For transmission system operator 50Hertz, a decisive decade of the energy transition has begun. By 2025, the company wants to invest almost twice as much in grid infrastructure than in the preceding five years. This year alone, investments worth 860 million EUR are planned, which is around 160 million EUR more than last year. The objective is to make transmission lines and substations fit to securely and reliably integrate more power from renewable energy sources into the overall system. In 2020, the share of renewables in the total electricity consumption in the 50Hertz grid area increased to 62%. At the same time, less wind turbines needed to be curtailed, and the costs for overall congestion management dropped to 33 million EUR.
‘Taking the right actions more quickly.’ This is how Stefan Kapferer, Chief Executive Officer at 50Hertz , phrased the challenges in implementing the energy transition at today’s balance sheet press conference. The expansion of renewable energy and the corresponding infrastructure should be driven forward and the appropriate political and regulatory framework should be created for the necessary investments in the grid.
Grid expansion is making significant progress
In 2020, 62% of the annual electricity demand in the 50Hertz grid area (i.e. the eastern German states as well as the city states of Hamburg and Berlin) was covered with PV, wind and biomass. This is a new record number for the feed-in of green electricity in this part of Germany. The installed capacity of renewable energy increased from around 34 gigawatts (GW) in 2019 to approximately 36 GW in 2020. At the same time, the necessary interventions in the operation of generating units were less than before. With regard to this so-called congestion management (curtailment of renewable energy installations and redispatch with conventional power stations), 50Hertz was able to lower the volumes from around 2.5 terawatt-hours (TWh) in 2019 to only 1.5 TWh in 2020. The costs for these measures dropped from 84 million EUR (2019) to 33 million EUR (2020). In 2015, these costs were more than 350 million EUR.
Infrastructure development in the 50Hertz grid area moved forward last year. In addition to the commissioning of the German-Danish offshore interconnector “Combined Grid Solution”, another extra high voltage line was added to the grid in the form of the 380-kV line between Wolmirstedt and Stendal/West.
Some of the top projects of 50Hertz were the SuedOstLink from Wolmirstedt, near Magdeburg, to the border of Bavaria. This project consists of a 525-kV high-voltage direct current (HVDC) underground cable. The planning approval procedure for the project is currently ongoing, while an extension up to the substation of Klein-Rogahn in Mecklenburg-Western Pomerania is currently being incorporated into the new Federal Requirements Plan Act (Bundesbedarfsplangesetz).
Offshore, 50Hertz began laying the cables this year to connect the two offshore wind farms Baltic Eagle and Arcadis Ost 1 off the coast of Rügen island. Moreover, overhead line projects north of Berlin (Nordring Berlin), between northern Brandenburg and Berlin (Uckermark Line), between Saxony and Thuringia (Pulgar near Leipzig to Vieselbach near Erfurt) as well as the diagonal power link underneath Berlin are currently under construction.
Stefan Kapferer continued: ‘In the past years, we have expanded the grid. This is also reflected by the lower costs for interventions in the operation of power stations and renewable generating units. We will keep going down this successful road. Nevertheless, the legislative path from planning, approval, construction up to actual commissioning is still too long. Here, all parties involved must examine which adjusting screws we can turn without losing sight of essential public participation. By launching the initiative “From 60 to 100 by 2032: new energy for a strong economy”, we have the motivation to become even faster and more efficient, which is why we have opened discussions with political and economic decision-makers to improve the framework conditions and to advance specific projects. To this end, it is also necessary for us to leverage additional efficiency potentials at 50Hertz.’
Onshore wind power expansion should double
According to Kapferer, the expansion of renewable energy is showing a mixed picture. The wind turbine capacity in the 50Hertz grid area increased slightly in 2020 compared to the previous year, to 427 MW. However, the figures of earlier years, which were required in order to meet the climate protection goals could not yet be achieved again. ‘To be clear: the annual increase in onshore wind turbines in our grid area should be doubled if we want to reach our goal of 100% by 2032,’ 50Hertz CEO Kapferer stressed.
In contrast, there was a positive trend in photovoltaic installations on rooftops and open spaces: here, the installed capacity grew by around 45%, from 761 MW (2019) to 1,348 MW (2020). In order to achieve the energy transition and climate protection targets, it is 50Hertz’s view that especially offshore wind power must be driven forward now. In the German part of the Baltic Sea, projects exceeding three gigawatts would be possible that are currently not considered in the area development plan (Flächenentwicklungsplan), the 50Hertz CEO emphasised. ‘If nothing changes,’ Kapferer said, ‘the expansion of offshore wind power in the German part of the Baltic Sea will come to a standstill after 2026, even though last year, Germany and other littoral states of the Baltic Sea committed themselves to exploit the entire potential of around 90 GW.’
Stable regulatory framework indispensable for investment programme
50Hertz Chief Financial Officer Marco Nix pleaded for a cautious development of the regulatory framework in the future with sound judgement: ‘Our positive assessments for the financial and sustainability rating confirm that the work we did last year is paying off. The good stable financial rating illustrates the trust placed in the successful and scheduled implementation of our investment programme, which prevails despite an uncertain market environment. This is exemplified by the first green bond of 750 million EUR that we issued in May, followed by another placement of 200 million EUR in November. The good assessments of the rating agencies are the result of many years of sustainable and reliable performance and are linked to conditions such as a stable regulatory framework.’
50Hertz is economically fit to manage the upcoming tasks. With a result of 193 million EUR according to IFRS and a grid turnover of around 1.45 billion EUR, 2020 was a good economic year for 50Hertz (result for 2019: 178 million EUR). In the period from 2021 to 2025, 50Hertz plans to invest a total of 4.7 billion EUR in grid infrastructure (2016 to 2020: 2.9 billion EUR). These resources were mainly spent on the expansion of new lines and the reinforcement of existing ones, as well as on the construction of new substation or the retrofitting of existing ones.
Thinking European: 50Hertz has a good position as part of the Elia Group
With last year’s adoption of the European Green Deal, the European Union has set itself ambitious goals in terms of climate and energy policy. As part of the European Elia Group, 50Hertz wants to contribute to the achievement of these goals. The connection of offshore wind farms plays a key role in this strategy. Both 50Hertz and Elia seek to cooperate on the realisation of energy islands in the Baltic Sea and the North Sea together with the Danish system operator Energinet. In the past weeks, the three companies involved signed corresponding Letters of Intent. Elia Group CEO Chris Peeters commented: ‘Energy islands and hybrid interconnectors are the first components of an offshore power grid. They will enable us to access large volumes of renewable energy, which is extremely important for the achievement of the climate targets and the decarbonisation of our industries as well as our society.’ Elia Group plays an important role in this, said Peeters, specifically offshore, and more in general: ‘Our strategy anticipates social developments such as decentralisation, sustainability, European integration as well as digitalisation and incorporates them.’
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