Germany’s record-breaking renewables expose lack of flexibility

On 13 April this year, Germany could have become one of the first major countries to be powered by 100% renewable energy.

It would have been celebrated around the globe as a defining moment in our transition to a greener future. Instead, power prices went negative due to oversupply and Germany had to pay neighbouring countries to take the excess electricity.

The reason? A lack of flexible generation and energy storage.

Why flexibility is key to achieving 100% renewables

Across Europe, the drop in demand due to the COVID-19 lockdown has "accelerated" the electricity system transition, with the share of renewables reaching levels not expected for another 10 years.

At Wärtsilä, we’ve been tracking and analysing the impacts on European energy markets with our new free-to-use tool, the Energy Transition Lab, providing open data and insights to help accelerate the transition to 100% renewables.

What we have seen is unprecedented. Germany broke its green energy generation records in April, with renewables achieving an incredible 61% average share of generation, up 12% year on year.

However, the country could actually have achieved its first ever 100% renewable day on three occasions (13, 20 and 21 April), but it missed out on realising this historic milestone due to the inflexibility of its power generation.

For example, nuclear and coal both contributed around 10% of daily generation on 13 April, but if Germany was able to switch off these generators, they could have been replaced by renewables to make up 100% of the country’s energy needs. Instead it had to export 12 GW of renewable power to other countries during the peak hours.

In fact, on five days (5, 13, 19, 20 and 21 April) German generators had to pay up to €80 per MWh to export excess electricity, with Norway and Austria, which have more flexible generation, being paid to receive electricity.

Average day-ahead prices for electricity generation in Germany were down by more than half in April compared to 2019, but energy storage providers saw a 20% profit uplift compared to 2019, demonstrating the need for greater investment in system flexibility.

This is because oversupply renders low or negative prices, and increases price volatility. Storage providers are therefore exposed to the difference in price rather than price itself, and can leverage the relative price differential by charging when prices are low and discharging when prices turn back up – even when prices remain negative.

The COVID-19 crisis is shining a light on the shortcomings and societal cost of inflexible energy systems and the market implications when renewable generation reaches unprecedented levels. What is clear from the German experience is that investment in flexibility has to be a priority. This will minimise the cost for consumers and the environment, and enable the transition to 100% renewable energy across Europe

Building Back Better

Worldwide, there is a growing movement to ‘Build Back Better’ after the COVID-19 crisis subsides and focus economic stimulus on tackling the biggest challenges. On 27 April, 60 German companies, including Eon and Allianz, published a joint letter calling for state-aid for the recovery to be tied to climate action. When it comes to the energy transition, that rebuild needs to combine the growth of renewable generation with the growth of flexibility.

That’s where Wärtsilä can help. Our flexible energy solutions, energy management systems and lifecycle services are designed to enable the energy transition across Europe and the world.

The Energy Transition Lab

We created the Energy Transition Lab to help our industry, policy makers and the public understand the impact of COVID-19 on European electricity markets and analyse what this means for the future design and operation of its energy systems.

What have you discovered from using the platform? What additional functionality would you like to see from it? We are adding new tools every day to help better understand how we can all lock in the positive change in our energy systems and accelerate towards 100% renewables.