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What are grid reserve, capacity reserve & security readiness?

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  • Grid reserve | Capacity reserve | Security readiness

The law on the further development of the electricity market (Electricity Market Act) came into force in full on July 30, 2016 (some parts of the law came into force retrospectively as of January 1, 2016). As a shell law, it defines changes to many electricity market-related laws and ordinances, for example the Energy Industry Act (EnWG), the Renewable Energy Sources Act (EEG), the Electricity Network Fee Ordinance (StromNEV) and the Reserve Power Plant Ordinance (now NetzResV).

Within the changes to the EnWG, the Electricity Market Act provides for the establishment of various mechanisms Reserve power provision to ensure that there are always enough power plants available that can step in if there is not enough electricity on the market to meet the demand for electricity. These mechanisms are in particular the Network reserve (§13d), the Capacity reserve (§13e), the Security readiness of lignite power plants (§13g) and special network equipment, formerly known as network stability reserve (§11 Paragraph 3, formerly §13k - overturned by the EU Commission).

The draft of the new Electricity Market Act was adopted by the Bundestag on June 23, 2016 with a few provisions and announced in the Federal Law Gazette on July 29. However, some areas of the new Electricity Market Act are still relevant for aid and therefore require the approval of the EU Commission. On August 30, 2016, the Federal Government reached a preliminary agreement on this with the EU Competition Commissioner, so that the new regulations should be implemented as planned, subject to a few adjustments.

In the following we have summarized the mechanisms for reserve power provision from the amended EnWG.

network reserve

Network reserve

The network reserve (colloquially also "Winter reserve") Was introduced by the Reserve Power Plant Ordinance (according to Article 6 of the Electricity Market Act, recently" Network Reserve Ordinance "), which came into force on July 6, 2013. With Section 13d, the network reserve is now given an independent paragraph in the EnWG, which is specified in the Network Reserve Ordinance.

The network reserve is created every year in the winter half-year to provide power plant capacities for Redispatch- Withhold interventions by the transmission system operator (TSO) that go beyond the usual redispatch. The background to this is that the electricity demand is usually particularly high in winter, while a lot of electricity is produced in the wind farms in northern Germany. Owing to Network congestion On the way from the north to the south, the TSOs then often have to shut down power plants in the north and start up plants in the south with the same output (redispatch) in order to relieve the power grid and fully meet demand. Because through the Nuclear phase-out by 2022, especially in southern Germany, further power plant capacities will be withdrawn from the market, this will be the case North-South divide presumably tighten initially in the next few years.

The Federal Network Agency (BNetzA) regularly publishes the demand for power plant capacity in the network reserve on its website. In it (mainly in Bavaria and Baden-Württemberg) flexible power plant services that can step in in the event of network bottlenecks, voltage losses or after a blackout. The network reserve is formed from systems that are currently not ready for operation, but classified as systemically relevant by the TSOs and from system-relevant plants that should be temporarily or permanently shut down, as well as from suitable plants in other European countries (Section 13d Paragraph 1 No. 1). The Operational costs, i.e. the one-off and ongoing costs of manufacturing and maintaining operational readiness, are then reimbursed to the plant operators (Section 13c (1)). The cost will be on the Network charges knocked down.

The electricity from these systems may be in the network reserve during their time (in accordance with Section 13b (4) sentence 2 for two years from the first designation as systemically relevant and in addition each up to 2 years for all further declarations) are not sold on the electricity market. The network reserve systems must, however on standby in case of need being held. You can also participate in the tender for the capacity reserve at the same time. If they are added to there, the systems are only remunerated for the capacity reserve, but must continue to adjust their output within the network reserve at the behest of the TSO. When the systems are active again on the electricity market after their time in the network reserve, the operators must Residual value of the investment benefits repay through the remuneration in the network reserve (§13c para. 2 sentence 2).

