“For 2025, we anticipate numerous developments the outcome of which will determine the future success of rolling out renewable capacity in Germany.”
Due to the intermittent nature of renewable energy, system integration and grid stability will remain key issues. This was clearly demonstrated when power prices spiked during a recent “Dunkelflaute” in November and December 2024 and has been highlighted by many German energy utility managers. Sweden and Norway also criticised Germany for not having established a reliable means of dealing with such situations. This criticism came as the high prices in Germany also impacted power prices in Sweden and Norway.
Germany has thus far discussed several options to address these concerns but failed to agree any comprehensive solutions. One major task for the next German government will be to provide the legislative set up required for the tendering of new (hydrogen ready) gas fired power plants as the legislative agenda promoted by the previous German government halted on its collapse. Rapid action here is key as new gas fired power plants are needed if Germany still plans to end lignite power production by 2030. In this respect, the planned “Power Plant Security Act” is of major importance as it promotes modernisation and the construction of new flexible gas and hydrogen power plants to ensure sufficient power supply at all times.
A particular focus should also be grid-scale battery energy storage systems. Germany currently has a lively market with many projects being developed and the Federal Ministry of Economics and Climate Protection planning investment incentives and subsidies for BESS in the coming years. Uncertainties remain, however, regarding the regulatory framework. Firstly, a solution to the issue of to what extent BESS operators must participate in the construction costs of grid connections is required. Hopefully, a decision of the Federal German High Court, which is expected in Q2 2025, will provide clarity. For the long-term, additional guidance from the German Federal Network Agency is required. The long-awaited new provisions on grid reservation procedures must also be included in the applicable laws to provide greater clarity compared to the status quo.
Energy Security
Energy security is of vital importance and Germany will need take great care in sourcing suppliers. In terms of both natural gas and hydrogen, Germany needs diverse sources of supply for the foreseeable future.