Price driver - redispatch
Why does grid expansion reduce electricity costs?
Lines can quickly become overloaded for a number of reasons. Whenever this occurs, APG intervenes and instructs power plant operators to change the power plant utilisation planned for the following day (e.g. increase or reduce output) so as to prevent grid congestion. This intervention is known as redispatch.
The power plant operators reported the planned utilisation of the power plant to APG in the dispatch (plant utilisation planning). Based on the schedules of the power plant operators, APG carries out a grid load calculation. This clearly shows which sections of the power grid would be used to what extent on the next day through the reported dispatch and where congestion could occur in the grid. If there is a risk of congestion arising at a certain point in the grid, power plants on this side of the bottleneck are instructed to reduce their feed-in, while plants on the other side of the bottleneck have to increase their feed-in capacity. This generates a balanced load flow.
As the basis of a redispatch, power plant operators therefore raise or lower the electricity production of individual power plants, which changes the local distribution of production; the amount of electricity fed into the grid remains the same. In 2017, APG had to perform redispatch on more than 300 days to keep the power grid stable. The costs of this are borne by all electricity consumers. Expansion of the power grid must therefore be accorded the same priority as the expansion of renewable energy. Only then can the costs for necessary stabilisation measures, such as redispatch, be reduced.
Redispatch costs and the energy Transition
Conclusion: redispatch costs are now so high that network expansion is a far more cost-effective option in the medium term.
Since redispatch entails market intervention, power plant operators affected must receive financial compensation for the change in their plant utilisation plan. The costs of redispatch are passed on to grid users through the grid tariff. The amount APG is allowed to charge here is precisely defined – the grid fees are monitored yearly by E-Control. Due to the heavy demands on the power grid and its lack of expansion, the associated costs have skyrocketed in recent years: while redispatch costs amounted to €1.1 million in 2012, they rose to €158 million in 2016 and by 2017 had doubled to €319 million. Without strong lines, these costs will continue to rise and will have to be borne by the industry and by consumers.
Information on the composition of the electricity price on the website of E-Control, the Austrian regulator for electricity and natural gas
Effects of grid expansion on electricity costs using the example of Germany, welt.de, 6 August 2018: Noteingriffe ins Stromnetz gesunken” (in German only)