The EU Commission has approved the grid reserve in principle, but plans to gradually reduce its scope by a total of 1.5 GW by the winter of 2019/2020 (page 2). The reduction is to be compensated for by measures to make the electricity market more flexible.

Development of the need for network reserve

According to information from the Federal Network Agency, the demand for grid reserves in Germany is declining: In a report on grid reserve requirements, the authority informs that a total of only 6,600 MW will be required in the 2018/19 and 2020/21 winters. This need can only be covered by domestic capacities - additional security through foreign capacities is not necessary. In the winter of 2017/18, a reserve requirement of 10,400 MW was reported to the BNetzA.

According to the BNetzA, the main reason for the reduced need for network reserves is the introduction of congestion management between Germany and Austria, but the authority does not yet see a fundamental trend reversal: the slow network expansion between northern and southern Germany could be combined with the continued strong growth in wind energy in northern Germany and the nuclear phase-out will ensure additional network reserve requirements in the years after 2021.

A higher grid reserve requirement of 8,042 megawatts was determined for the winter of 2024/2025. The demand is increasing on the one hand due to an EU regulation that calls for an increase in trading capacities between the member states. On the other hand, the transfer of coal-fired power plants to the grid reserve leads to an increase in the grid reserve requirement. It is questionable whether this additional network reserve is necessary, as the redispatch requirement continues to decrease.

capacity reserve

Capacity reserve

The new §13e of the EnWG stipulates that the TSOs must keep the capacity reserve in order to To increase performance capacitiesif supply and demand on the German electricity markets cannot be fully balanced. This means that the demand for the capacity reserve is behind the electricity exchange and the balancing energy markets, but according to the White Paper (page 81), depending on their specific travel time, the systems should be activated on the day before if no market clearing result could be achieved in the day-ahead auction.

From the Winter half-year 2020/21 power plants are transferred to the capacity reserve, which then no longer actively operate on the electricity markets (Marketing ban) and are only allowed to increase their output at the signal of the TSO. They are therefore intended for the case that market mechanisms cannot provide enough power in winter to cover the electricity demand, i.e. when PV systems in particular have their lowest electricity production.

To ensure that the capacity reserve is available in good time, the TSOs will be introducing them regularly from 2019 competitive tendering process or equivalent procurement system. From the winter half of 2020/21, 2 GW are to be contracted in each case. A reserve capacity of 2 GW is also planned from the winter half-year 2022/23, but the right to make adjustments is reserved. The Federal Ministry for Economic Affairs and Energy (BMWi) will review this until October 31, 2018 (and from then on at least every two years) on the basis of the BNetzA's monitoring report Adjustment of the size of the capacity reserve.

Specifically, this means that the tender for the first delivery period (October 1st, 2020 - September 30th, 2022) will be issued by September 1st, 2019 at the latest.

Plants can multiple times participate in the procurement process for the capacity reserve. You will then receive an annual fee that is determined within the TSO's procurement process. The remuneration is intended to cover the following costs:

  • Maintenance of the system
  • Start-up processes within other legal regulations
  • maintenance
  • Rework
  • Own power consumption of the system
  • Value consumption

The following are remunerated separately:

  • Infeeds that were requested within the capacity reserve or network reserve
  • variable maintenance costs for feed-in within the network reserve
  • ensuring the fuel supply
  • Costs that arise from further requirements of the TSO (in order to be able to produce the black start capability or reactive power feed without active power feed)

The Cost of the capacity reserve are also allocated via the network charges. If the plants run out of reserve capacity, they have to be shut down (No return), but this does not apply to loads (electricity consumers) in the capacity reserve. There is also still a capacity reserve Authorization to issue ordinances (§ 13h). The EU Commission has also decided that the BMWi (or the BNetzA) must carry out a system analysis in autumn 2016 (page 2) in order to reconfirm the actual need for a capacity reserve. Only when this has happened is the capacity reserve introduced as described above.

