(The author is a Reuters market analyst. The views expressed
are his own.)
By Gerard Wynn
LONDON, April 18 Rising electricity exports to
the Netherlands and France show how German households are
subsidising their neighbours' fuel bills, but Germany is gaining
greater benefit from the resultant balancing of its own grid.
The Netherlands is now importing far more power from Germany
than it did two years ago, as rising German household charges to
pay for wind and solar power cut German wholesale power prices.
Similarly, French imports from Germany grew in 2012,
exceeding exports every month.
Germany's eastern neighbour, the Czech Republic, by
contrast, has complained about wind power surges that can
overload transmission lines. It must noted that the country is
less attracted by lower wholesale power prices, which could
undermine investment in a planned nuclear power plant.
The Czech complaints serve to highlight how Germany benefits
from using neighbouring grids to help to balance its domestic
demand and increasingly intermittent power supply.
Estimates of the costs for other countries to host such
cross-border flows, or the alternative cost for Germany to
reinforce its own grid, suggest that it may be the biggest
beneficiary from the subsidised exports.
German wholesale power prices have recently started to
undercut those of its European neighbours, partly because of a
sharp increase in solar power generation, which has zero
marginal cost and priority grid access. (See Chart 1)
Combined German wind and solar power generation last year
grew 8.3 percent against 2011 and accounted for 13.2 percent of
the country's gross electricity generation. (See Chart 2)
A big rise in solar power generation, up 44 percent, masked
a small drop in wind, down 6 percent.
The impact of falling wholesale power prices can be seen in
electricity flows between Germany and the Netherlands and
From Jan. 2010 to Jan. 2013, flows from the Netherlands to
Germany fell 99.2 percent and surged 258 percent going the other
way, according to data from the European Network of Transmission
System Operators for Electricity. (See Chart 3)
As for France, data from French grid operator RTE show that
commercial electricity imports from Germany exceeded exports
every month last year.
That compares with an even split of six months each of net
imports and net exports in 2011.
Net French imports from Germany widened in the last three
months of 2012 compared with the same period in 2011, to 2,709
gigawatt hours (GWh) from 765 GWh, recent European Commission
Chart 1: link.reuters.com/gud47t
Chart 2: (Slide 7) goo.gl/YlRPO
Chart 3: link.reuters.com/saz47t
The cut in wholesale prices produced by the levy on German
residential electricity bills is clearly good news for Dutch and
French consumers. However, the cross-border energy trade also
supports Germany's energy transition away from nuclear, by
helping to balance a grid that is likely to become more volatile
with rising in wind and solar power.
German households are in effect paying Dutch and French
power consumers for grid-balancing services, raising the
question whether these offer value for money.
The EU has an inter-transmission compensation (ITC) fund
that compensates countries for hosting cross-border electricity
flows that spill over from neighbouring grids.
Compensation is limited to 100 million euros a year, but a
report in October by the Agency for the Cooperation of Energy
regulators said the actual cost of infrastructure to accommodate
such flows was as high as 1.3 billion euros in 2011,
highlighting the value to Germany of cross-border electricity
trade and spillovers as a way to balance its own grid.
Without this trade, Germany would be pressed into expensive
domestic action to manage the variability of its renewable
power. This would involve shutting down wind farms when power
supply exceeds demand, or reinforcing the grid to connect German
consumers and power supply better.
Long delays in the development of an internal North-South
German onshore grid underline the cost and controversy
surrounding such cable upgrades.
And that raises the question whether France and the
Netherlands are in fact subsidising German grid investment.
(Editing by David Goodman)