Germany's electricity system is undergoing a transition towards higher shares of renewable energy like wind and solar power. While renewable energy now accounts for over 25% of Germany's electricity generation, integrating its variable output is challenging and leading to increasing grid congestion and negative electricity prices at times. The country has advanced electricity markets but could better utilize flexibility from demand response and storage. Recommendations include further developing markets to access more flexibility resources and incentivizing renewable energy to provide grid services as renewable shares rise toward Germany's 2030 and 2050 targets.

1. Flexibility Tracker Country Report
Germany

2. ECOFYS Germany GmbH | Albrechtstr. 10c | 10117 Berlin | T +49 (0)30 29773579-0 | F +49 (0)30 29773579-99 | E info@ecofys.com | I www.ecofys.com
Managing Director C. Petersdorff | Register Court: Local Court Cologne | Chamber of commerce Cologne HRB 28527 | VAT ID DE 187378615
Flexibility Tracker Country Report
Germany
By: Edwin Haesen, Katharina Grave and Thobias Sach
Date: 19 October 2016
Project number: ESMDE16676
Reviewer: Hans De Keulenaer (European Copper Institute)
© Ecofys 2016 by order of: European Copper Institute

3. 1
Flexibility Tracker Country Report - Germany
The technical challenges of integrating high shares of variable renewable energy sources (VRES) are
considered mostly known and manageable in Germany. Nevertheless, the institutional challenges to
ensure sufficient flexibility resources are available remain substantial.
This report summarizes the main findings of a standardized flexibility tracker analysis for the case of
Germany. The present status of flexibility resources potential and implementations are highlighted, as
well as comparisons with other systems and recommendations for further work.
Key findings on flexibility readiness for high shares of variable renewable energy
Germany’s electricity system is
undergoing a substantial
transition. In the last two
decades, the Energiewende led
to a strong development of
electricity generation from
wind and solar resources. The
challenge to integrate their
variable feed-in has already
given momentum to analyse,
discuss and optimize market
mechanisms, system
operations and regional
cooperation, among others.
Despite the quickly rising VRES
shares - renewable energy was
the main source of electricity
in May 2015 on a sunny
afternoon in Germany for the
first time – the output level of
conventional generation has
almost stayed constant in recent years. This led to significant exports on the one hand, and to
increasing congestion in transmission and distribution grids on the other hand. [8], [9]
In addition to significant re-dispatch due to internal transmission congestion and increasing RES
curtailment, negative prices occur despite positive residual load. The rising number of hours with
negative prices indicate a lack of flexibility in the current power system. [10]
Recently revised market regulation and grid development plans already address this issue, however,
efforts could further be enhanced. Especially in the exploitation of flexibility from the supply and
Fact Sheet Germany
RES share 2014 13.8 % [of gross final energy consumption]
National RES targets
2020 18 % [of gross final energy consumption]
2030 30 % [of gross final energy consumption]
2040 45 % [of gross final energy consumption]
2050 60 % [of gross final energy consumption]
Electricity sector present situation (2015)
Net electricity generation 580.4 TWh/yr
RES-e generation share 28.7 %
Electricity consumption 520.6 TWh/yr
Net import - 51.8 TWh/yr
Net generation capacity 188.5 GW
RES-e capacity share 49 %
Share of distributed
generation (connection
<110kV)
40 %
Annual peak load 79.9 GW
Theoretical DSM potential 3.5 GW
Active/enabled DSM 1.4 GW
Installed energy storage 10.9 GW
Sources: [1], [2], [3], [4], [5], [6], [7].

4. 2
demand side. Conventional generation in Germany is dominated by coal and nuclear power plants.
Although there are significant capacities of gas power plants, there are currently no incentives to use
them. This also applies to demand side flexibility. There is a great potential for industrial demand side
management (DSM), however, its exploitation is still low.
Electricity storage is on the rise in Germany. There are a number of pilot programmes for small-scale
storage in distribution grids and state aid for behind-the-meter storage exists. However, it remains to
be seen what the actual impact of storage will be.
Electricity system status and perspectives
The following shows the present share and future projections of variable RES (solar, wind, hydro) in
the total national generation mix for Germany, some of its neighbouring systems and the EU as a
whole; from 2020 to 2050 under the EU’s reference scenario [11].
Germany is one of few European countries, that have already implemented explicit RES targets for
2030 and beyond and is well on track to meet these targets [2], [3], [12].
0
10
20
30
40
50
60
70
BE DE EU FR LU NL
Share of RES in final electricity consumption per year [in %]
Hydro Other RES Solar Wind