Capacity reserve: tendering process and awards

For the first delivery period from October 1, 2020 to September 30, 2022, the tendering process ended on December 1, 2019. Of the 2,000 MW tendered, 1,065 MW were awarded. The invitation to tender was thus clearly signed. Three companies had winning bids. Among them RWE with 680 MW, Lausitz Energie Kraftwerke AG (Leag) with 270 MW and Statkraft with 106 MW. The providers receive 68,000 euros per year and megawatt for the reserve provision.

For the following delivery period from October 1, 2022 to September 30, 2024, the tendering process will take place from January 1, 2021 to April 1, 2021.

Criticism of the EU Commission on the German capacity reserve

In a press release from the EU Commission on April 7, 2017, EU Competition Commissioner Margrethe Verstager reports state aid doubts about the planned German capacity reserve.

"We currently have doubts about the necessity of this measure and concerns about its design," said EU Commissioner Verstager in Brussels and now wants the German government to examine the assumptions and scenarios. In addition, the EU Commission has gained the impression that the German government is apparently not planning to quickly end the capacity reserve regulation, which is actually limited to two years.

In addition, it was criticized that the prerequisites for the participation of providers for controllable loads (demand-side management) are not open enough. Foreign capacity providers are excluded. In general, the developing capacity reserve mechanisms in the EU member states are closely monitored by the EU Commission: Capacity reserves should only be introduced when absolutely necessary and should be as cost-neutral as possible.

security readiness

Security readiness (§ 13g, decommissioning of lignite power plants)

In addition to the network reserve and capacity reserve, Section 13g of the EnWG prescribes the formation of a safety standby from lignite power plants (colloquially also "Lignite reserve"Or"Climate reserve“).
The following eight power plant blocks with a total output of 2.7 GW (corresponds to 13% of the installed lignite output) are to be gradually transferred to security readiness:

  • Buschhaus (MIBRAG): October 1, 2016
  • Frimmersdorf (two blocks; RWE): October 1, 2017
  • Niederaußem (two blocks; RWE): October 1, 2018
  • January (two blocks; Vattenfall): October 1, 2018 and 2019
  • Neurath (RWE): October 1, 2019

That means the power plants provisionally shut down and on standby every four years final be shut down. In 2023, the security readiness should be completely dissolved.

The power plants on standby may no longer be active on the market (Marketing ban), so no longer run normally. However, they are kept available in the event that electricity production, including all regular safety measures (such as redispatch, control energy, interruptible loads, network reserve and capacity reserve) is not sufficient couldto cover consumption. In the event of a request by the TSO, the systems must be within 240 hours (10 days) be operational; after they are ready for operation, they must be able to be started up within 11 hours at minimum partial output and within a further 13 hours at net nominal output. Proof that they are capable of doing so must be provided beforehand. The system operators (MIBRAG, RWE and Vattenfall) receive a compensation out of a total of 1.61 billion euros (230 million euros per year)which is also apportioned to the network charges here. However, the operators should pay for the subsequent costs of the final shutdowns themselves and the remuneration for the security readiness should decrease if the power plants do not respond in time to a request (down to zero from the 13th day). In the event of a premature final shutdown, however, the operators will receive a one-off final payment, for which a payment of one to two billion euros is under discussion.

The security readiness relates to the reason Brown coalthat lignite causes 50% of the CO2 emissions in the electricity sector (slide 41), but only covers 24% of the German electricity supply (slide 12). So she is the one Most climate-damaging energy sources in the German energy mix with a relatively low energy density. From 2020, the Lignite-fired power stations are withdrawn from the market 12.5 million tons of CO2 emissions can be saved annually, which corresponds to around 50% of the savings required by the energy industry up to that point in Germany Climate protection target for 2020 to be achieved. If it is foreseeable by June 30, 2018 that this target will not be achieved, the operators must propose further measures to reduce CO2 by December 31, 2018.

The European Commission approved the aid for the decommissioning of lignite-fired power plants on standby on May 27, 2016.

