Half a Billion Euros Paid Out Annually for Unused Renewable Energy: A Breakdown
Excess green electricity, left unutilized, burdens taxpayers with a hefty 500 million euros expense annually
Unleash the power of renewable energy - but not too much! The strained power grid demands compensation of €553.94 million from the federal government in 2023, doled out to operators of wind and solar plants when their energy couldn't reach the grid due to network bottlenecks.
Wind in the Countryside, Money in the Bank Operators of wind turbines and solar panels reap the benefits of state-backed minimum prices for their electricity. If the market price falls below this guaranteed figure, the government pays the difference to ensure investment security and speed up the adoption of renewables. Unfortunately, network bottlenecks often lead to operators receiving difference payments when they have to curtail production. The ministry's figures account for these special compensation instances.
Ebb and Flow of Compensation Compensation payments have receded over the years due to progress in network expansion. In 2021, €807.10 million was paid out, while €580.32 million was spent in 2023. The year 2022, however, bucked the trend with €186.14 million in compensation - an anomaly caused by high electricity prices during the energy crisis. At this time, operators were already earning good money at market prices and thus received little subsidy.
The Telescopic Effect of Network Constraints
On windy days, the power grid in northern Germany often buckles under the pressure of excessive renewable energy production. This situation results in compensation payments or curtailment of energy generated. The frequency of these instances depends on the weather and the effort being put into grid expansion. Keep in mind that the exact amount in individual cases is also influenced by market prices.
The Broader Context: Beyond the Grid, Towards a Sustainable Future
The issue of taxpayers footing the bill for unused renewable energy is intertwined with grid limitations. When grid capacity falters, it's unable to seamlessly manage surging renewable energy production, causing curtailment. This, in turn, incurs financial compensation to operators and increased costs for consumers.
Europe is aiming to ramp up its renewable energy share in the electricity mix, targeting 72% by 2030. With networks subject to bottlenecks in countries with high renewable energy penetration, the urgency of fostering robust grid infrastructure is paramount. The European Commission is taking measures to simplify EU legislation, streamline permitting processes for infrastructure projects, and increase investments in renewable energy infrastructure to tackle the bottlenecks[1][2].
Footnotes
[1] European Commission, European Grid Initiative, https://ec.europa.eu/energy/en/topics/electricity-markets-and-grid/electricity-grid-package
[2] European Investment Bank, Climate Bank, https://www.eib.org/en/investment/focus/climate-bank
- The community and employment policies could benefit from allocating funds towards expanding the power grid, as network bottlenecks in the renewable energy sector lead to millions of euros in compensation payments annually, and hinders the general-news goal of increasing the renewable energy share in the electricity mix.
- As politics often revolve around economic issues, policymakers might consider addressing the problem of compensation payments to renewable energy operators due to network constraints as part of a larger, more comprehensive strategy towards job creation and sustainable development, aligning with the broader context of moving towards a sustainable future.
