Saving electricity generation costs and relieving the strain on electricity grids with decentralized flexibilities

Building new plants and making the power grid more flexible: these are the two developments that are driving the expansion of renewable energies. Scenario calculations show that decentralized, flexible technical generators and consumers of renewable energies – especially heat pumps and electric vehicles – can reduce the annual cost of electricity generation by up to one billion euros. In 2020, the technical flexibility potential of decentralized producers and consumers was still around ten terawatt hours (TWh). This was just under two percent of electricity consumption (558 TWh). By 2050, the amount of electricity that can be flexibilized may increase twenty-fold to about 220 TWh (infographic).

However, the framework conditions must be changed for this to happen. A research team from the Öko-Institut has developed these and summarized them in a policy brief.

The current framework conditions
In today’s legal framework for congestion management (the so-called Redispatch 2.0), grid operators can only access power generators that have at least 100 kilowatts of capacity, as stipulated in Section 13a of the Electricity and Gas Supply Act (EnWG). Electricity consumers, on the other hand, are not used today to eliminate grid bottlenecks. They can only use their flexibility to provide balancing power if they meet the requirement of using at least five megawatts of capacity (Section 13i (2) Sentence 4 EnWG). A performance that small consumers, such as heat pumps or electric vehicles, do not achieve.

Clarify section 14a in the EnWG
Section 14a of the EnWG takes a first step toward controlling decentralized consumption systems. A network operator may offer a reduced network charge to consumer operators based on this paragraph. In return, the latter grants him the control of a consumption device. The exact form of this agreement between consumers and network operators and the amount of the network fee reduction have not yet been defined. A concrete formulation in an ordinance regulating these points is still pending. This should be developed in a dialogue between relevant stakeholders and then implemented by policymakers.

Matching flexibility supply and demand
In order for distributed consumers and generators to contribute to the grid, mechanisms are needed to match the supply and demand for flexibility. Different procedures are conceivable here: They can be flexibility markets, for example. In these markets, consumers and producers offer their flexibility. Grid operators ask for them there and use them in a grid-serving manner. Flexibility markets have already been developed and tested in the SINTEG projects of the Federal Ministry for Economic Affairs and Energy. This was also the case in the Enera project, in which the Öko-Institut played a key role in the areas of scenarios, modeling and roadmap.
Mechanism design must be discussed and decided
In addition to flexibility markets, other instruments are also conceivable. These may include contractual agreements between network operators and individual providers.
Time-variable network charges are also being discussed. These are based on the network load and are high during periods of critical conditions. Consumers will be able to adjust their consumption accordingly and take preventive action against network bottlenecks.
Which mechanisms are ultimately used must be negotiated in a dialog between network operators, flexibility providers, the regulatory authority and political decision-makers.