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Redispatch & Redispatch 2.0

Definition Redispatch

The term "redispatch" describes the process by which the transmission system operator (TSO) changes the power allocations of power plants at short notice in the event of grid congestion or other unforeseen events in order to maintain the balance between power generation and consumption in the grid and avoid congestion. An increase in feed-in to the grid corresponds to positive redispatch, while a reduction is called negative redispatch. For negative redispatch, grid operators buy part of the production obligation from power plant operators and instead contract operators on the opposite side of the bottleneck. So when a bottleneck is imminent, power plants immediately upstream of the bottleneck are instructed to ramp down their power feed into the grid, while power plants downstream of the bottleneck must ramp up their feed accordingly. This creates a load flow that counteracts the bottleneck.

Redispatch can be used within a control area as well as across control areas and is only carried out by power plants with a capacity of more than 10MW.

Where is redispatch regulated by law?

In Germany, redispatch is regulated by law through Section 13 of the Energy Industry Act (EnWG) and the Electricity Grid Access Ordinance (StromNZV). The EnWG regulates the general framework for the operation of energy supply networks and network access, while the StromNZV sets out the specific requirements for network access and network connection conditions.

Within the framework of these statutory provisions, the Federal Network Agency, as the regulatory authority for the electricity and gas markets in Germany, has issued further regulations that specify the redispatch process in more detail. These include, for example, the Redispatch Ordinance (Redispatch 2.0), which has been in force since October 1, 2021 and specifies the requirements for implementing the redispatch process.

Definition Redispatch 2.0

The newly enacted Grid Expansion Acceleration Act (NABEG) also defined new requirements for measures to avoid or manage grid congestion. Redispatch 2.0 has been introduced since October 01, 2021. For this purpose, the EnWG was supplemented by the paragraphs §§13a and 14. Specifically, Redispatch 2.0 since then provides that all generation plants from a size of 100 kW can be used for redispatch. This also includes all renewable energy generation plants as well as energy storage and CHP plants, which were previously excluded.
Redispatch 2.0 is intended to improve the grid integration of renewable energies. By increasing the size of the plant pool across the board, it is also possible to achieve higher efficiency compared to previous procedures. The aim is also to reduce the costs of redispatch and grid connection management, which have been rising steadily in recent years, and to realize the non-discriminatory elimination of grid bottlenecks.
In Redispatch 2.0 measures, renewable energy systems are deployed only when the options of conventional energy sources are exhausted or the cost of removing congestion is 10 times lower or 5 times lower than cogeneration. This system is compensated in Redispatch 2.0. However, network operators only pay a market premium.

How is redispatch 2.0 remunerated?  

In Germany, the remuneration for positive redispatch is cost-based and, according to Section 13a of the Energy Industry Act (EnWG), should put the plant operator in an "economically neither better nor worse position" after the measure has been implemented. Changes to the redispatch procedure are regularly discussed. Since no profit is envisaged from redispatch, there is also little incentive for plant operators to participate in redispatch measures.
In general, the compensation for redispatch measures that contribute to relieving the power grid is lower than for measures that lead to an increase in generation capacity. The costs of redispatch are ultimately passed on to electricity customers and levied as part of the network charges.

Redispatch 2.0: Scope and costs

The cost of redispatch can be significant depending on the scope and duration of the deployment. In recent years, there has been a continuous increase in both the scope and the cost of redispatch. In 2021, the cost of redispatch in Germany was approximately €590 million. In comparison, the cost volume in the previous year was 240 million euros and recorded a more than 100 percent increase within one year.

There are many reasons for the increase in redispatch costs. On the one hand, the feed-in of renewable energies, especially wind and solar energy, is increasing, which leads to higher volatility in the power grid and makes the use of redispatch necessary more frequently. On the other hand, the power grids in many regions of Germany are not yet sufficiently developed to accommodate the increasing feed-in of renewable energies.
The majority of redispatch measures were carried out due to electricity and attributed to the cause of occurring grid bottlenecks.  

It can be assumed that the costs for redispatch will continue to rise in the future as long as the expansion of the power grids does not keep pace with the increasing feed-in of renewable energies.