The power system in Germany is undergoing major transformations. Renewable energies (RE) reached a share of 45% of Germany's gross power consumption in 2020; in 2011, this share was still 20%. The share of RE will continue to grow strongly according to political targets. The increasing share of renewables in the power system is reflected, among other things, in the decrease of the residual load. The residual load is the share of power demand that is covered by conventional power plants. The expansion of renewable energies is accompanied by the retirement of conventional power plants. As a result of the phase-out of nuclear and coal-fired power plants, a total of 25 GW of installed capacity from conventional, dispatchable power plants will exit the power market between 2021 and 2030.
Load duration curve and capacity of coal-fired and nuclear power plants in Germany
The Merit Order in the power market shows the deployment ranking of different power plants, ordered by ascending marginal costs. The marginal costs are mainly composed of fuel and transport costs, as well as the costs for the procurement of CO2 certificates. Using individual power plant parameters such as the efficiency, the internal Team Consult Merit Order Model determines the marginal costs of power production for each power plant.
Team Consult’s Merit Order Model calculates the power plant-specific marginal costs, lists the power plants in ascending order of marginal costs and shows the cumulative power plant capacity.
Merit order of the German power plant fleet during summer, as of 2021
Since conventional power plants provide the increasingly fluctuating residual load in the power system, they are required to operate in an increasingly flexible mode. The utilization of power plants is mostly brokered through the power exchange, where the demand for electricity is matched with supply, taking into account marginal costs.
The stability of the power system is ensured by the transmission system operators. To this end, transmission system operators have a number of measures at their disposal. These include re-dispatch of power plants and curtailment of renewable energies. The use of these interventions has increased significantly in recent years. In addition, transmission system operators can procure control energy from other market participants to ensure the balance in the power system. The total tendered capacity of control energy products has fallen from 11 GW in 2009 to around 7 GW in 2020.
Re-dispatch and curtailment (left) and Tendered control energy products (right) in Germany
In this dynamic market environment, we support the various participants in adapting their business activities to current developments in the power market.
- Market studies and expert opinions
- Development and evaluation of business models
- Provision of parameters for energy system considerations and modeling
- Support for plant operators in assessing opportunities and risks
- Due Diligence for investors