With the rapid electrification of Europe’s energy system, the network operators are facing a challenge. The integration of more and varied electricity generation is putting a strain on the growth of grids. Erik Rakhou and Chris Collins contrast the struggles the Netherlands is experiencing with the smoother ride navigated by Germany where in the 12 years to 2015 solar PV capacity rose around 100-fold from 0.44 GW to 39.7 GW. Greater investment, of course, played its role. But the authors say a combination of curtailing excess generation while reinforcing networks as the system grew was Germany’s way of maintain stability.
Setting the scene
The path towards green electricity generation in Europe seems all but irreversible. Governments are implementing ambitious renewables growth targets, and financiers are facing increasing calls to support the growth of green energy technologies. At the same time, green technologies are getting steadily cheaper, with a number now approaching parity with more traditional forms of generation.
Add to this new forms of load arising from the electrification of transportation and heating, and the addition of decentralised generation and storage, for Europe’s energy networks, this represents something of a “perfect storm”. These changes introduce more complex flows on the networks, which make the planning and operation of those networks increasingly difficult.
The pace of change is such that it is not yet clear how network operators should respond. The conventional wisdom is that the role of the network operators is to accommodate whatever choices the market makes – facilitating the connection and operation of generation, storage and demand as required. As the world becomes more complex, and the demand for access to grid capacity increases, some are beginning to ask whether network operators should take more control. But if that is indeed the right answer, how should it be done?
This article gives the story of the Dutch and German grid operators, which have been facing precisely this challenge. For them, solar power has been the primary cause for concern. They have been taking a more proactive approach, and already thinking ahead as to how they could and should cope with the changing energy mix.
Dutch case study
Early in 2019, the Dutch media started to report that networks in the Netherlands – particularly the regional networks – could not keep up with the rapid development of solar parks (“zonneweides”), and their requests for connection.
Dutch grid operators are increasingly faced with having too little capacity on their networks to accommodate the electricity from the new solar projects. The grid has reached its limit at a number of locations, particularly in the North-East of the Netherlands.
As a result, grid operators are now saying that applications for the connection of solar (or onshore wind) farms are, for now, out of the question. The Netherlands’ track record in the field of sustainable generation is seen to be lagging behind its European counterparts, and a 2018 legal battle that resulted in the government being ordered to do more to cut its greenhouse gas emissions. As a result, this issue around new connections has generated discussion among Members of Parliament, and the topic has started to gain television coverage on the national evening news.
The Dutch media has been reporting various potential remedies, including:
- Interconnecting the DSO grids and Railway grids (25 kV) to help meet the transmission grid constraints;
- Combining solar and wind farms at one connection (so-called cable pooling);
- Establishing digital flexibility markets;
- Enacting measures to deliver better utilisation of the existing network (e.g. enabling congestion management).
In a mid-February 2019 position paper, the national association of Dutch network operators, Netbeheer Nederland, underscored some of these ideas – such as cable pooling – and explored alternative solutions such as lowering or removing the redundancy obligation from the DSOs. The paper also discussed three strategies that are already part of the Dutch draft Climate Agreement:
- Including a capacity test in permit procedures for renewables connection as well as in the procedure for a local subsidy (so-called SDE +) application. This would oblige developers to raise potential bottlenecks with the grid operator at an early stage.
- Including solar generation siting as part of Dutch local provincial Energy Strategies. This would assure a degree of steering by DSOs and provinces where solar parks are to be developed. This already applies in the case of offshore wind but, at present, local governments have little opportunity to steer solar developments in the same way.
- Exploring how to incentivise grid operators to proactively invest in networks in anticipation of future congestion.
The Dutch grid operators are already putting some of these ideas into action. On 29 January 2019, Tennet and a number of Dutch regional network operators reported that they would jointly use a platform called GOPACS to deal with congestion in the grid.
On 15 February 2019, Tennet and Gasunie published their Infrastructure Outlook 2050 report looking at integrating energy transmission infrastructure in the Netherlands and Germany, and stated an intention to produce a similar study in 2021 working with the regional grid companies. The study makes the case that the electricity and gas networks need to cooperate more to achieve climate goals, making use of both networks to accommodate fluctuations in solar and wind.
Lessons from the German experience of solar uptake
Supported strongly by governmental incentives Germany saw a strong uptake of PV generation long before the Netherlands. In the 12 years from 2003 to 2015, PV capacity rose around 100-fold, from 0.44 GW to 39.7 GW:
The vast majority of PV generation in Germany is connected to the low voltage network, which results in challenges for network operators and specifically for DSOs with regard to network stability. Erneuerbare Energien Gesetz (EEG) – the German Renewable Energies Act – and its revisions, set the regulatory framework in Germany for solar. §8 (i.e. Section 8) of the EEG contains an obligation for new installed PV generation to be connected to the network without any regional installation restrictions.
