Business model

What is so special about the Combined Grid Solution?

— Frank Golletz: With the Combined Grid Solution, we are interconnecting two wind farms from different countries. One wind farm in Denmark and one wind farm in Germany. We utilise the capacities of the cable connections very efficiently. If the transmission capacity of the wind farm connection is not fully utilised, we can use the interconnector for electricity trading. So we combine assets with the market. The project has been a joint project of 50Hertz and Energinet in Denmark from the beginning, where we both learn how such a combination can work. The Combined Grid Solution is advancing the energy transition in Europe by better integrating renewable energies and increasing the safety of the electrical system in Germany and Denmark. 

Now that Ostwind 1 has been finalised and Combined Grid Solution is almost completed, what are the further plans for offshore development?

— Frank Golletz: First of all, there is one project that is practically a mirror image: our grid connection project Ostwind 2. Here we are once again connecting two wind farms with each other. Baltic Eagle by Iberdrola and Arcadis Ost by Parkwind. There are also plans for a Modular Offshore Grid 2 (MOG 2) in Belgium and for a DC link between Germany and Sweden, the Hansa Power Bridge. Offshore will continue to be one of the biggest growth drivers for Elia Group in the coming years. 

Why is offshore wind becoming increasingly important in realising the energy transition?

— Henrich Quick: Offshore development is becoming an important building block of reliable supply in a new energy world. It is competitive in terms of market prices, reliable in terms of the technology and in terms of grid development. We are getting used to integrating more and more renewables into our system operations. Wind Europe published a report stating that 450 GW is the offshore potential within Europe by 2050, of which 212 GW can be found in the North Sea and 83 GW in the Baltic Sea. 

— Tom Pietercil: Without offshore energy, Europe will not be able to reach its ambitious climate targets. According to the International Energy Agency (IEA), offshore energy is the next hot item in the energy sector. Offshore wind will be the technology that grows like mushrooms over the next 10 to 15 years. It is cheap, reliable and it provides highly efficient energy. It will become an important part of Elia Group‘s business.

Offshore is at the forefront of international cooperation, do you have many exchanges with other European TSOs?

— Henrich Quick: Because the offshore business is so complex, there is a lot of solidarity among the TSOs as we all face the same challenges. There is a group of large offshore project managers from Norway, the UK, Denmark, Germany, Belgium, France, Italy and Spain. We all work closely together and have organised internships between countries to share best practices. That spirit goes to both of our teams. They often call each other for advice. This is something we really encourage. 

— Andreas John: A major challenge for us is above all to forecast the feed-in behaviour of renewable energies. If a special situation can be predicted clearly, we can take appropriate measures and coordinate with neighbouring grid operators. The particular challenge here lies in the growing number of renewable energy sources and the increase in international power flows with an increasingly volatile situation in system operation. This multitude of interactions makes it difficult to make accurate forecasts. We must therefore operate our grid today in a completely different way than in the past: We must actively and foresightedly intervene in system operation more often and make use of topological switching or transformer staging as well as redispatch measures. Redispatch measures cost money and are passed on to customers in the form of tariffs. And that is why it is very important to us to keep the volume of redispatching as low as possible and to make the management of all available measures as efficient as possible. In Germany - at a time when we are phasing out both nuclear and coal-fired power, the question of the future provision of system services is also a major issue: In particular, measures to maintain electricity supply stability are needed to ensure system security in the event of increased grid load caused by missing or outdated infrastructure.

Ring flows pose a further challenge for system balancing.

— Andreas John: Ring flows are a well-known fact. Due to physical laws, electricity always takes the path of least resistance. In Germany, we have the unfortunate situation that a considerable part of the energy from the north of Germany flows to the south via the neighbouring countries of Poland and the Czech Republic as well as the Netherlands and Belgium. In some cases, this involves considerable quantities. We must therefore expand the grids in line with demand or use more active grid components to control electricity flows in order to reduce unplanned ring flows and keep an eye on the requirements of society, the new generation pattern and the energy market.

Is there any other way to solve this problem than by expanding the grid?

