Whether renewable energy can achieve large-scale development in China has long been a hot topic of discussion in the industry. Drawing on Germany’s power grid management experience, Greenpeace, an international environmental organization, recently developed and released a report titled Jiangsu’s Potential: Roadmap for High-Proportion Renewable Energy Grid Integration. The report argues that Germany’s experience in accommodating high-proportion renewable energy integration—especially in power grid management—is highly valuable for Jiangsu to learn from.

Germany’s renewable energy market has grown steadily since the implementation of fixed feed-in tariffs in 1990, particularly after the reform and introduction of the Renewable Energy Sources Act (EEG).

The development process of Germany’s renewable energy market—especially in wind and solar photovoltaic (PV) power—serves as a successful model. This success stems from a series of factors, including a long-term and predictable feed-in tariff subsidy policy, mandatory grid connection regulations for renewable energy, priority grid access policies for renewable energy, and construction and management standards for PV power plants.

Steps for Power Grid Expansion

Just a decade ago, thermal power plants and hydropower plants still dominated Germany’s electricity supply. However, by the end of 2014, renewable energy had accounted for 30% of Germany’s total power generation, with an installed capacity of 88 gigawatts (GW)—surpassing the country’s peak electricity demand. Such a flexible and distributed renewable energy generation system requires an entirely different power grid management model.

Germany’s national power grid is managed by four transmission system operators (TSOs). Each year, these four operators jointly develop a "Scenario Framework."

This framework outlines potential future developments in power generation and electricity consumption over the next decade. It is used to formulate both onshore and offshore power grid development plans, while also summarizing measures needed for grid optimization, expansion, and improvement.

To avoid adverse environmental and social impacts, Germany identifies potential risks in the early stages of grid expansion planning. Accordingly, the Federal Network Agency (Bundesnetzagentur) issues an environmental report listing all possible environmental impacts.

Germany’s grid expansion follows five key steps:

Scenario Framework: Outlines the composition of the power generation mix and trends in electricity demand.

Grid Development Planning and Environmental Assessment: Defines regional and capacity-related requirements for future grid expansion.

Federal Demand Plan: Breaks down the comprehensive grid plan into specific construction projects. The grid development plan and environmental report form the basis of the Federal Demand Plan Act, and justify the necessity and priority of power projects specified in the Act to meet energy supply needs.

Federal Sector Planning: Provides an overview of all cross-border grid projects. Cross-state or cross-border projects developed under the Federal Demand Plan Act must undergo the federal sector planning process, where the Federal Network Agency determines the most suitable corridors for laying new cables.

Planning Approval: The corridors identified in the fourth step serve as the basis for initiating the planning approval process. Transmission system operators must propose multiple alternative routes when defining each corridor. After public discussion and assessment of the environmental compatibility of these candidate routes, the route with the least social and environmental impact is finally confirmed through planning approval.

Integration of Renewable Energy in the Trading Market

Germany has a sophisticated electricity trading market, which not only facilitates domestic electricity transactions but also enables power exchange with other European countries. Since renewable energy enjoys priority grid access rights, any gap between electricity demand and renewable energy generation is supplemented by non-renewable energy sources in the market.

A portion of power generation capacity is pre-purchased through over-the-counter (OTC) contracts (i.e., direct contracts between buyers and sellers, not traded on official markets), including international electricity sales. The remaining electricity is sold on several spot markets across Europe.

Most electricity on the spot market is traded on the day-ahead market. This market conducts electricity transactions based on hourly forecasts of the next day’s electricity demand and renewable energy generation. Gaps between forecasts and actual electricity demand are supplemented by intraday market transactions, which occur every 15 minutes.

In Germany, electricity is traded within a single price zone, meaning the market ignores regional electricity disparities and grid constraints. This poses a challenge for transmission system operators: who is responsible for preventing grid congestion or other security risks (such as voltage fluctuations and stability issues caused by single-line failures, also known as N-1 failures)?

To address this issue, transmission system operators are authorized by the market to take over power plant dispatch. In the event of congestion or other stability issues, they can use "redispatch measures" to alleviate grid conditions.

In approximate order of priority, operators may take the following redispatch measures:

Modify the grid topology (e.g., adjust switches connecting control lines to the grid);

If the first measure is insufficient, intervene in the operation of conventional power plants by instructing some plants to increase or decrease their power output;

As a last resort, curtail renewable energy generation (e.g., reduce the active power output of wind farms).

Owners of renewable energy facilities subject to mandatory generation curtailment are entitled to certain income compensation. In 2013, Germany curtailed 555 gigawatt-hours (GWh) of renewable energy—equivalent to 0.44% of the total renewable energy generation that year, which was eligible for subsidies. Of this curtailment, 87% came from wind farms, mainly due to grid constraints between northern Germany (where wind power capacity is concentrated) and southern Germany (where electricity demand is high).

Germany’s Ongoing Power Grid Reform

Under German policy, the country’s power grid is obligated to connect wind and solar PV power in accordance with the principle of priority dispatch. As a result, renewable energy projects in Germany can predict their annual power generation based on local conditions without worrying about being "rejected" by the grid. This long-term predictability also better supports engineers and technicians, who rely on stable data to further upgrade technologies and improve performance.

Germany’s power grid reform is still in progress, and relevant stakeholders in the country are discussing how to formulate future policies to improve renewable energy grid integration and design new market schemes for the liberalized electricity market.

The Federal Ministry for Economic Affairs and Energy (BMWi)—the authority responsible for formulating Germany’s energy policies—has been organizing discussions among stakeholders. In October 2014, it released a green paper titled The Electricity Market in Germany’s Energy Transition. By March 2015, 500 citizens and 210 organizations/enterprises had taken the opportunity to provide comments on the future electricity market. Among 710 political parties, 593 submitted comments and agreed to have them published on the BMWi website. Following the release of a white paper specifying concrete measures, consultation work was launched in early June 2015. The public consultation period for the white paper ended in September 2015, after which necessary legislative procedures were initiated. Meanwhile, the Federal Ministry for Economic Affairs and Energy has been holding talks with neighboring countries and the European Commission to develop solutions for reducing costs within the framework of the EU energy market.