5. 3
Key Performance Indicators
The Flexibility Tracker methodology scores 14 flexibility KPIs, grouped in the five
categories of supply, demand, storage (flexibility sources) as well as grid and
markets (enablers).
All KPIs are based on a scoring system of 1 (low readiness level) to 5 (high readiness
level). The Tracker KPIs are derived from a detailed questionnaire based assessment
covering 80 questions, including thresholds for scoring and quality checks.
Higher flexibility readiness levels indicate either vast potential, substantial application,
clear policy incentives, concerted RD&D efforts, awareness/action or a combination
thereof. A tracker scoring of 2 to 3 serves as an indication that good first steps have
been taken in the long road towards high VRES systems. Higher scores show
better/best practices in comparison with other systems. Lower scores indicate a
missed opportunity in terms of flexibility, and need to be analysed in combination
with the other categories and the country’s present energy roadmap.
Flexibility Tracker Analysis
Germany’s system flexibility progress is advanced, especially regarding wholesale and balancing
markets. Supply and demand flexibility are lagging. The supply side is still dominated by inflexible
conventional generation and demand side flexibility is largely undeveloped. Efforts developing storage
options could be strengthened. Sector coupling is less developed than in some neighbouring
countries. The following tables cover the main findings of each flexibility KPI.
0 1 2 3 4 5
Markets
Storage
Grid
Demand
Supply

6. 4
The following section analyses each flexibility KPI, highlighting good practices as well as critical points
and open questions.
Supply Score: 2.8/5
Conventional Generation Score: 2.5/5
A large share of the conventional fleet is inflexible. Their energy is traded years in advance and they
do not react to short-term price signals. Also the long-term vision for adapting this issue is unclear.
On the upside, there is a trend towards advanced adequacy assessments in the context of regional
cooperation.
The phase out of the nuclear power plants until 2022 could be used as an opportunity to establish
new incentives for flexible generation.
Distributed Generation and Variable Renewables Score: 3.2/5
Germany has a high share of VRES connected to the distribution grid. The policies to achieve
ambitious RES targets especially incentivise small scale RES. Additionally, their further market
integration is progressing at the moment. The provision of ancillary services from VRES is currently
being tested. A large share of the distributed generation has basic controllability, with PV units
>100kW having to comply with feed-in management rules, >30kW having simple controllability, and
the smallest units being able to be restricted in their output to 70%.
Demand Score: 2.3/5
Energy Efficiency Score: 2.5/5
Germany is considered not on track to meet the 2020 target for the reduction of energy consumption.
However, there are ambitions to change this situation. There is an ongoing public consultation about a
green book on energy efficiency. [13], [14]
Large-Scale (Industrial) Demand Side Management Score: 3.1/5
There is high (industrial) DSM potential in Germany, but its usage is still very low. However, pilot
programmes have been established and balancing markets are being opened up for the demand side
and aggregators.
Small-Scale Demand Side Management Score: 1.5/5
Despite a significant potential for the provision of flexibility by small-scale units on the demand side,
little progress has been made to exploit this potential. Germany is one of few European countries that
decided against a broad roll-out of smart meters. The share of residential and other buildings whose
electricity consumption is externally automated is negligibly small. Additionally, the use of electric
vehicles as flexible loads is not developed. On the balance, aggregators are rising and behind-the-
meter storage is popular. [15]