— Andreas John: Our joint study on securing the future of the European energy system until 2030 identified a second lever in addition to adequate grid infrastructure. In future, network operators should not have to make a decision in advance about the direction in which we believe the market will develop. If we make market coupling more flexible and take better account of certain flexibilities when allocating trading capacities, we can achieve more efficient market results and need to take corrective action less frequently.

Elia and 50Hertz are developing into digital transmission system operators. How does this affect everyday Business?

— Dirk Biermann: Digitization will certainly provide us with strong support in all areas of system operation. The generation of renewable energy is geographically very widely scattered and highly dependent on the availability of wind and sun. Our complex infrastructure projects lag behind the rapid development of renewable energies. We therefore need to increase the capacity utilization of our existing grid - and we urgently need new tools to achieve this. Big Data and artificial intelligence can help us do this. It begins by providing us with a complete picture of the system using complex analyses in real time. We also need digital tools that provide forecasts and help us make decisions. Once action is taken, automation comes into Play.

What role will digital metering play in the future?

— Dirk Biermann: Digital metering technology (smart meters) enables a real-time view of consumption and generation even in a very decentralized world. Consumers have access to a wide range of desired services that allow them to adapt their consumption to the needs of the system. Prices reflect the current market situation and households can adjust their consumption of heat pumps or electric vehicles accordingly. To promote this development, Elia Group has launched the IO.Energy (Internet of Energy) initiative. This is an ecosystem where several use cases will be developed and tested together with the distribution network operators.

What impact does this have on system operation?

— Dirk Biermann: There is a close link between market development and system operation. This became clear last summer in Germany when we had major imbalances in our grid. These were not caused by technical problems, but were a consequence of the market design at that time. The prices for balancing power did not provide the right incentives for market participants to avoid negative effects on system security. The Bundesnetzagentur has since taken countermeasures in this respect. But the incident has shown that it is essential to take into account the interaction between the market and the electrical system. We follow the principle of leaving as much as possible to the market and intervening as little as possible in the market on the system side.

Elia and 50Hertz published a study "Future-proofing the EU energy system towards 2030" at the end of 2019. In it they propose further optimisation of the market model.

— Dirk Biermann: If we want to successfully implement the next phase of the energy transition, we must fine-tune the hardware (the infrastructure) and software (the market design) of the European interconnected system. For example, we are observing considerable discrepancies between the physical load flows in the network and the commercial transactions in the market. Therefore, we want to optimize the market design so that there is a better match between the physical load flows and the commercial flows. Our study also clearly showed that timely completion of the planned new network infrastructure is essential. Our simulations have shown that delays in the expansion of new infrastructure cause significant welfare losses. Furthermore, the lack of grid expansion leads to an increase in the renewable energy compensation. We are therefore doing everything in our power to accelerate the expansion of the grid in close cooperation with the responsible authorities.

50Hertz and the Elia Group focus on short-term markets. What successes did you see in 2019 in this respect?

— Dirk Biermann: At European level, we are currently implementing cross-border intraday market integration. Why is this necessary? Well, the Western European countries are already integrating renewable energies on a large scale to drive the energy transition. However, the increasing volatility of renewables requires more short-term trading and more short-term correction of system imbalances. We have achieved great success with shorter procurement times for balancing power and quarter-hourly trading. However, I believe that there is still potential for even better coordination to deal more efficiently with volatility and cross-border electricity trading. This will take us a good step further along the road to a truly integrated European internal electricity market.

What role will electromobility play in the future?

— Dirk Biermann: An important topic in sector coupling is electromobility. It brings a multitude of new challenges for the system and the electricity market. Simultaneous charging processes of many electric cars can cause high load peaks, which have to be predicted at the different grid levels and possibly adapted to the limited grid capacities. At the same time, however, the new energy storage systems and flexibility in the system also offer new options. Based on concrete use cases, we are investigating which software and which mechanisms need to be developed to integrate e-mobility. As things are today, market processes are not designed for such a large number of electric vehicles and their intelligent use. There is plenty of room for improvement. For example, we could imagine charging systems in private households that are linked to a photovoltaic system on the roof and to an intelligent energy management system. And as an internationally positioned group, we are of course also looking at cross-border charging and billing processes. We should make electromobility a problem solver and not regard it as another disturbance variable.