„As Simple As Car Sharing“

Interview – September 18, 2023

David Krehan, Senior Speaker for decentralized generation, the gas industry and the EU at bne

Interview with bne’s David Krehan on promoting prosumption and energy sharing in Germany.

The potential of prosumption is huge, but there are still many obstacles to sharing decentralized renewable energy. Since both energy sharing and prosumption are key to a successful energy transition, the German Association of Energy Market Innovators (bne) promotes a simple on-site renewable energy supply. In this interview, David Krehan, Senior Speaker for decentralized generation, the gas industry and the EU at bne, explains what the government has done to pave the way for this concept and what still remains to be done.

The German government’s Solar Package aims to improve the framework conditions for prosumers. What do you think about the amendments?

Up until now, prosumption has been limited to private homes and commercial operations. Although the landlord-to-tenant electricity model under the EEG was introduced back in 2018, it has never really gained a foothold on the market because the process is just to complicated and bureaucratic. With the Solar Package 1, the German government wants to facilitate joint self-supply from photovoltaics in apartment buildings. Buildings that include commercial units are also to be included now.

At the same time, a separate, entirely new model for the joint supply for buildings will be introduced. A building’s ownership situation will then no longer impede the development of a decentralized energy concept. Apartment owners will then be able to decide if they want to implement shared PV electricity without being forced to switch their electricity provider for the remaining amount of electricity they need. This in itself constitutes a small revolution. The next important step is to enable temporary electricity storage in buildings, and to make charging electric vehicles a cinch.

Will this be enough to fully exploit the potential of prosumers?
No, because so far, the regulations only apply to individual buildings. To fully unlock the potential of prosumers, local energy sharing is key. What I’m referring to is the right of households, companies and public institutions to play an active role in sharing electricity from renewable sources at a local level via the public grid.

How can the implementation of energy sharing in Germany become a success?
We need a simple, non-bureaucratic, non-discriminatory way to share energy. It needs to become as simple as car sharing. A simple, private contract should be enough. An independent legal definition of energy sharing, digitalization and a system-oriented design of grid usage are essential preconditions. The public grid also must also be taken into account. The expansion of the distribution grid must be accelerated, decentralized generation must be possible, and grid operation must become more flexible using a systematic and competitive approach.

In your food for thought paper, you recommend a new operating system for a decentralized energy transition. Tell us more about that.
We need a new framework for local energy sharing. We’ve developed clear billing and accounting principles based on energy industry practices. Billing needs to be as simple as possible for local energy communities. At the same time, third parties, such as grid operators and energy suppliers, must be able to reliably balance and procure power. For concrete suggestions, read our food for thought paper (in German).

Scalability of innovative solutions requires a standardized operating system. New platforms and services will simplify on-site models, making them the norm.

And what role does the integration of the public grid play?
The public supply grid is the connecting element for on-site supply. Without it, supply communities would need to consider installing private power lines. Such a fragmentation and partial duplication of the local grid infrastructure would be neither in the interest of the system as a whole, nor in the interest of individual grid operators, because it would destroy flexibility.

We therefore recommend enabling local energy sharing at clearly defined grid levels at reduced, flat-rate grid charges. This is how we can contribute to the energy transition, prevent excessive bureaucratic hurdles and increase transparency for supply communities. It would require a fundamental reform of the grid charge system, though. During periods with a high renewable energy supply, grid operators need to use variable flexibility premiums to encourage grid-serving behavior. Variable grid charges are only directed at consumers, failing to exploit all other flexibility options.

What added value does energy sharing offer private citizens?
For one thing, it gives rise to new communities in which people motivate each other at a local level to switch to renewable energies. This creates cohesion and makes the energy transition a project everyone can be part of. What's more, it makes consumers much more independent from fluctuating fossil fuel prices. Sharing energy from renewable sources thus builds resilience to external shocks and reduces geopolitical risks.

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