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Germany’s Energy Transformation: Coming to a grid near you

By Bob Gibson

In Germany, an extraordinary energy story is unfolding, and it is centered on a quite ordinary place, the electric distribution grid.

“At some point between 2020 and 2030, we’ll start to see negative residual loads in the grid,” said Gerhard Walker, a young engineer with Netze BW GmbH, a distribution arm of German utility EnBW AG. “This means we do not have to put any conventional power plants on the grid. At that point the grid, including renewables, is sustaining itself.”

Residual load, a term more commonly used in Germany than the U.S., is the demand for power that remains once you subtract all of the “must-run” energy, which in the German market means renewables fed to the grid largely from solar, wind and hydro sources. One of the end goals of Germany’s energy transformation plan — or Energiewende — is an energy sector that by 2050 is 80 percent renewable, up from its current nameplate electricity capacity of 27 percent renewable.

German Village With Solar
Solar rooftops have become a common sight in certain parts of Germany. 

The idea that a highly industrialized, wealthy economy such as Germany’s can be sustained on 80-percent renewable energy — much of it variable rather than base load power — seems improbable to many in the U.S. But that it is happening,  Walker said during a webinar hosted by the Solar Electric Power Association (SEPA) on March 19, and his utility is preparing for that day.

“It doesn’t really matter how fast one can actually build renewables,”  he said.”The problem is that you have to have a system capable of integrating renewables.

“As conventional power plants can’t make money and are taken off-line, this means we have less rotating masses on the grid and more power electronics,” he said. “An increased amount of ancillary services will be required” to maintain grid stability, he said.

Find more of Bob Gibson’s articles on Germany’s Energiewende on SEPA’s Utility Solar blog.

This is leading to the need for investment in technology, both hardware and software, coupled with new market designs and incentives for customers to participate dynamically in the energy market. A successful transformation to a grid reliant on renewable energy will center on the distribution utility, or distribution system operator (DSO), in German parlance, such as Walker’s Netze BW.

More than any other of Germany’s renewable energy resources, solar is driving much of the change in southern Germany, where Netze BW operates. Unlike much of the country’s wind, biopower or hydro resources, Germany’s 36 gigawatts of solar are largely distributed and small in scale, delivered from hundreds of thousands of installations on the rooftops of homes and barns in towns and villages and connected to the low- and medium-voltage distribution grid.

Managing this high penetration of solar is just one of the challenges that Walker and a team of Netze BW engineers are taking on as they assess technology and innovation needs for “the design of the DSO of tomorrow.”

Similar scenarios are arising across Europe, since distribution utilities handle 90 percent of Europe’s renewable energy. As reported by Reuters on March 19, the International Energy Agency estimates that between 2014 and 2025, the European Union will invest $413 billion in power networks, with 75 percent going to distribution systems.

A significant shift in production and consumption on the German grid began two years ago, when for the first time, the subsidies provided through the national feed-in tariff program for energy produced by rooftop solar systems slid below the cost of retail electricity purchased from the grid.

This led to the quick rise of solar self-consumption and, as a result, the appearance of a new kind of utility customer who Walker termed “prosumers” — customers who actually produce more than they consume. These prosumers are the utility customers of the future in Germany and likely in other parts of the world, including the United States.

How are U.S. utilities and technology providers preparing for putting more renewable energy on the grid? Check out SEPA’s Solar Integration Workshop in San Diego April 30. 

Originally set well above retail electric rates, the feed-in tariff triggered the rise of a two-way flow of power on a grid designed for a one-way flow. The emergence of prosumers will only aggravate the reverse power flow on the distribution grid, which if not addressed can cause a host of cascading issues leading to grid instability.

A second major challenge in electricity supply, Walker says, will come when the price of renewable power falls below the price of natural gas. The impact on the distribution grid will be felt when consumers turn to electricity instead of gas for domestic heating.

German homes are highly energy efficient compared to homes in the U.S., where residential electricity consumption is three to four times that of Germany. But, ironically, peak demand for electricity may rise in Germany — first for heating and then to power electric vehicles — at a time when conventional power generation continues to shrink.

The work that Walker and his fellow research engineers are undertaking is heavily focused on new communication and control technologies. For example, multi-tariff, multi-utility smart meters — for electricity, gas and water — and adaptable distribution transformers are being developed to address strains on the grid triggered by changing consumption patterns and sources of generation.

At the same time, new uses may be found for old technology, such as storing off-peak electricity by heating ceramic bricks in electric thermal storage systems. These simple electric heating systems have been fairly widespread in Germany since the 1970s. In the future, excess wind production, found largely in the north of the country, and excess solar in the south may be stored not only in batteries but in cheaper thermal systems, helping grid stability.

In addition, Walker observed that an increasingly decentralized grid will require both an investment in smart technology and a new market system of price signals. The distribution system of the future may be managed by a grid “traffic light,” he said.

A green signal would mean “there is enough capacity in the grid to allow any flexible load” to be served, he said. A yellow light, on the other hand, would activate price signals and automated load shifting.

If the light turns red, he said, “We’re above grid limits and some generation may have to be shut down in order to return the grid to stable condition.”

What will the distributed grid look like in the U.S.? Check out SEPA’s 51st State website for visions of grid transformation.

Like their regulated counterparts in the U.S., German utilities such as Netze BW previously would have addressed grid instability through the installation of hardware on the utility side and received regulatory approval to recoup the costs from customers. But the DSO of tomorrow that Walker and his colleagues are working on will be incentivized to develop more dynamic customer- and market-based solutions.

Utility investments will center on technologies that provide “visibility” into what is occurring on the grid, Walker said.

“If we start moving load from night to day, or we start feed-in management, we always need to know what the grid is actually doing,” he said. “There is no point in doing it blindly. That’s why we are moving monitoring and control units into the grid.”

Building this system has become the core mission of the German distribution utility.

“We hope to have a whole toolkit of technical solutions that will allow the DSO to interface with all the new players — including the smart market and the transmission grid operators — manage our grid without threatening reliability and still be highly efficient in terms of what the regulators set forth,” he said.

Bob Gibson is SEPA’s Vice President of Education and Outreach. He can be reached at [email protected].