7. 5
Grid Score: 3.0/5
Transmission Grid Score: 2.5/5
The grid development was not able to keep up with the RES development in the past years. Thus, parts
of the German transmission grid are highly stressed, resulting in a great need for internal re-dispatch
and RES curtailment. Grid expansion plans address the VRES targets with ambitious projects, and there
is a trend towards advanced methods for controlling and monitoring the grid, e.g. dynamic line rating.
Additionally, there are established communication channels between TSOs and DSOs. [8]
Interconnections Score: 3.3/5
Grid expansion plans are on track to meet the short-/medium term EU interconnectivity targets and
the issue of loop flows in Central-Eastern Europe. Germany is aware of its central role within the
European electricity market and shows increased efforts to strengthen regional cooperation.
Distribution Grid Score: 3.3/5
There is a trend to monitor and actively control distribution grids. However, financial incentives and
the ability to procure local flexibility are not in place yet. The large number and vast variety of
distribution grid operators - over 800, with very different sizes and regulatory context – adds
complexity to the potential implementation of new regulations.
Storage Score: 3.0/5
Small-scale Storage Score: 3.3/5
Technologies for small-scale electricity storage like batteries are in early development stage. New
business models emerge slowly. There is a significant number of pilot programmes in Germany. In
particular ‘behind-the-meter’ has received financial incentives since 2015 resulting in a fast uptake in
combination with PV.
Bulk Storage Score: 3.3/5
The geographic potential of bulk storage in pumped storage power stations and dams is limited and
already developed. A need to develop further storage capacities will arise in the medium-/long-term.
Pilot programmes for e.g. power-to-gas are in operation.
Sector Coupling Score: 1.7/5
Sector coupling is less developed in Germany compared to other Central European countries. This
especially applies to the share of CHP generation as well as the penetration of electric vehicles.
Efforts to change this are currently being strengthened; sector coupling is one of the major topics of
the ‘green book’ on energy efficiency. [14]

8. 6
Markets Score: 3.3/5
Wholesale Markets Score: 4.0/5
The German wholesale markets are at an advanced stage already, and recently implemented
regulations support the further integration of new actors. The intraday market is very liquid and
product sizes are sufficiently small. There is an ongoing harmonisation with neighbouring markets
fostered by regional cooperation. [8], [16]. There are no geographically-specific price signals, which
impact investment incentives for grids and transmission congestion.
Balancing Markets Score: 3.0/5
Balancing markets are currently under revision and being opened up for new participants. Current
regulation still hinders greater participation of new actors, especially the prequalification
requirements and the long bid nomination time. Furthermore, the reserve levels are determined
statically once per quarter. A dynamic day-ahead determination of reserve levels would help to adapt
to the actual reserve demand. [17]
Retail Markets Score: 2.5/5
There is a large bandwidth or retail tariffs for end consumers in Germany. Households pay up to six
times the price of energy intensive industries. Politically induced price components, especially the
surcharge to finance renewable energies, determine large parts of the retail prices. While large
energy intensive industries are allowed to participate in wholesale markets, prices for households are
not linked to the fluctuation of wholesale prices. Time of use tariffs are rare.

9. 7
Comparison with neighbouring countries
The graph below shows a cross-comparison of the Flexibility Tracker KPIs for Belgium, Germany and
the Netherlands.
It highlights the advanced stage of the German wholesale markets and shows that efforts regarding
energy efficiency as well as the development of storage are heading to the right direction. While
flexibility in retail markets, the development of small-scale demand side flexibility and sector coupling
are areas where Germany could learn from its neighbours.
The graph also shows that the three neighbouring countries are at similar medium levels regarding
their power system flexibility overall and also face similar challenges in the further integration of
variable renewables. Regional cooperation such as the Pentalateral Energy Forum and the “twelve
electricity neighbours” are a promising way to learn from each other and further harmonise the
electricity markets and should be expanded.
0
1
2
3
4
5
Conventional
Generation
Distributed
Generation
& Variable
Renewables
Energy Efficiency
Large-Scale
(Industrial) Demand
Side Management
Small-Scale Demand
Side Management
Transmission Grid
Interconnections
Distribution Grids
Small-Scale
Storage
Large-Scale/
Bulk Storage
Sector Coupling
Wholesale Markets
Balancing Markets
Retail Markets
Comparative scoring per flexibility KPI
for Belgium, Germany
and the Netherlands
Belgium
Germany
Netherlands

