final argument does not seem to explain capacity availability on some days however.
For example on 18 May, when German wind power on a day-ahead basis was expected to be below 6GW – less than 15% of the country’s total wind capacity – Germany’s export capacity to France was around 2GW from morning until midnight compared with more than 4GW of capacity in the opposite direction.
French prices held a premium to Germany for several hours during this time, meaning higher flows from Germany to France would have been needed to achieve more price convergence, which the FBMC model aims to do.
Average German-French export capacity was 3.1GW in May compared to 4.7GW in the opposite direction.
French export capacity to Germany was up 30% year on year while German-French capacity was down.
German and French transmission system operators did not comment on what the reasons for the low German-French capacity may be when wind power is low, only answering with general explanations of the FBMC methodology.
In June too, capacity has sometimes been low even with minimal wind power.
Large plant maintenance is due to overlap less than in recent months from July until the end of the year, hence cross-border capacity might improve looking ahead.
That said, Germany’s growing wind power generation and nuclear phase-out might continue to restrict available capacity. The next nuclear unit to be closed down is the 1.3GW Gundremmingen B, which needs to go offline by the end of 2017. email@example.com