What exactly is "security of supply"?
"Security of supply" sounds great - it seems obvious that everyone needs it. Read on to find out what it means, and which aspects of this multifaceted topic are the crucial ones.
The idea is that the electricity supply should be maintained at all times, even as the energy transition advances.
This aspect of the energy transition is highly complex and much debated: ensuring a reliable electricity supply in the face of Germany’s phase-out of electricity generation based on nuclear and coal. How can this security of supply be guaranteed in the long term? To achieve this, policy makers, planners and experts need to give consideration to many different points and predict the future as precisely as possible. We will explain the three central aspects of security of supply here:
Aspect 1: Security of supply at the generation stage
Security of supply at the generation stage means that the amount of electricity generated always matches the amount demanded by the consumers. In the 2016 Electricity Market Act, the Federal Government set out a clear framework for the electricity market. This act states that it must be possible to form prices for electricity freely and without state intervention. Also, electricity suppliers are obliged to have at their disposal the electricity they are trading. Only if this is the case can they actually meet their commitments to supply the electricity consumers. One way in which they do this is to conclude long-term supply contracts with power plant operators. This means that an important role is played by the prices on the electricity market: they show how much electricity is being generated and is needed, and whether it is worth generating more electricity or adjusting consumption at any given time.
Germany’s electricity market is located at the heart of Europe, and is fully integrated into Europe’s electricity supply. Cross-border trade in electricity thus results in efficient and low-cost use of Europe’s power plants, as generation and consumption can be balanced over long distances and across borders.
Nevertheless, in order to ensure that security of supply can be maintained even in the case of unlikely and unpredictable events, Germany also has a unique security standby reserve totalling more than 10 Gigawatts (GW).
Aspect 2: Security of supply in the grid
In addition to adequate electricity generation capacities, supply security also crucially depends on an efficient electricity grid. This is where the biggest challenges currently facing the energy transition are to be found. Germany has a very reliable electricity grid today. It always ranks very highly in international comparisons, with only very small local downtimes. The intention is that this should remain the case as the radical transformation of the electricity supply to renewable energy takes place. It is therefore necessary to optimise the electricity grid and rapidly expand it using new technologies. More and more electricity generated from wind power in the north of Germany needs to be transported to the many consumers in the south. The Network Development Plan sets out the necessary work to be done on the grid in the forthcoming five to fifteen years. Thought is always given to ensuring that, when individual powerlines fail, the grid can continue to be operated reliably without major interventions.
Also, the grid operators use system analyses to think through particularly challenging grid situations and to prepare for these. Congestion can be tackled, for example, by curtailing electricity generation in the north and increasing it in the south - behind the temporary bottleneck. Where necessary, the grid operator can intervene in each renewable energy installation and each power station to achieve this. Also, the grid operators can deploy power stations in the security standby reserve (grid reserve power stations) in order to maintain grid security.
Aspect 3: The fuel supply
If there isn’t enough fuel, even the best power station will be unable to function. For this reason, the sufficient supply of fuel to our power stations is the third decisive aspect of security of supply. The supply of fuel is mainly ensured by long-term supply contracts and a range of different suppliers. This is due to the fact that, apart from Germany’s own lignite, almost all the fuel used by power stations here comes from abroad. It mainly takes the form of hard coal and natural gas. The formula is a simple one: the more countries supplying the fuel via different transport routes, the greater the security of supply and the higher the level of competition. And this also tends to reduce prices. In the case of gas, maritime transport can result in new suppliers and transport routes. For this reason, Germany welcomes private-sector initiatives to build new import pipelines and to construct import terminals to receive liquefied natural gas (LNG) transported to Germany by ship.
Current monitoring report confirms continuing security of supply
So how good is the security of supply in Germany? On the basis of the Electricity Market Act of 2016, the Federal Minister for Economic Affairs and Energy continuously monitors the security of the electricity supply. This means that risks to supply security can be identified as early as possible. At regular intervals (at least every two years), the findings are summarised in a monitoring report on the security of the electricity supply.
The latest issue of the monitoring report, which was published in July, confirms that Germany continues to have a very high level of security of supply in the international comparison. "The report shows that the electricity supply to consumers in Germany will continue to be secure as the transformation of our energy system continues," said Peter Altmaier, Federal Minister for Economic Affairs and Energy, when it was published.
One of the sources for the monitoring report is an expert study. It examines in detail how the electricity market and the available power plants will develop in the coming years until 2030. The study also considers various scenarios which can arise, e.g. due to different weather conditions or the effects of unscheduled power station failures. It finds that the electricity supply to consumers in Germany is secure at all times.
Beyond the latest report, the Federal Government continuously reviews all aspects of security of supply in order to identify risks to this at an early stage and in good time.