Our most important findings

By 2030, renewables will account for 55% of power generation in Europe, and 50% of power generation in SEE. Nearly 70% of renewable power in SEE will stem from wind and solar, given the excellent resource potential of these renewables in the region.

For example, wind generation can fluctuate from one hour to the next by up to 47% in Romania, whereas the comparable figure for Europe is just 6%. Moving from national to regional balancing substantially lowers national flexibility needs. Increased cross-border interconnections and regional cooperation are thus essential for integrating higher levels of wind and PV generation.

Accordingly, conventional power plants will need to flexibly mirror renewables generation: When renewables output is high, conventionals produce less, and when renewables output is low, fossil power plants increase production. Flexible operations will become an important aspect of power plant business models.

The available reserve capacity margin in SEE will remain above 35% in 2030. More interconnectors, market integration and regional cooperation will be key factors for maximising national security of supply and minimising power system costs. SEE can be an important player in European power markets by providing flexibility services to CEE in years of high hydro availability.

Beide Länder werden die Erzeugung von Wind- und Solarstrom bis 2030 deutlich erhöhen müssen, um ihre Ausbauziele für Erneuerbare Energien zu erreichen. Zur Vermeidung von Stranded Assets ist eine damit einhergehende schrittweise Reduktion konventioneller Kapazitäten unerlässlich.

Zu wachsenden Stromexporten Frankreichs würde es bereits kommen, wenn das Land mehr als 40 Gigawatt Kernkraftwerke im Jahr 2030 in Betrieb hielte. Zudem würde Frankreich sein Ziel, den Kernenergieanteil im Strommix auf 50 Prozent zu reduzieren, erst nach 2030 erreichen können. Selbst wenn eine Steigerung der französischen Stromexportkapazitäten um 60 Prozent, eine Verdopplung der Interkonnektoren innerhalb der Europäischen Union und eine CO2-Bepreisung von 30 Euro pro Tonne CO2 angenommen werden, wäre die Wirtschaftlichkeit eines Kernkraftwerksparks mit einer Kapazität von über 50 Gigawatt bis 2030 gefährdet.

In diesem Fall wäre die Bilanz für den grenzüberschreitenden Stromhandel zwischen Deutschland und seinen Nachbarländern ausgeglichen. Die geplante Erhöhung des Anteils der Erneuerbaren Energien auf 65 Prozent des Bruttostromverbrauchs im Jahr 2030 wird dazu beitragen, eine unerwünschte Importabhängigkeit Deutschlands trotz des Kohleausstiegs zu vermeiden.

Initiativen für den Ausbau der Erneuerbaren Energien und der Interkonnektoren sowie zur CO₂-Bepreisung sollten koordiniert werden.

With a renewable electricity target of 40% in France and 65% in Germany by 2030, the two countries will significantly increase their production of wind and solar energy. Their conventional power plant fleet will have to be resized accordingly to avoid stranded costs.

A nuclear fleet exceeding 40 GW in 2030 would increase the national electricity export surplus and additionally postpone the achievement of the objective of reducing the share of nuclear power to 50% beyond 2030. The profitability of a nuclear fleet greater than 50 GW would not be assured in 2030, even when assuming a 60% increase in French export capacity, a doubling of interconnectors capacity in Europe and a CO2 price of 30 euros per ton of CO2.

In this case, Germany’s electricity trade balance with its neighbours is balanced. The new planned target of 65% renewable energy in electricity consumption by 2030 will ensure that Germany will not depend on undesired electricity imports while phasing-out coal.

These joint actions could take the form of initiatives led by the two countries on the development of renewable energy, interconnectors or CO₂ pricing.

Some key design elements of intraday and balancing markets as well as imbalance settlement rules distort wholesale power price signals, increasing the cost of providing flexibility. This highlights the need to adjust key market design elements and requires continuous political momentum to coordinate efforts regionally.

Restrictive requirements for market participation, mainly relating to demand response and renewables, constrain the flexibility potential. In the balancing markets, small minimum bid sizes and short contracting periods would be required. A regulatory framework enabling independent aggregation should be implemented for fully tapping the flexibility potential.

A joint balancing market design in the PLEF region with short product duration, late gate closure and marginal pricing would enable efficient cross-border competition for flexibility services. Getting the pricing right in balancing mechanisms is important as it support sefficient pricing in preceding day-ahead and intraday markets – where most of the flexibility is traded.

Intraday markets are critical for integrating wind and solar, as they allow for trades responding to updated generation forecasts. Today, explicit cross-border capacity allocation as well as misalignments in gate closure times across the region and differing product durations result in inefficient intraday energy and interconnector capacity allocation. Thus, harmonised rules and improved implicit cross-border allocation methods are needed, e.g. improved continuous trading or intraday auctions.

The challenge of integrating a high share of wind power led Danish institutions and market participants to develop several flexibility options early on, including use of interconnectors to other countries, increasing the flexibility of thermal power plants, making district heating more flexible, encouraging system friendly wind power, implementing demand side flexibility as well as introducing alternative options for procuring ancillary services.

With 6.4 GW of net transfer capacity to Norway, Sweden and Germany (Danish peak demand: 6 GW), Denmark is able to sell electricity during times of high wind production, and to import electricity in times of low wind production. The use of the 2.4 GW net transfer capacity to Germany is sometimes limited for export depending on the wind conditions in Northern Germany.

Danish coal power plants have been optimised to allow very steep ramp-up gradients, shorter
start-up times and low but stable minimum generation levels. Flexibility in providing ancillary services has further reduced must-run capacity

Regulation has been reshaped to reduce heat bound electricity generation in situations with high wind energy feed-in. In the future district heating systems are envisioned to become electricity consumers rather than producers in times of high wind power production. In spite of changes already adopted to the energy tax system, further regulatory measures are still needed to tap the full potential of using power for heat.

The Danish power system has been undergoing a transformation, moving from a highly centralised to a more decentralised structure in electricity generation. There has been a significant increase not only in wind power but also in distributed generation from combined heat and power plants since the 1980s. Broad-based political agreements on energy policy have provided security for investors while enabling a smooth and continuous transition to a sustainable power sector.

The interdependencies among these different sectors are reflected in Danish energy policy goals, in scenario analyses as well as in concrete initiatives for implementing the transition to a renewables based energy system.

The Danish tendering scheme is characterised by Contracts for Difference with guaranteed support payments, a guaranteed grid connection and a one-stop-shop authority for  preliminary site assessments when new offshore wind energy projects are developed.