Robert Busch: “There is still no master plan for the energy transition”. Robert Busch, CEO of the German Association of Energy Market Innovators (bne), responds to seven questions on increasing the flexibility of our power supply.
Mr. Busch, in Germany, you have recently had to get to grips with many new draft laws and regulations – the Omnibus Energy Act (EnSaG), the Act on the Operation of Metering Points (MsbG), the Low Voltage Connection Ordinance (NAV). For the energy market to move toward renewable energies, decentralized supply and digitalization, there must be an appropriate regulatory framework. In your opinion, is Germany on track for a successful energy transition?
Clearly formulated targets and a consistent package of measures are essential for the energy transition and the accompanying process of transforming into a greenhouse gas-neutral industrial nation. But there is still no master plan for the energy transition. All the approaches we have seen so far for the heat and transportation transitions have been fragmented. In the electricity sector as well, there is no convincing overarching concept which fits the individual pieces of the puzzle together to enable comprehensive decarbonization in the electricity, heat and transportation sectors. The individual standards remain uncoordinated, tend to address individual issues, appear too late, and are also poorly implemented. Important tasks whose value is also recognized by policy makers, such as reforming grid charges and statutory levies and introducing a carbon price, have never got off the ground. We need a structured approach which tackles the first things first.
Where do you think most improvement is needed at the present moment?
To ensure a successful energy transition, we need a reform of the taxes and levies imposed on the electricity price, we need a national carbon price and we need the Act on the Operation of Metering Points to be made more receptive to innovations. It’s also necessary to develop renewable energies with an increasing market orientation and encourage new marketing concepts. A grid charge reform is needed which distributes costs in proportion to usage and factors in the contribution to grid stability, in addition to enabling greater flexibility for power consumers while maintaining competitiveness. Our aim has to be to interconnect the heat, mobility and electricity sectors in combination with storage technologies.
You say a reform of the taxes and levies on the electricity price is a central element of a new energy industry. What do you suggest?
The government determines or regulates around three quarters of the price components in the consumer price of electricity. The heavy burden of charges, taxes and levies places electricity at a disadvantage compared to other energy sources. The existing grid charge system also hinders the utilization of flexibility in the energy market. In the necessary reform of the grid charge structure, considerations such as replacing the energy price and the power price with a grid connection charge and the option of an infrastructure contribution for the property are headed in the right direction. Intelligent implementation of the framework required can avoid disproportionate effects on individual consumer groups and disruptions for net operators. And a plan for a fair distribution of costs must also be put forward which convincingly accounts for sociopolitical considerations.
In addition, solutions for the EEG levy have to be developed. By redistributing the EEG costs, including across the heat and transportation sectors, the EEG levy on clean power can be reduced. The distortion of competition in favor of fossil energies has to come to an end. Introducing a charge on energy sources according to their carbon emissions would steer investment and usage towards clean power supply solutions.
Does the situation look any more promising on a European level?
The Clean Energy for All Europeans package will have a marked impact on EU energy legislation from 2021 to 2030. Compared with the current legal framework, the regulations set to come into force include some truly new and innovative aspects. For example, the revised Renewable Energy Directive features new approaches for marketing electricity from renewable sources. In addition, much greater importance is given to new marketing concepts and new players in the electricity market. The package primarily contains directives which do not immediately come into force in the member states, but instead have to be implemented in national law by each individual state. It will be apparent by 2021 at the latest whether the momentum coming from Brussels has galvanized legislators into action or a more leisurely pace has prevailed.
It’s also essential for the new energy industry that we follow the decision-making process in Brussels on the ePrivacy Regulation (ePR) very closely. The proposed regulation could rule out many new and data-based business models on the energy market. In the first few months of 2019, the required amendments have to be situated within the Council’s general approach in order to see the subsequent tripartite negotiations result in meaningful solutions which take account of data protection without hindering the energy transition.
In October 2018, the European Commission presented its strategy for long-term reductions in greenhouse gas emissions within the European Union. The strategy sets out a path for achieving net-zero greenhouse gas emissions by 2050 in accordance with the targets of the Paris Agreement. The public debate on the Commission’s proposals is therefore due this year so that an appropriate strategy can be approved by the beginning of 2020, and presented to the UN Climate Change secretariat (UNFCCC) in line with the Paris Agreement.
Renewable energies are generated decentrally. In addition to storage, trade and generation management, this requires greater flexibility in demand. How would you evaluate the current situation?
At the moment, there are two major obstacles to overcoming the lack of flexibility in the distribution grid. Firstly, the German government, which has to finally adopt a regulation in accordance with Section 14a of the German Energy Industry Act (EnWG), and secondly, the increasingly delayed and technologically outdated smart meter rollout. These two issues have to be resolved before distribution grid operators can be well prepared for the energy transition.
More and more renewable energy plants are being connected to lower-voltage grids. This means distribution grids in particular are faced with renewable energy supplies which fluctuate with the weather. So it’s increasingly common for the grids to receive an infeed of large amounts of power all at once. In addition, we can expect rising numbers of controllable high-output loads such as storage devices, power-to-heat installations and electric cars. This will bring about an increase in concurrent electricity consumption. For example, if all the residents in a street want to charge their electric cars at the end of the day or turn on their heat pumps during cold weather, this can cause a problem for the power grids. Distribution grids may therefore have to cope with different volumes of electricity at any given time, compared with the conventional energy industry, as a result of the energy transition. For the most part, they are currently not designed for this. In the future, power grids will function more as a connector than a distributor, making it all the more important to build flexibility in a way that is both competitive and receptive to new technologies in order to ensure optimal use of the power grids without overloading them.
How could, for example, e-mobility benefit from greater flexibility?
Controllable appliances, such as heat pumps or wall boxes for charging electric cars, offer huge potential for flexibility. These are precisely the kinds of loads which could also cause increased instances of simultaneous consumption in the distribution grid. On the other hand, if the electric car is plugged into the wall box overnight from 6pm to 7am, the charging process can be initiated at a later time within this period to contribute to grid stability without inconveniencing the customer. Instead of starting at exactly 6pm when the grid is under greater strain, the charging could be delayed until 2am. The car’s battery will still be fully charged by 7am. It makes no difference to the customer, but the strain on the grid is minimized. Another option is to install a storage device at charging stations as standard to act as a flexibility buffer. With 1.4 million controllable appliances, there is potential for considerable flexibility in the distribution network.
bne is one of the first signatories of the Manifesto For E-Mobility And Renewable Energy. Why is this?
Until now, the energy transition has primarily unfolded in the electricity sector. But we also need a transportation transition, which connects e-mobility not just with electricity, but with renewable energies. Unfortunately, what is missing is consistent political action. The manifesto shows that the industry has come up with proposals for solutions. The members of bne are delighted to be part of such a strong alliance, which, with this manifesto, is offering a vision of how politicians, industry and the public can work together to advance the transportation transition. We need clear parameters for this, so that we can expand e-mobility, charging infrastructure and renewable energies more rapidly and more comprehensively than ever before.