10. 8
Recommendations
The detailed analysis of the German system and comparison with other systems shows best practices
to promote externally, particular actions to implement, and issues that require at least further review
and understanding. The following recommendations follow the structure of the earlier published
Flexibility Roadmap [18].
Short-term actions
Supply
 Start planning for phasing out inflexible baseload resources
 Encourage VRES to provide flexibility and grid support services
Demand
 Gather best practices on exploitation of large scale demand response and
aggregators in reserve markets
 Prepare the deployment of small-scale demand side flexibility, i.a. by the roll-
out of smart meters
 Improve energy efficiency initiatives
Grid
 Promote strong interconnector ambitions, with optimized use via flow-based
markets, in regional collaborations
 Address VRES flows from distribution to transmission in optimal way (dynamic
capacities, similar as the evolution at transmission level from static Net
Transfer Capacities to Flow-Based)
 Further promote TSO/DSO coordination
Storage
 Analyse potential of small-scale and large-scale storage
 Consider stronger link with heat and transport sector
Markets
 Further reduce operation period lengths (especially in balancing markets)
and gate closure times
 Begin developing dynamic/situational reserve requirements
 Expand markets for flexibility (intraday and balancing markets),
geographically and technologically (plurality of actors)

11. 9
Mid-term actions
Supply
 Oblige VRES to provide flexibility and grid support services
 Modify VRES production incentives to encourage diverse deployment of
resources
Demand
 Fully deploy large-scale demand response
 Incentivize demand response from small-scale loads
 Assess the further implementation of energy efficiency
Grid
 Complete interconnection ambitions
 Further implement dynamic measurement, capability assessment, and control
of transmission systems
 Manage distribution grids
o Deployment of communication and control equipment for distributed
energy resources (DER)
o Implement aggregation and optimisation of DER
Storage
 Explicit incentives for small-scale storage, by capitalising R&D findings.
 Implement system-based energy storage valuation methods, especially for
bulk storage development
Markets
 Increase geographic resolution of short-term electricity markets
 Complete market coupling of wholesale and balancing markets
 Expand markets for flexibility for all actors
 Consolidate balancing areas explicitly or virtually to cover larger practicable
regions
 Implement capacity markets for flexible resources as necessary
 Reflect the dynamics of wholesale market prices at the retail level
 Implement best practices for VRES ramp forecasts and use forecasts in
planning and operations
Long-term results (VRES dominated system)
Supply
 Complete phase out inflexible baseload resources
 Implement incentives to ensure adequate resources under low VRES output
events
 Require all VRES (above a certain size and/or vintage) to be capable of
providing ancillary services
 Synthetic inertia mechanisms in place
Demand
 Maximise use of end-use flexibility options
 Efficient use of “surplus” generation
 Synthetic inertia review
Grid
 Maximise use of grid infrastructure and distributed generation
Storage
 Implement incentives to ensure adequate resources under low VRES output
events
 Efficient use of “surplus” generation
Markets
 Market process timings fully tuned for VRES (short time spans, short gate-
closure-time lapse)

12. 10
References
[1] Eurostat, „Share of renewable energy in gross final energy consumption,“ 2016. [Online].
Available:
http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=t2020_31
&plugin=1.
[2] Federal Republic of Germany, „National Renewable Energy Action Plan in accordance with
Directive 2009/28/EC on the promotion of the use of energy from renewable sources,“ 2010.
[Online]. Available: https://ec.europa.eu/energy/en/topics/renewable-energy/national-action-
plans.
[3] Federal Republic of Germany, „Energiekonzept,“ 2010. [Online]. Available:
https://www.bundesregierung.de/ContentArchiv/DE/Archiv17/_Anlagen/2012/02/energiekonz
ept-final.html.
[4] Entso-E, „Statistical Factsheet 2015,“ 2016. [Online]. Available:
https://www.entsoe.eu/Documents/Publications/Statistics/Factsheet/entsoe_sfs2015_web.pdf.
[5] Bundesnetzagentur, „List of Power Plants,“ 2016. [Online]. Available:
http://www.bundesnetzagentur.de/EN/Areas/Energy/Companies/SecurityOfSupply/Generating
Capacity/PowerPlantList/PubliPowerPlantList_node.html.
[6] H. C. Gils, „Assessment of the theoretical demand response potential in Europe,“ Energy, Bd.
67, pp. 1-18, 2014.
[7] 50Hertz, Amprion, Tennet, TransnetBW, „regelleistung.net - abschaltbare Lasten,“ 2016.
[Online]. Available: https://www.regelleistung.net/ext/static/abla.
[8] Bundesnetzagentur, „Monitoring Report 2015,“ 2016. [Online]. Available:
http://www.bundesnetzagentur.de/cln_1432/EN/Areas/Energy/Companies/DataCollection_Mo
nitoring/MonitoringBenchmarkReport2015/Monitoring_Benchmark_Report_2015_node.html.
[9] Bundesnetzagentur, „3. Quartalsbericht 2015 zu Netz- und Systemsicherheitsmaßnahmen,“
2016. [Online]. Available:
http://www.bundesnetzagentur.de/SharedDocs/Downloads/DE/Sachgebiete/Energie/Unterneh
men_Institutionen/Versorgungssicherheit/Stromnetze/System-
_u_Netzsicherheit/Quartalsbericht_Q4_2015.pdf?__blob=publicationFile&v=1.
[10] Agora Energiewende, „Die Energiewende im Stromsektor: Stand der Dinge 2015 - Analyse,“
2016. [Online]. Available: https://www.agora-
energiewende.de/fileadmin/Projekte/2016/Jahresauswertung_2016/Agora_Jahresauswertung_
2015_web.pdf.
[11] European Union, „EU PRIMES Reference Scenario 2016,“ 2016. [Online]. Available:
http://ec.europa.eu/energy/en/data-analysis/energy-modelling.

