Energy dynamics in (Northwest) Europe and Germany’s Energiewende – A think piece

Author: Thomas Sattich

Europe’s energy transition is about to enter a new phase: A turning point has been reached, at which the rapid growth of renewables and the relative decline of traditional energy sources begins to seriously affect the texture of the European energy system. Power generation, distribution, and consumption stands in the centre of this development, as many indicators suggest stronger electrification. A cursory glance at the EU level seems to suggest that the increase of renewables does not interfere with the ability of utilities to keep the pace of growing electricity consumption, as if renewables were a power source just like others. Yet the EU-27 picture is blurred and rather conceals the true dynamics in the European power sector.

These are to be found at deeper layers of the still diverse European power system: Due to a widely meshed infrastructure, the dynamics caused by the introduction of RES are to be observed at the national and regional, rather than at the EU-27 level. Here it is the interface between national power systems, where the most compelling aspects of Europe’s energy transition can be observed, namely the progressive intermingling of different national power systems and markets. Renewables play a key role in this process, as their operation increases the interplay between national systems. Growing swaps of electricity are the result, causing unintended economic and technical consequences, and therefore increasing the demand for regional solutions.

In order to grasp the consequences of RES policy in Europe, four different aspects have to be taken into consideration: 1.) Time: Due to fluctuating natural forces, renewables disrupt the necessary balance between consumption and generation; 2.) Power sources: Once set up, low marginal costs of renewables undercut wholesale prices of other power sources; merit order effects may lead to premature phase-out of gas plants, necessary as flexible backup reserve, while coal plants can still operate under the given market conditions; 3.) Geography: The spatial distribution of RES power stations differs considerably from fossil and nuclear plants; 4.) Market shares: The logic of financial incentives for RES comes with the advantages and disadvantages of industrial policy.

These different aspects of renewables in the power system do not only relate to the national level, but also for the transnational context. For several reasons Northwest Europe is an interesting test case in this regard: 1.) With France and Germany two main players in European energy policy are parts of the region (and seem to pursue opposite approaches when it comes to energy policy); 2.) The North Sea region is a hotspot for renewables and gas alike; in both cases Northwest Europe is representative for the EU-27; 3.) Political negotiations to integrate markets and to update the infrastructure are already relatively advanced (e.g. NSCOGI, Pentalateral Energy Forum) and may serve as an example for other European regions (e.g. the Mediterranean).

Moreover, with strong interactions between the Dutch and German energy system, one of the main axis of market and power system integration in Europe is also part of the region. Yet at this point the varying size of European nations comes into play, as bigger countries tend to disregard their surroundings due to an inward-looking perspective (which can be described as national selfsufficiency), whereas the awareness of smaller nations for their neighbourhood  is better developed. Germany’s neglect of the wider European context during the first years of its Energiewende project can be regarded as a prime example for this phenomenon, and should therefore be studied in greater detail in order to grasp the transnational dimension of RES policy.

The Energiewende’s impact on the regional context should hence be examined on the four above outlined dimensions:

1.) Time: To what extend does Germany’s Energiewende disrupt the balance between consumption and generation in neighbouring countries?

2.) Power sources: In what way does the transition of Germany’s energy sector affect the energy mix of neighbouring countries?

3.) Geography: How does the Energiewende affect the spatial distribution of the regional power system and transmission infrastructure?

4.) Market shares: Does Germany’s energy transition have an impact on the broader economic situation in Europe?

Meaningful results require the assessment of probable trends. Studying the Energiewende’s regional impact therefore also includes the evaluation of the likely course of German energy policy: The “landscape” of German energy policy should be screened for actors who take an active (or passive) position towards the above outlined points; structures between these actors should be highlighted for coherent groups, their position in and their influence on the broader field of German energy policy should be identified (for a possible procedure see:, pp. 10-15). This approach should allow the evaluation of Germany’s future course in energy policy.

Import/Export of electricity in Northwest Europe in 2012 (data source: ENTSO-E)
Import/Export of electricity in Northwest Europe in 2012
(data source: ENTSO-E)

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