Criticism of regulation, control and practical feasibility of security readiness

At the beginning of 2018, the parliamentary groups of the Left and Greens as well as the taxpayers' association asked whether the federal government had placed too much trust in the lignite industry when introducing security readiness. Because according to information from "Welt", the federal government is not checking whether the systems, as contractually stipulated, can really be operational in extreme network conditions within ten days.

The taxpayers' association has criticized the fact that the material basis of an investment in the millions is not being examined; the electricity customers bear the risk. Claudia Kemfert, member of the Advisory Council for Environmental Issues, also expresses concerns: It is questionable whether there will be enough staff or resources available when needed. It is technically possible to reactivate a lignite power plant within 10 days - however, the power plant would then have to keep resources permanently available. However, according to Kemfert, full equipment would not pay off. In a small question in the Bundestag, the Bundestag parliamentary group on the Left above all doubts the timely provision of coal: If the Buschhaus lignite power plant in East Germany were to be reactivated, the coal would now have to be brought in by rail from a distance of 200 kilometers, since the neighboring open-cast mine would be exhausted - with a daily consumption of 6,000 tons this would be 240 coal wagons per day.

Even in the answer to another small question from the Bündnis 90 / Die Grünen parliamentary group on February 26, 2018, it remained unclear whether and by what means, in particular, the Buschhaus power plant could actually be restarted within eleven days. With regard to the demanding coal logistics, the federal government again referred to the assurances of the power plant operators in Section 13g of the Energy Industry Act (EnWG). Reference was also made to these assurances with regard to the problem presented, namely that central German lignite with its high water content is considerably more difficult to transport in unheated coal wagons in frosty conditions.In 1978, lignite that was frozen solid in unheated coal wagons and thus no longer pourable had almost led to a collapse of the energy supply in the GDR.

The weak sanction practice is therefore particularly criticized: If the restart of a power plant does not succeed within the specified time of ten days, the remuneration for the security readiness is reduced by ten percent per year. Given the very low probability of retrieval, coupled with the lack of controls, losses in remuneration for the lignite industry are extremely unlikely. Green parliamentary group leader Anton Hofreiter sums up "Welt Online": "The electricity consumers pay for something that is not even clear whether it exists."

cost security readiness

Concrete costs of security readiness

In the answer to the small question already mentioned in the previous paragraph by the Bündnis 90 / Die Grünen parliamentary group on February 26, 2018, the Federal Ministry of Economics provided specific figures on the costs of security readiness: The operators of the lignite power plants Buschhaus and Frimmersdorf, which are already on standby, will receive a total of 234 million euros for 2017 and 2018. Of this, 85 million euros in 2017 and 149 million euros in 2018, generated from the network charges for electricity consumers. It remains unknown which specific measures in the power plants concerned are being financed by these sums: the Federal Government has no knowledge of the number of employees in the power plants in question.

If the assurances of the power plant operators in §13g of the Energy Industry Act (EnWG) are not adhered to, according to the federal government, the remuneration will be reduced to zero or by "a certain percentage, depending on the reasons for which the plant cannot be made operational in time. . " For disputes, reference was made to the courts. A practical test of this procedure is still pending: So far, the security readiness has not yet been requested.

There are no actual deployments of security readiness

So far (as of April 2021) the lignite-fired power plants that have been put on standby have not been used. Nevertheless, a total of 234 million euros were due for 2017 and 2018 alone; 1.6 billion euros are estimated for the entire seven-year period of security readiness.

Actual use was and is probably not the intention of the political decision-makers: "We are assuming that the power plants will not be used" was quoted by State Secretary Rainer Baake for the energate messenger when creating the security readiness. Instead, those responsible are presumably concerned with a CO2-saving measure thanks to the premature decommissioning of coal-fired power plants, as is now also being communicated more openly.

