Increasing System Flexibility in Germany Through Demand Response
The Energiewende targets for increasing renewable energy resources in Germany to at least 50% by 2030 will require increased demand-side flexibility to ensure system reliability. Incorporating dispatchable demand response resources into the energy market can increase system flexibility and ensure reliability at lower cost. As described in RAP’s Demand Response as a Power System Resource, markets in the US have successfully incorporated demand response resources, offering real-life examples for the Energiewende. RAP captures the essence of the US and other international experiences and applies them to remove current barriers to demand response in Germany in Nachfragesteuerung im deutschen Stromsystem: die unerschlossene Ressource für die Versorgungssicherheit (available only in German). Shortly after its release, Daniel Holstein, policy officer to German Parliamentarian Bärbel Höhn, recommended the paper, identifying demand response was an “underrated” resource in Germany, and key for the success of the Energiewende.
Because of its independent status and broad international experience in market design and carbon-reduction policies, RAP is the only non-German organization appointed by the German Ministry of Environment to a small advisory group focused on the interaction between renewable energy supply, conventional energy supply, and demand-side resources. An official report of the appointed Working Group to the Federal Ministries, Chancellor, and Minister-Presidents of the Federal States reflects RAP’s efforts to create a competitive framework for flexibility that includes the participation of demand response. The German Energy Agency (Dena) and the Ministry of Economics and Technology invited RAP to present at their August 2013 conference on how demand side flexibility can contribute to ensuring power system reliability.
RAP is regularly invited to provide insights on these issues to a broad range of stakeholders in Germany (see Related Documents), and also serves as technical advisor to Agora Energiewende in its demand-side work with German stakeholders. Recently, RAP assisted in framing and reviewing Lastmanagement als Beitrag zur Deckung des Spitzenlastbedarfs in Süddeutschland – Zwischenergebnisse, an Agora-commissioned study on demand response potential among energy-intensive industries in Southern Germany (Load Management as a Way of Covering Peak Demand in Southern Germany).
Moreover, RAP introduced a new “dynamic” framework into the German policy discussions for allocating the costs of subsidies for variable renewables as well as grid expansion costs. For example, if a consumer uses electricity from the grid when there is a lot of renewable electricity in-feed (reflected in low spot market prices), then his/her allocation of these costs will be less, relative to periods when electricity in-feed is low (and market electricity prices are high). This serves to improve demand-response incentives in the market and works in concert with the cost drivers and flexibility needs of the Energiewende. RAP senior associate Andreas Jahn served as co-leader of Agora Energiewende’s report on this new cost allocation framework and related reforms to the German renewable energy subsidy program (Der Spotmarktpreis als Index für eine dynamische EEG-Umlage, in German with an English summary).
Visit our Making Germany’s “Energiewende” (Energy Transition) a Reality page to learn more about our work in support of the Energiewende. Other Energiewende topics of interest include: