Denmark and Germany agree temporary cross-border deal

23 June 2017, Week 24 Issue 865

The Danish and German energy ministries appear to have finally resolved a long-running dispute over cross-border electricity trading.

A new deal has been signed that will gradually expand the amount of power capacity traded between the two countries, opening up the German power market to renewable energy producers in Denmark and its Nordic neighbours.

Germany’s national power grid has struggled to keep up with the fast growth of renewables, particularly in the northern half of the country.

This has caused problems with bottlenecks, and meant that while power producers in Scandinavia have often been able to produce excess renewable energy at lower cost than their German counterparts, they have been unable to access the market to the south. According to the Danish energy ministry, only around 11% of the potential trading capacity between the Jutland peninsula and the German state of Schleswig Holstein was available in 2016.

Last week’s joint declaration was signed by the German Ministry of Economics, the Danish Ministry of Energy, Utilities and Climate,and the German and Danish energy regulatory authorities, BNetzA and Energitilsynet. It will be implemented by the countries’ transmission system operators (TSOs), Energinet in Denmark, and TenneT in Germany.

The agreement will come into effect as from December 1, but will be preceded by a five-month pilot phase commencing in July. This will increase the minimum available day-ahead capacity that can be traded between the two countries in either direction in monthly steps, reaching 400 MW in November. The minimum capacity will then rise to 700 MW in 2018, to 900 MW in the first quarter of 2019, to 1 GW as from April 2019, and then to 1.1 GW from 2020.

By the end of 2020, when the agreement expires, both sides hope that an expansion of the German power grid will have been completed, allowing for a full opening of the border.

“A single [European] market for electricity is a prerequisite for integrating more renewable energy into the energy system,” Danish energy minister Lars Lilleholt said in a statement. “With this temporary agreement, we are not fully opening capacity, but we have taken an important step. The problems of internal bottlenecks in Germany are very complex, and it would be unrealistic to solve the problems from one day to the next.”

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Joseph Murphy

Edited by

Joseph Murphy

Editor

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