5. Conclusions
This paper examined recent developments of short-term integration costs of variable renewable energy (VRE) sources, congestion management and balancing costs, in Britain and Germany. Congestion management costs have increased recently in both countries to unprecedented levels. In Germany, these costs are dominated by compensation payments to wind farms for curtailment, whereas in Britain the costs for redispatch of gas plants make up the bulk of costs. Ongoing and planned major grid upgrades are expected to relieve congestion to a large extent in both countries. We show that 4.4% of German and 5.6% of (metered) British wind energy was curtailed in 2016, a total of 4.65 TWh. This energy cost €426 m to curtail, and could have saved approximately 2.1 MT of CO2 if it had been utilised.10 Balancing costs have stayed constant in Britain and have decreased in Germany, despite VRE capacity increasing five-fold and two-fold respectively. This goes against most modelling studies which predict an increase of reserve requirements and costs with increasing VRE penetration levels. This supports the hypothesis that significant flexibility already exists in these systems, and so accommodating more intermittent renewable output can be managed by improved system operation without necessarily raising costs. Three policy goals should be pursued to enable and incentivise such improved system operation by system operators as well as market participants: