Experience with Grid Expansion in a Northern European Perspective

The power grid constitutes an essential flexibility option for integrating ever-greater shares of variable renewable energy, such as wind power and solar photovoltaics. The development of interconnectors between neighboring EU Member States enables cross-border balancing. The potential for trade results from the differences in hourly wholesale electricity prices between regions or countries. The presentation given by Stephanie Ropenus at the 4. BNetzA Meets Science Dialogue provides some insights into increased integration of European electricity markets from a Nordic-German perspective. In doing so, it draws on the results of three reports commissioned by Agora Energiewende where Stephanie Ropenus acted as project leader, [1], [14] and [15], or co-author [2]. Increased integration between the Nordic countries and Germany will become ever more important as the share of renewables increases. Denmark is a prime example of how great interconnectivity can enable the integration of high wind energy shares into the power system. To some extent the Nordic electricity system can be considered unique with its complimentary power generation mix of wind energy in Denmark and hydropower as a “green battery” in Norway and Sweden. In general, closer integration of the Nordic and German power systems leads to better utilization of renewable energy and induces price convergence between the two regions on the wholesale electricity market. While the overall welfare effects of increased integration are positive, there may be significant distributional effects across stakeholder groups (power producers and consumers) within countries. These effects need to be taken into account for creating public acceptance for new lines and for the cross-border allocation of network investments.