From the perspective of two system operators (Elia in Belgium and 50Hertz in Germany), Elia Group wants to raise awareness about the increasing challenges on both the grid infrastructure (hardware) and the market design (software) of the European interconnected electricity system. The joint study ‘Future-proofing the EU Energy System towards 2030’ proposes two levers to realise the next phase of the energy transition in a timely and efficient way with maximum welfare for society.
„To deal with the growing complexity of a decarbonised electricity system, timely infrastructure development has to be combined with an improved market design. As such, the market can act as a traffic agent that efficiently directs the electricity flows in the grid and makes optimal use of the available capacity.“
– Chris Peeters, CEO Elia Group
On the way to 2030, renewables will further increase, some conventional generation will disappear and there will be more cross-border exchanges as Europe has set ambitious targets regarding the further development of the internal energy market. Just letting things run their course is not an option. That is why Elia Group performed a study on future-proofing the energy system for the next decade.
We observe a discrepancy between the development and construction times of renewable generation compared to the longer lead-times for realising grid infrastructure. This creates congestions on the electricity grid. System operators regularly have to perform redispatch to keep physical electricity flows within operational boundaries. In Germany in particular, getting the large-scale wind energy production efficiently from the north to the consumption centres in the south, is a considerable challenge.
The timely completion of the planned grid infrastructure results in maximum welfare and benefits for society
The first and most important lever is the timely completion of the planned new grid infrastructure. Grid expansion is required to meet the European renewables targets in an efficient way. Our simulations show that not having the German north to south HVDC lines in place entails a yearly welfare loss of around € 1 billion to € 1.5 billion by 2030. In addition, this missing infrastructure also causes higher volumes of RES curtailment. These numbers will further increase beyond 2030, as more renewables will be integrated into the grid on the road to full decarbonisation.
Elia Group is therefore committed to do the utmost to accelerate delivery of planned new infrastructure and to mitigate any risk of delays, in close collaboration with the competent authorities. We are also committed to up-grading and optimising exiting assets.
An improved market design enables a more efficient use of the grid
As a second lever, we propose the Flex-In-Market design. This improved market design gives the market access to a toolbox of controllable devices to better manage the flows in line with physical constraints. This enables a more efficient use of the grid and reduces the gap between markets and physics.
Our simulations show welfare gains of € 300 to € 400 million per year in 2030 for the Flex-In-Market design compared to the reference market design and a decrease of curtailed volumes of RES.
„We believe that our study – that truly embraces a binational and European approach – provides inspiring insights that might bring currently opposing views on how to improve the market design closer together. This report could serve as a stepping-stone to set up a broad coalition and start discussions with representatives of system operators, market parties, regulators and European authorities.“
– Stefan Kapferer, CEO 50Hertz
The complete report can be found on https://www.eliagroup.eu/en/publications
Download the press release as PDF-file