Electricity market

Today, electricity is traded both within Germany and across Europe. Transmission system operators (TSOs) play a key role in enabling secure and efficient electricity trade. We at 50Hertz are committed to foster the European internal energy market and to the efficient provision of services required for a secure grid operation given the fact of an ever growing share of renewable energy in the system. For consumers, this means a favourable and increasingly sustainable power supply. To achieve this, we constantly debate with market players and political decision-makers and strive towards further development of the framework conditions.

Grid use and congestion management

Electricity is traded constantly and this trade is not only influenced by commercial factors, but also by physical ones: On the one hand, balance between generation and consumption must be maintained at all times in the system; on the other hand, the capacity of the lines in the electricity grid is limited. As the power flows in the meshed European AC grid are subject to Kirchhoff’s law, a commercial transaction does not only affect the nearest line - but the entire meshed grid as well. Due to the interference caused by many of these transactions, it is not always possible to provide the full physical transmission capacity for electricity trading. As a TSO, we constantly check how much transfer capacity we are able to provide for the market, based on the limited capacities of the cross-border interconnectors. We also include our revision planning in this forecast; in other words, the scheduled outage of lines or substations for maintenance.

Of course, the 50Hertz transmission system is also used for national electricity trade. Furthermore, the grid is available to power plants for feed-in of electricity from renewable and conventional energy sources as well as to distribution system operators to ensure electricity supply to consumers. More under grid customers.

We examine the outcomes of the various electricity markets to determine whether our lines can transport the traded electricity volumes. Changes that may have occurred in the meantime, e.g. the intensity of wind or sun, must be taken into account. In case of foreseeable bottlenecks, we alter the grid topology and use phase shifting transformers; additionally, we rely on such instruments as redispatch and countertrading. Redispatch involves the reduction of conventional energy. Therefore we approach contracted producers in our control area or neighbouring transmission system operators. Power plant operators on either end of the bottleneck are instructed to decrease or increase the output of their installations and are compensated on a legal basis. In case of countertrading, which is applied less often, we achieve the same effect through the targeted procurement and sale of electricity on the power exchanges. Although the process of reducing the feed in of renewable energies is becoming more and more common, it is not part of the market-based redispatch process regulated by the Energy Industry Act. In our opinion, this needs to be changed: you can read more about it in our position paper.

Balancing energy and balancing group coordination

The always necessary balance between generation and consumption in our grid is ensured by using balancing energy. Some background on that: market participants (balance responsible parties) must forecast that they will have a buyer for the quantity of electricity they have generated or purchased at any time. Regarding this100 per cent accuracy is simply not achievable, as we permanently see different cases of deviations: e.g. if consumption is higher, we buy additional energy - balancing energy - across Europe in an optimized manner. If consumption is lower, we have to sell energy. This requires the help of third parties: We have prequalified suppliers which can provide positive or negative balancing energy in our grid area; today, wind turbines or batteries, etc. are already able to do so. In order to balance these deviations more efficiently, European balancing energy platforms are currently being built with 50Hertz actively involved.

We settle the forecast deviations with each market participant (balance responsible party). This settlement is called balancing group coordination, which is part of the market processes. 

Renewable energy and sector coupling

50Hertz is front runner when it comes to integration of electricity from renewable energy sources (RES). Like other German transmission system operators, 50Hertz is also active on the electricity market: we sell the share of renewable energy on the stock exchange that could not directly be marketed. The renewable energy producers receive a guaranteed tariff that is legally prescribed by the German Renewables Act (EEG) and charged from all consumers as the EEG surcharge.
Additionally, 50Hertz performs tasks to advance combined heat and power generation. The so-called sector coupling keeps gaining importance, which involves the conversion of different types of energy into other types. In addition to Power-to-Heat, this also includes Power-to-Gas. Sector coupling can make an important contribution to enabling an even higher share of renewable energy in the system by temporarily storing electricity as other forms of energy.