Germany’s EnBW and EWE propose flexibility connection agreements

German energy companies EnBW and EWE have developed a joint concept for flexible grid connection agreements, aiming to continue the expansion of renewable energies despite limited grid capacity while ensuring grid stability.

With Flexible Connection Agreements (FCAs), EnBW and EWE are proposing a standardised, flexible solution for energy producers, intended as a temporary measure, particularly in cases of overloaded equipment. 

Such agreements, says EnBW in a release, are currently rarely used. 

The proposal comes as part of the ongoing debate surrounding the German government's planned grid connection package, which includes measures for greater control and transparency in grid connections.

According to reporting from Clean Energy Wire, privileged grid access is seen as a key driver of the progress in Germany’s expansion of renewables, which now cover nearly 60% of the country’s electricity demand. However, grids have not kept up with this expansion. Germany is also slow to tap into the potential of making demand more flexible to better align it with fluctuating wind and solar generation, which would ease the burden on the grid. 

In an internal draft leaked by Table.Media, the ministry detailed its plans to better align renewable power projects with the grid’s capacity to transport the electricity they produce. 

On the package, EnBW and EWE say they welcome the synchronisation of grid expansion and renewable energy expansion in the proposals, but are critical of a redispatch clause.  

This clause stipulates that grid operators can restrict the connection of renewable energy plants in the event of bottlenecks, and that plant operators must temporarily forgo financial compensation for curtailment. 

Both companies believe this regulation would slow down the expansion of renewable energies. 

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Commenting in a release was Georg Stamatelopoulos, CEO of EnBW:

"With our proposal for flexible grid connection agreements, we are creating a balanced solution that takes into account both the expansion of renewable energies and the requirements for a secure grid infrastructure." 

Added Stefan Dohler, CEO of EWE: “We need to think about grids and renewables as a single unit and create innovative solutions. Our joint FCA concept offers a pragmatic way to overcome existing bottlenecks while simultaneously ensuring investment security for all stakeholders.”

The companies’ joint concept proposes abandoning the designation of capacity-limited grid areas and instead creating transparency regarding limited grid resources. 

Furthermore, priority connections for renewable energy plants are to be maintained. A complete elimination of redispatch compensation is not planned; however, electricity customers are to be relieved of some of the burden through a reduction in system costs. 

To obtain favourable financing conditions, renewable energy projects are particularly dependent on costs and risks being ex-ante, say the companies. The introduction of an entitlement to a standardised FCA (Financial Conduct Agreement) is planned only for new connections. 

Grid fee reform

Connections are not the only way Germany is looking to reform its energy system.

The country is also considering the introduction of dynamic grid fees (dGF) as a market-based instrument to incentivise grid supportive behaviour, reduce redispatch volumes, and improve system efficiency in its increasingly congested power system. 

However, according to Aurora Energy Research a week prior to the proposal from EnBW and EWE, the system-wide and distributional impacts of such fees depend crucially on their design, spatial granularity, and the accuracy of congestion signals.

Aurora, commissioned by a corporate consortium consisting of EnBW, Engie, LEAG, Onyx Power, RWE, Statkraft, Trianel, Uniper, and Vattenfall, assessed regional dynamic grid fees in Germany.

The study, The impact of dynamic grid fees on the power system, found that, in principle, it is a sensible step to align market decisions more closely with grid realities. 

However, the study finds that regional dynamic grid fees can only partially reduce redispatch needs, while simultaneously creating strong system wide distortions, welfare losses and distributional challenges.

Additionally, it adds, structural limitations – including spatial aggregation, forecasting errors, and the inability to target individual assets – constrain their effectiveness and limit their suitability as a primary congestion management.