Grid Expansion: Opportunities and Challenges of a Modern Energy Policy

Market Economy Foundation Conference with the Lower Saxon Government at the Lower Saxon State House on June 9, 2011.

Photos: Kay Herschelmann

The rapid phasing-out of nuclear energy and the even more rapid introduction of renewable energy appear to enjoy broad consensus today. But have the goals of economic viability, supply security, and climate protection been taken into account during the evolution of this consensus?

These are certainly not achieved by simply expanding renewable energy production. Improved cables and better ways of storing energy are necessary. Electricity produced from wind turbines in the North and Baltic Seas, for example, must be transported efficiently to the areas where it will be used using methods that incorporate such improvements. The required investment necessary for an electricity grid that can accommodate growth in renewable energy, however, is tremendous. According to studies by the German Energy Agency (Deutsche Energie-Agentur), Germany must construct 850km of new electricity transmission lines by 2015, and another 3600km must be in place by 2020. Additionally, energy production that is more decentralized requires intelligent transmission networks (Smart Grids) and, above all, any such program requires the approval of the citizens.

How can this reconstruction of the grid proceed in an way that allows for the implementation of market incentives? What can and what may the state do? Smarter regulation of the grid, which sets into place incentives for network operators to invest without unnecessarily raising electricity costs, is necessary. But how would such regulation look? Instruments like the Federal Grid Plan (Bundesnetzplan) and the Federal Grid Expansion Acceleration Act (Bundesnetzausbaubeschleunigungsgesetz) are supposed to expedite the regulatory approval process. But is the shift in responsibility and action to the federal level an appropriate step? And how can acceptance of the plan among citizens affected by it be strengthened? Is cost-intensive underground cabling an effective solution? What role could an expansion of cross-border transfer points and the strengthening of European energy trade play in the transformation of the German energy market? We were able to discuss these issues at our energy conference held in conjunction with the Lower Saxon government. A conference report will be available here shortly.

Conference Report (German): Download

Here you can find

the Conference Program

Prof. Dr. Haucap's Presentation