Germany’s Network Agency plans network charges reform
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Aiming to incentivise consumption in line with the highs and lows of power supply peaks, Germany’s Federal Network Agency, Bundesnetzagentur, has published a key points paper to enhance the regulation on network charges for industrial customers.
Through their paper, the Network Agency proposes a regulation that creates an incentive for electricity-intensive companies to react dynamically to the levels of generation on the network, reflected in the electricity exchange prices.
Commenting in a release was Klaus Müller, president of the Federal Network Agency: “The old network fee discounts no longer meet the requirements of an electricity system that is characterised by high proportions of renewable electricity generation.
“In the future, we want to particularly encourage consumption behaviour in industry that benefits the system. Industry and commerce should pay reduced network fees if they use more electricity in situations with high electricity supply.
“Conversely, they will also receive a reduction in network fees if they use less electricity in times of a shortage of electricity. We propose a transition from a rigid to a flexible system. We now want to discuss the future system in detail with all stakeholders.”
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In principle, according to Germany‘s Network Agency in a release, market signals should be strengthened using network charges.
The privilege of network charges, they state, should be granted to those who significantly increase consumption during periods of low prices and significantly reduce consumption during periods of high prices.
The precise balance of the incentive mechanism depends on the technical capabilities of the industry to forecast volume and price developments and to respond flexibly to them.
Battling bottlenecks
The Agency’s proposal comes as an influx of renewable power has been coming online, causing a re-evaluation of grid operations as bottlenecks on the power grid result from a lack of capacity.
Particularly, in regions with a low level of decentralised feed-in from renewables, bottlenecks are more likely to arise due to load. Here, current reactions to the market signal can sometimes exacerbate bottlenecks, states the Agency.
In this respect, the Federal Network Agency adds that they would like to discuss whether and how regional exceptions can be created until the network expansion reaches a level that enables the market signal to be strengthened nationwide.
They say that existing agreements on individual network charges should not immediately lose their effect.
The Agency is also planning to grant companies transition periods that will enable them to convert production and realise flexibility potential.
The Federal Network Agency’s key points paper is part of a determination procedure that was initiated alongside its release.
Consultation will take place until September 18, 2024, with the regulation expected to come into force on January 1, 2026.
