Flexible bottle neck: Opportunities and risks of the new regulations on flexible grid connection agreements

What is the problem?

The success of the energy transition depends not only on the expansion of renewable energy plants, but also essentially on their connection to the electricity grid. While the number of installations is constantly breaking new records, grid expansion is often described as the bottleneck of the energy transition. Grid expansion is regularly required to be able to feed in the requested plant capacity. However, the expansion leads to delays and higher connection costs.

This can be seen not least in the number of enquiries for the grid connection of battery storage systems. The enormous number of enquiries currently means that grid operators only process and respond to them with long waiting times of several months in some cases.

However, a delayed grid connection entails uncertainties for the plant operator and the financing of the plant through long-term supply contracts (PPAs), fixed supply commitments or state support under the EEG 2023.

What has changed?

The Act Amending the Energy Industry Act to Avoid Temporary generation surpluses enables the "overbuilding" of grid connection points and so-called cable pooling. In contrast, the initially planned requirements for a standardized procedure and the content of grid connection reservations are no longer part of the amendment.

Overbuilding of grid connection points

To meet the acute demand for grid connections and at the same time enable better utilization and use of existing capacities, so-called overbuilding of grid connection points is made possible. This term describes the situation where the total installed capacity exceeds the available capacity at the grid connection point. The case can occur in particular if a grid connection point is utilized by several installations feeding into the grid at the same time (see 2.2 below).

Such overbuilding can now be made possible in the form of a flexible grid connection agreement in which the maximum feed-in is limited. The limitation must be technically ensured by the system operator and can be limited to individual time windows (Sec. 8a para.1 (2 and 3) EEG 2023).

In particular, the flexible grid connection agreement must regulate the limited feed-in power, the time windows for different limitation levels, the duration of the limitation and the consequences at the end of this, the technical requirements for the limitation, the liability of the system operator and the consent of other system operators in the case of cable pooling (Sec. 8a para. 2 (1) EEG 2023).

Cable pooling

The newly introduced regulations also allow connection points to the general supply grid that are already used by other systems to be designated as grid connection points (Sec. 8 para. 2 (2) EEG 2023).

The joint use of a grid connection point by several generation plants (so-called cable pooling), which is already practiced in some cases, is thus explicitly embedded in the regulatory framework.

How should the innovations be assessed?

The regulations is a first step towards greater flexibility, but they also raise follow-up questions.

The new flexibility options are limited in two respects:

• Firstly, the overbuilding of grid connection points is subject to the proviso that there are no grid operational concerns.
• Secondly, the operator of the existing plant must agree to the shared use.

To ensure that the joint feed-in power does not exceed the total capacity, a contractual arrangement is also required between the operators of the existing and the additional plant. This creates new interfaces that can lead to frictional losses. It also remains to be seen to what extent the grid operators will be able to absorb the additional work involved in determining the possible grid connection points.

Regarding regulation on cable pooling, the question arises as to what extent the connection of several generation and storage systems via a grid connection point should be categorized as a customer installation (Kundenanlage) in individual cases. If yes, the much-discussed ruling of the European Court of Justice on the illegality of the German customer investment regulation under European law raises further questions and creates legal and economic uncertainty.

What's next?

Overall, the need to press ahead with grid expansion will remain, despite the new regulations. The new possibilities can lead to greater utilization of existing capacities. The necessary flexibility of the demand side through the smart meter rollout and an adjustment of incentives for industrial consumers should have a much stronger effect. It remains to be seen how the new government will position itself on these issues.