Germany to develop more market-based demand-side management incentives

The German economic affairs ministry plans to develop a new, more market-based demand-side management (DSM) incentive regulation next year.

This can reduce the costs of DSM and enable to use it more extensively if needed for stabilising the power system and avoiding supply shortages at times of low renewable energy generation.

German large industrial consumers can get paid for DSM under the regulation of sheddable loads, which is in place since 2012 and expires at the end of this year.

Used little

This regulation has not been used a lot, showed an evaluation the German regulator Bundesnetzagentur (BNetzA) made recently.

The regulation enables transmission system operators to sign framework contracts for 3GW of DSM capacity. By September, they had signed such contracts with four chemical and aluminium companies for 465GW of immediately shedabble loads and 979MW of loads that can be shed within 15 minutes.

The companies can participate in monthly tenders, with bid price set between €100-400/MWh. Winners are also entitled to a capacity payment of €2,500/MWh per month.

Between February 2014 and March 2015, the contracted DSM capacities were requested on nine days, indicating that the market was flexible enough for coping without them most of the time. Therefore, BNetzA recommended not to extend the regulation.

Early stages

The government has decided to design a new DSM incentive regulation. “We are really at the very beginning,” a spokeswoman for the economic affairs ministry said about it.

Therefore, the government has proposed to extend the existing regulation until the end of June 2016. The parliament’s economic affairs committee approved the proposal on Wednesday.

The ministry would need to come up with the draft of the new regulation in January to be able to bring it into force by mid-2016 when the planned extension would expire, the spokeswoman said. It is not sure if the ministry can prepare the draft so quickly, but it hopes to have the new regulation in the legislative process by mid-2016, she added.

Balancing market

German large consumers can participate in DSM also via the balancing market. This option too is used little, showed a study conducted by German municipal utility network Trianel and the University of Stuttgart this month. Out of more than 200 German industrial sites hosing glass, cement paper, copper and zinc companies and foundries that the study investigated, only 30% participate on the balancing market. This means that a large part of their load flexibility of the sectors analysed – which totals 740MW in terms of reduction 790MW in the opposite direction, according to the study – is unused.

BNetzA is working on regulatory changes, which aim to bring more suppliers, including demand-side management entities, to the balancing market (see EDEM 24 November 2015). laura.raus@icis.com