German Grid Issues

TenneT has again found itself at the sharp end of further industry criticism in the German offshore market this week after DONG Energy halted construction on its Borkum Riffgrund 2 project. The development followed failure to secure an electricity connection contract to the German grid.

Unfortunately, for the wider industry, the move couldn’t come at a worse time.

Increasingly, political debates in Germany are starting to focus on the cost of installing and connecting renewable energy projects, despite the fact that the country now sees an increasing amount of its energy supply secured from renewable sources.

This cost debate, coupled with pressure to get projects up and running, is starting to cause a bit of an impasse. TenneT, a Dutch-owned business, has said that it is unreasonable to expect it to pay for the entire cost of offshore wind connection to the German grid.

And, in the rush to get projects up and running, it was assumed that the gird operator would be able to swallow the investment. Not so. Now TenneT should, perhaps, have flagged its problems a little earlier, or scaled down its ambitions all the way back in 2009 when it bought the German grid from E.ON.

However, it didn't. And the longer the saga continues, the more delays Germany faces - and that's not just in its ability to achieve renewable energy targets.

Indeed, in this respect, there's arguably an even more pressing concern as the country continues to decommission its nuclear power stations at an unprecedented pace. As this decommissioning continues, there's a very real risk Germany will face an energy supply deficit that has the potential to cause crippling damage to Europe’s strongest economy.

And yet despite this growing concern, for all the while that Chancellor Angela Merkel’s bill proposal that consumers, investors and operators swallow the cost is scrutinised, the delays continue to mount up.

Evidently then, Germany is need of answers - fast. Particularly since persuading the investment community to get involved will be difficult, as working with transmission lines and cabling is still considered to be a relatively high risk asset.

And that of course, is the crux of the matter. For if Germany can demonstrate that it can develop and adapt to truly capitalise on the long term industrial benefits of renewable energy sources, then it won't just become the poster child of Europe but moreover will avoid the very real risk of undermining its own much-sought after manufacturing supply chain.

TenneT has again found itself at the sharp end of further industry criticism in the German offshore market this week after DONG Energy halted construction on its Borkum Riffgrund 2 project. The development followed failure to secure an electricity connection contract to the German grid.

Unfortunately, for the wider industry, the move couldn’t come at a worse time.

Increasingly, political debates in Germany are starting to focus on the cost of installing and connecting renewable energy projects, despite the fact that the country now sees an increasing amount of its energy supply secured from renewable sources.

This cost debate, coupled with pressure to get projects up and running, is starting to cause a bit of an impasse. TenneT, a Dutch-owned business, has said that it is unreasonable to expect it to pay for the entire cost of offshore wind connection to the German grid.

And, in the rush to get projects up and running, it was assumed that the gird operator would be able to swallow the investment. Not so. Now TenneT should, perhaps, have flagged its problems a little earlier, or scaled down its ambitions all the way back in 2009 when it bought the German grid from E.ON.

However, it didn't. And the longer the saga continues, the more delays Germany faces - and that's not just in its ability to achieve renewable energy targets.

Indeed, in this respect, there's arguably an even more pressing concern as the country continues to decommission its nuclear power stations at an unprecedented pace. As this decommissioning continues, there's a very real risk Germany will face an energy supply deficit that has the potential to cause crippling damage to Europe’s strongest economy.

And yet despite this growing concern, for all the while that Chancellor Angela Merkel’s bill proposal that consumers, investors and operators swallow the cost is scrutinised, the delays continue to mount up.

Evidently then, Germany is need of answers - fast. Particularly since persuading the investment community to get involved will be difficult, as working with transmission lines and cabling is still considered to be a relatively high risk asset.

And that of course, is the crux of the matter. For if Germany can demonstrate that it can develop and adapt to truly capitalise on the long term industrial benefits of renewable energy sources, then it won't just become the poster child of Europe but moreover will avoid the very real risk of undermining its own much-sought after manufacturing supply chain.

TenneT has again found itself at the sharp end of further industry criticism in the German offshore market this week after DONG Energy halted construction on its Borkum Riffgrund 2 project. The development followed failure to secure an electricity connection contract to the German grid.

Unfortunately, for the wider industry, the move couldn’t come at a worse time.

Increasingly, political debates in Germany are starting to focus on the cost of installing and connecting renewable energy projects, despite the fact that the country now sees an increasing amount of its energy supply secured from renewable sources.

This cost debate, coupled with pressure to get projects up and running, is starting to cause a bit of an impasse. TenneT, a Dutch-owned business, has said that it is unreasonable to expect it to pay for the entire cost of offshore wind connection to the German grid.

And, in the rush to get projects up and running, it was assumed that the gird operator would be able to swallow the investment. Not so. Now TenneT should, perhaps, have flagged its problems a little earlier, or scaled down its ambitions all the way back in 2009 when it bought the German grid from E.ON.

However, it didn't. And the longer the saga continues, the more delays Germany faces - and that's not just in its ability to achieve renewable energy targets.

Indeed, in this respect, there's arguably an even more pressing concern as the country continues to decommission its nuclear power stations at an unprecedented pace. As this decommissioning continues, there's a very real risk Germany will face an energy supply deficit that has the potential to cause crippling damage to Europe’s strongest economy.

And yet despite this growing concern, for all the while that Chancellor Angela Merkel’s bill proposal that consumers, investors and operators swallow the cost is scrutinised, the delays continue to mount up.

Evidently then, Germany is need of answers - fast. Particularly since persuading the investment community to get involved will be difficult, as working with transmission lines and cabling is still considered to be a relatively high risk asset.

And that of course, is the crux of the matter. For if Germany can demonstrate that it can develop and adapt to truly capitalise on the long term industrial benefits of renewable energy sources, then it won't just become the poster child of Europe but moreover will avoid the very real risk of undermining its own much-sought after manufacturing supply chain.