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Germany

Germany

Shocking claims on reserve requirements

Surprisingly, the country operating the most wind power plant has yet to agree on hard and fast rules for calculating the volume of reserve generation needed to cover the extra uncertainty introduced by wind fluctuations. Germany, with 14.2 GW of wind power, has also only just started consideration of how to assess the actual cost of the reserves and how balancing markets should be structured to reflect that cost.

Transmission system experts in Germany charged with studying wind integration are claiming that the country's wind power plant need reserves equal to half their installed capacity. This is up to ten times more than needed in other countries and even defies the experts' own observations of wind's current demand on spinning reserve

Surprisingly, the country operating the most wind power plant has yet to agree on hard and fast rules for calculating the volume of reserve generation needed to cover the extra uncertainty introduced by wind fluctuations. Germany, with 14.2 GW of wind power, has also only just started consideration of how to assess the actual cost of the reserves and how balancing markets should be structured to reflect that cost.

Studies of how to integrate wind have been initiated, however, and there is political recognition that the efficiency of what are now four balancing market zones needs to be improved. Debate on amendments to the German renewable energy law (Windpower Monthly, December 2003) includes discussions on improvements that will not only benefit wind energy but other market players as well.

The two power system operators with networks bordering Germany's North Sea and Baltic Sea coastlines, E.on Netz and Vattenfall, take the bulk of the country's wind power, which meets about 4% of national demand for electricity. The huge E.on network runs from north to south through the centre of the country and Vattenfall's VE Transmission system covers the whole of eastern Germany. With expectations that wind capacity on their networks, particularly offshore, will more than double within seven years, they are both pressing for political action to pave the way for them to get a grip on how their systems will cope. E.on predicts it will need to cater for 12,800 MW of wind generation, 6000 MW of that offshore, by 2011. By the same year, Vattenfall is getting ready to operate 8650 MW, including 3250 MW offshore.

At those volumes and presuming the offshore stations get built, the demand met by wind generation could approach, and for Vattenfall exceed, 20% on their individual systems. In practice, the effective penetration will not be as high since the production feeds into the whole of Germany's integrated national network, which is also connected with its neighbours. The challenge now is to develop market rules that recognise that fact and do not unfairly punish wind by landing it with a fictional cost.

Out on a limb

Experts from the two utilities, working with more experts from research institutes RWTH in Aachen and FGH in Mannheim, agree that wind's demands on spinning reserve today (in Germany, reserves called up within 15 minutes) are minimal and place "no restrictions" on wind energy. But as wind penetration increases, E.on and Vattenfall say reserves must increase too.

By 2016, claims the expert group, wind's demand on spinning reserve will be four or five times greater than today. On E.on's northern network it will peak at 8 GW, they believe, or a huge 50% of the wind capacity in the region. A 50% reserve is five to ten times the level that system operators in America or Britain are expecting to provide (article page 35). It is apparently based on purely day-ahead forecasting of wind output and a claim that standard error in that forecasting is a high 12.5% (Windpower Monthly, December 2003).

The group uses the same calculation basis for the VE Transmission area, concluding that maximum demand for spinning reserve will be 4 GW, again 50% of the wind capacity. In both cases, average spinning reserve over the year will be about half those levels, they say. This is still substantially more than experience with wind operation indicates, including their own experience with 4% wind penetration, and more than international studies maintain.

Not surprisingly, the expert group questions whether its calculations of the "extremely high reserve requirement of about 10 GW" can be covered by German resources alone. Spinning reserve in the whole of Germany today lies at just over 8 GW. The group concedes, however, that its analysis looks at the northern part of E.on's network and the VE Transmissions network in isolation, rather than at the sum of all four German high voltage transmission systems.

The group also expresses its calculations in terms of energy used by the reserve. On E.on's northern network, the experts claim the need for electricity reserve will rise from about 1.5 TWh in 2001 to around 6.5 TWh a year in 2016 and for VE Transmission from about 1 TWh to 3.5 TWh in 2011.

No word on costs

The actual cost of the reserve power is an issue the expert group avoids. Its only comment is on market prices for spinning reserve, which "are by no means stable and therefore difficult to estimate for the coming years." Network operators are not required to use the country's four separate markets for regulating wind power, which is barely traded on them.

As it is, both E.on and VE Transmission procure at least some of the needed reserve for wind energy internally rather than on the market after conducting their own wind forecasting and scheduling (Windpower Monthly, December 2003). As a result, the actual costs of reserve are hidden away from external examination. E.on buys reserves for up to 60% of its wind capacity from sister company E.on Energie, which it says costs far less than buying the standard market product, used to cover some of the remaining 40% of its needs.

Vattenfall's trading division markets wind power on the EEX Leipzig electricity exchange based on day-ahead forecasts. It corrects deviations from the forecast on the delivery day with power bought internally and/or calls on spinning reserve procured the previous day to iron out discrepancies between projected and actual supply and demand, including wind fluctuations.

Federal economics minister Wolfgang Clement seems to have been made aware of the dark areas of wind integration costs. At a Handelsblatt/Euroforum conference in Berlin last month he stated that combining Germany's four balancing markets into one "in connection with wind energy" was part of discussions on amendments to the renewable energy law. The intention is to increase market liquidity with the aim of reducing prices. Liquidity is highly constrained by distribution of balancing services over four separate markets.

A new study, Energy and Economic Planning for Network Integration of Wind Energy in Germany on Land and Offshore to 2020, co-ordinated by German energy agency Dena, is due for publication by the summer. Representatives from a cross-section of wind and electricity companies, research institutions, lobby organisations and the federal economics ministry aim by then to have answers to the key issues of wind energy expansion. Dena assumes that wind capacity will grow from 14 GW in 2003 to 24.5 GW in 2010.

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