Renewable generators, including PV systems, were given connection priority over conventional sources of energy. This raised technical challenges for DSOs and their networks: if PV generation were to exceed power demand in an area, which might be expected during peak hours (e.g. noon), the resulting voltage increase has the potential to threaten the stability of the grid. DSOs had the right to impose certain technical preconditions on connecting generators, which provided some mitigation. For example, DSOs were authorised to curtail certain PV systems in critical situations, to prevent their network from blackouts or their infrastructure from damage (§14 EEG). However, they also had the obligation to reinforce their networks in order to minimise such curtailment (§12 EEG).
For the most part, stability issues proved to be rare and isolated examples, and in most cases they were dealt with without any grid issues or negative impacts for either the DSO or the PV generator. It is understood that the technical connection rules agreed by the association of network operators, and endorsed by the respective network operator (e.g. specific inverters, controllability, and provision of reactive power) contributed to this successful outcome.
It should be noted that, whilst in the Netherlands rural DSO networks have in the past faced chronic underinvestment, in Germany the network infrastructure has been very well developed. As a result, the German network operators have been able to accommodate this upturn in solar capacity through a combination of selective infrastructure reinforcement, optimisation activities and, in some cases, the use of new grid technologies such as controllable distribution transformers.
Under the regulatory framework, most of the reinforcement costs associated with new connections are passed to the end consumer in the region through network usage charges. As a result, German DSOs are careful to ensure that any perceived need for reinforcement is well justified.
Since 2015, regulation in Germany around solar generation has continued to evolve, and solar capacity in Germany is projected to exceed 50 GW by 2020. As expected, Germany’s second chamber of parliament has passed a new package of laws concerning solar, applicable from 1 January 2019. Among the changes are significant cuts to Feed-in Tariffs (FiT) for rooftop systems between 40 and 750 kW, and new tenders for wind and solar totalling 4 GW.
Applying the German experience to the Netherlands (and beyond)
Network operators in Germany have gone through a steep learning curve regarding (decentralised) PV system installations, and are expected to be able to manage the challenges which arise from further deployment of PV.
The most effective measure for maintaining network stability has been the curtailment of PV systems through active network management and, since 2012, a mandatory choice for PV installations of equal or less than 30 kWp to either limit their feed-in to 70% of rated power or to participate in remote feed-in controlling by the DSO. These measures might not be regarded as being the most efficient and sophisticated, but through the controllability of inverters, timely network enhancements, and the installation of controllable distribution transformers network stability could be achieved in most cases with only temporary need for curtailment.
German network operators learnt that the right to curtail is important, but the impact can be minimised if a suite of other measures is put in place.
From a regulatory perspective, the following regulatory measures could be considered in the Netherlands in order to limit the effects of PV uptake on network stability and the need for network reinforcement:
- Introducing an established definition of connection requirements in order to have a clear and standardised process of network connection as well as the technical ability to stabilise the network (e.g. inverters, reactive power capability, and controllability)
- We don’t see this yet happening in the Netherlands.
- Having a clear methodology for defining remaining available network capacity (regional installation corridors) and limitations (including allocation of voltage level) to give DSOs planning certainty, keep investments at an agreed level and to allocate connection points in accordance with the available capacity to secure network stability
- Netbeheer Nederland seems to be opting for a planning approach.
- Empowerment of the DSO to take actions where installation targets have been reached, perhaps taking the form of curtailment, postponement of network connections or undertaking network reinforcements
- This is being experimented with in the Netherlands.
- Foster markets that encourage allocation of capacity amongst participants, and trading of curtailment obligations. Such markets more narrowly would also underpin the integration of PV systems with battery solutions; especially incentives to deploy and utilise network/system-friendly batteries, and therefore to integrate solar power generation and consumption through active power demand management.
- We observe this in e.g. GOPACS initiative in the Netherlands, but more could be done.
Final thoughts – regulation and technology coming to the rescue?
Accommodating the projected levels of distributed generation is a challenge that will require a combination of technological, regulatory and market solutions. The introduction of GOPACS, as seen in the Netherlands, along with rising levels of grid storage solutions, demonstrate the value that comes from adopting a whole suite of approaches (e.g. organising better connections queues, implementing common technical requirements, adopting enhanced control systems, encouraging flexibility, and introducing market-based solutions).
The ‘perfect storm’ can be resolved if regulators take note of the broader lessons across Europe on how to facilitate the PV revolution.
Erik Rakhou is a management consultant at Baringa partners and member of the ACER Board of Appeal
Baringa works with a wide range of investors in the energy sector and utilities including network operators across a broad range of geographies including Europe.
- Particularly in the Netherlands, natural gas as a household heating fuel is being actively phased out. Local leading energy firms like ENECO are advertising that new build homes will no longer be connected to natural gas grid, see e.g. https://www.eneco.nl/welkom-in-de-nieuwe-wereld/gespot-gas-verdwijnt/. ↑
- On 8 March 2019 DSO Rendo reported problems with solar on its grid as well. ↑
- This is based on Baringa assessment. We welcome further feedback. ↑
- We note that the Dutch grid operators report significant differences between electricity networks in cities (typically more developed) and rural areas (typically less developed). ↑
- Curbing or curtailing of feed-in power for new-build small-scale PV up to a certain size, with a possible choice for fixed limitation or dynamic control. ↑