Security readiness in the coal compromise: four billion euros for old lignite power plants

With the coal exit law of the federal government, which provides for the truly not hasty coal exit by 2038, a new regulation of the security readiness was decided. In the new law, too, the regulations and their emergence are not very transparent, experts criticize, particularly in view of the sum: More than four billion euros in additional costs are involved in maintaining the security readiness from lignite power plants that are to be shut down.

As part of this "new" security readiness, units of the Jänschwalde power station and one unit of the Niederaussem power station are to be kept in operation. This decision was made largely independently of the objective determination of the actual need in an emergency, as Ida Westphal, lawyer at Client Earth Berlin, criticized in the specialist press. She also raises the charge that the Federal Government "under the guise of security of supply [...] has created a possibility of gilding lignite power plants without having to call this compensation".

At the moment it is also questionable whether the regulations that have been adopted will comply with European state aid law. The EU Commission is examining whether the sums of a foreseeable, negative price development for electricity from lignite are appropriate and which additional incentives are provided by a security preparedness in this form.

Special network equipment

Behind the designation "special network equipment", which was advertised for the first time in spring 2019, is what became a dispute in a dispute with the European Commission Grid stability systems, also Grid stability reserve called.

The special network-related operating resources, which are de facto medium-sized gas power plants, serve to stabilize the network in the event of underfeed and were originally intended to be built and operated by the network operators themselves - a clear violation of this Unbundling of the electricity market between the grid and electricity production. Section 13k of the Energy Industry Act (EnWG), which provided this option for the TSO, was therefore overturned on June 13, 2017.

"Relaunch" of the grid stability systems in § 11 Paragraph 3 EnWG

The standards for the grid stability systems can now be found in the new Paragraph 3 of Section 11: The transmission system operators are now only entitled

Tendering and use of special network equipment

The TSOs are now procuring in total 1,200 MW active power, which are divided into twelve lots of 100 MW each. Bids can be placed on a lot or lottery packages within a lot group. The awarded company must guarantee to bring its systems to full load within half an hour and to be able to hold this full load for at least 38 hours. The total operating time is at least 500 hours per year.

The required parameters for the delivery of the special network-related equipment are now being criticized because, due to the lot size of 100 MW in connection with the fast and long full load requirement, they exclude many decentralized energy generation systems from the outset. Due to the long minimum delivery time, they are particularly affected Power storage, as the German Association of the Energy Industry (BDEW) criticized. The lot size of 100 MW also closes the participation of Loads that can be switched on and off out.

Finally, the BDEW criticizes that with an annual minimum operating time of 500 hours one can no longer speak of an emergency situation, but of a normal case. The "normal case", that is, the special network equipment as de facto system service, then has to face completely market-economy conditions, as is also a matter of course for the system service balancing energy. A financing of the special network equipment from the "Regulated area", what is meant are the network charges to be paid by every electricity network user, which is not acceptable from the BDEW's point of view.

Expert commission: reasons for reserves are not always convincing

The expert commission “Energy of the Future - Commission for the Monitoring Process”, consisting of representatives of four recognized research institutes, has critically assessed the various electricity market reserves in its “Statement on the sixth monitoring report of the Federal Government for the reporting year 2016”. The reason for the introduction of the individual reserves is “not always convincing”, the simple and short “reference to the security of supply does not do justice to the importance of the topic”, according to the experts.

The introduction of the capacity reserve implicitly denies the balancing group managers the competence to ensure balanced balancing groups themselves by procuring the necessary flexible capacities in good time - although this is daily, lived practice, especially in virtual power plants. In addition, the capacity reserve, the extended network reserve and the safety reserve take significant proportions of the conventional energy sources from the free electricity market: Instead of having to face market-economy conditions, the reserve capacities are financed through the network usage fees, the composition of which is not only opaque according to the experts at Agora Energiewende.

In summary, in the opinion of the expert commission, the introduction of the numerous reserves “fundamentally contradicts the idea of ​​the energy-only market and the unbundling of network operation and generation” and thus contradicts a path laid down in the white paper of the energy transition that made the electricity market of the energy transition possible in the first place.

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