13. 11
[12] Federal Ministry for Economic Affairs and Energy, „The Energy of the Future - Fourth Energy
Transition Monitoring Report - Summary,“ 2015. [Online]. Available:
https://www.bmwi.de/BMWi/Redaktion/PDF/V/vierter-monitoring-bericht-energie-der-zukunft-
englische-kurzfassung,property=pdf,bereich=bmwi2012,sprache=de,rwb=true.pdf.
[13] Energy Efficiency Watch, „Energy Efficiency Policies in Europe - Country Report Germany,“
2014. [Online]. Available: http://www.energy-efficiency-
watch.org/fileadmin/eew_documents/EEW3/Country_Reports_EEW3/Germany/Country_Report
_Germany_FINAL.pdf.
[14] Federal Ministry for Economic Affairs and Energy, „Grünbuch Energieeffizienz,“ 2016. [Online].
Available: http://www.bmwi.de/BMWi/Redaktion/PDF/Publikationen/gruenbuch-
energieeffizienz,property=pdf,bereich=bmwi2012,sprache=de,rwb=true.pdf.
[15] Smart Energy Demand Coalition, „Mapping Demand Response in Europe Today - 2015,“ 2015.
[Online]. Available: http://www.smartenergydemand.eu/wp-
content/uploads/2015/09/Mapping-Demand-Response-in-Europe-Today-2015.pdf.
[16] Pentalateral Energy Forum Support Group 2, „Generation adequacy Assessment,“ 2015.
[Online]. Available: http://www.bmwi.de/BMWi/Redaktion/PDF/G/gemeinsamer-
versorgungssicherheitsbericht,property=pdf,bereich=bmwi2012,sprache=en,rwb=true.pdf.
[17] Fraunhofer IWES, „Dynamische Bestimmung des Regelleistungsbedarfs - Abschlussbericht,“
2015. [Online]. Available:
http://www.energiesystemtechnik.iwes.fraunhofer.de/content/dam/iwes-
neu/energiesystemtechnik/de/Dokumente/Projekte/Abschlussbericht_Dynamische_Bestimmun
g_des_Regelleistungsbedarfs.pdf.
[18] Ecofys, „Power System Flexibility Strategic Roadmap,“ 2015. [Online]. Available:
http://www.ecofys.com/en/publications/power-system-flexibility-strategic-roadmap/.
[19] Federal Ministry for Economic Affairs and Energy, „An electricity market for Germany's energy
transition - White Paper,“ 2015. [Online]. Available:
http://www.bmwi.de/English/Redaktion/Pdf/weissbuch-
englisch,property=pdf,bereich=bmwi2012,sprache=en,rwb=true.pdf.

14. ECOFYS Germany GmbH
Albrechtstr. 10c
10117 Berlin
T: +49 (0) 30 29773579-0
F: +49 (0) 30 29773579-99
E: info@ecofys.com
I: www.ecofys.com