Germany – Cosidering Merger of High-Voltage Grid Operators

The German government is currently in talks to merge its four high-voltage grid operators with the aim of modernizing its power lines to better accommodate the growing demand for renewable energy, according to unnamed sources by Bloomberg. Having multiple Transmission System Operators (TSOs)  is proving to be a challenge in expanding the grid to meet the increasing electricity demand, which is expected to rise by 18% to 700TWh by 2030 due to the increasing share of e-mobility, electric heat pumps, hydrogen production, and more hyperscale data centers. Furthermore, Germany aims to have 80% of intermittent solar and wind energy by 2030, requiring advanced digitalized grid technologies to manage the flow of electricity in a more efficient, flexible, and cost-effective way.

To address these challenges, the German government is currently negotiating to purchase the local unit of Dutch operator TenneT for over €20 billion ($21 billion) and is also in talks to acquire stakes in the other TSOs – 50Hertz Transmission, TransnetBW, and Amprion. A nationalized grid would make it easier for the German government to fund the consolidation of the grid via the state-backed bank KfW, which would enable the necessary investments to meet the grid expansion and modernization targets.

Deutsche Energie-Agentur (Dena), the German Energy Agency, has estimated that expanding the high-voltage network alone would require €50 billion ($53 billion). However, Germany is already behind schedule in building an additional 12,000 kilometers of high-voltage electricity lines to connect most of the wind capacity located in the North near the Baltic Sea with big industrial consumers located in the South. The current capacity problems are concerning as they may become more common as the country transitions to renewable energy sources.

Germany is not the only European country facing capacity issues in the transition to renewable energy. Other European countries have also reported similar concerns and are preparing similar grid capacity expansion plans. The European Commission recently launched a public consultation on reforming the European Union’s electricity market design to better protect consumers from excessive price volatility, support their access to clean energy sources, and make the market more resilient.

Source: PTR