Technology leadership thanks to the energy transition

Whether it’s grid expansion, smart meter rollouts, or the development of charging infrastructure, Germany frequently highlights its own shortcomings in various areas of its energy transition. It’s time for a shift in perspective: technologically, the German energy system ranks among the world’s leaders, thanks to smart, German-made technology.

This opinion piece by Simon Koopmann, CEO of envelio, was originally published on the industry platform energate-messenager.de.

Behind schedule, slowed by self-imposed bureaucracy, or lacking in digital innovation — Germany’s energy transition often faces scrutiny, not least from critics at home. Be it the sluggish smart meter rollout, the slow wind energy expansion in the South, the Building Energy Act, or the grid bottleneck in Oranienburg. These concerns reveal societal uncertainty about the success of the energy transition and indicate that not everyone is convinced by the measures necessary to achieve it. Despite the partly justified criticism, we must not overlook the fact that, technologically, Germany’s energy system is among the world leaders, and our declared goal should be to turn our technologies into a global export success for the benefit of the worldwide energy transition.

Challenges almost unavoidable

The energy transition brings numerous challenges, that’s undeniable. Given that our electricity market is one of the most complex and heavily regulated in the world, these difficulties are almost unavoidable. In Germany alone, more than 800 grid operators manage 1.9 million kilometers of grid lines — the longest power grid in Europe. An ever-growing share of the electricity flowing through these lines comes from renewable sources, reaching 56 percent last year.

These renewable energy sources are intermittent and thus harder to manage than, for example, hydropower, which accounts for a higher share of renewables in Norway. Despite this, we’ve managed to make our grid one of the most reliable in the world, with only 12.2 minutes of downtime per end user per year (2022). Certainly, there is room for improvement in Germany’s energy transition, particularly regarding regulatory frameworks. However, the situation here is by no means as hopeless as it is often portrayed in public discourse and the media.

Section 14a: The industry has proven it’s possible

Internationally, Germany’s extensive regulation of the electricity market is unparalleled. However, rules like Section 14a of the Energy Industry Act (EnWG) — which essentially anchors grid-side flexibility management for electrical loads in law — showcase the adaptability of the German energy sector, even if this section still poses challenges for many grid operators. Developed in consultation with the industry, it has established a workable approach and provided a crucial stimulus for building the skills needed in a more decentralized energy system. The industry responded quickly, developing solutions that demonstrate what’s possible.

German companies have shown themselves to be pioneers in creating powerful tools to accelerate the energy transition, as we have demonstrated in the past with technologies such as photovoltaics, wind energy, and heat pumps. Unfortunately, we’ve often relinquished our technological leadership in many areas. However, the digitalization of our energy system offers new opportunities. We are leading globally in the development of digital solutions for grid infrastructure — despite the sluggish smart meter rollout. Amid the AI hype and global tech race, we should be aware of our technological leadership and continue to advance it assertively.

German companies have shown themselves to be pioneers in creating powerful tools to accelerate the energy transition, as we demonstrated in the past with technologies such as photovoltaics, wind energy, and heat pumps. Unfortunately, we have occasionally fallen behind in maintaining our technological leadership in these areas.

However, the digitalization of our energy system offers new opportunities. We are leading globally in developing digital solutions for grid infrastructure — despite the sluggish smart meter rollout. Amid the AI hype and global tech race, we should recognize our technological leadership and continue to advance it with determination.

A look at the USA: 1.2 GW awaiting grid connection

For example, a look across the Atlantic reveals that the USA – a country currently recognized for its technological edge, especially in artificial intelligence — is facing major challenges in the energy infrastructure sector. The U.S. grid is outdated and not equipped to handle rising electricity demand. Meanwhile, the AI boom in the U.S. has led to a significant increase in new data centers. This is coupled with regional economic booms that are causing significant local load increases, along with a substantial rise in large-scale wind and solar installations. However, the electricity grid, largely composed of overhead lines, isn’t yet adapted to these new demands and remains vulnerable to extreme weather events. It is, therefore, essential to transform it into a more resilient, powerful power grid.

In some ways, this situation mirrors that of Germany: it is a fragmented market with over 3,000 grid operators. Large operators are owned by investors and cover about 70 percent of the network. Additionally, there are medium-sized and small grid operators in municipal hands and numerous cooperatives in rural areas. One of the largest challenges, aside from substantial regional differences in grid capacity and the current condition of grids, is the so-called “interconnection queue.” In total, no less than 1.2 GW of electricity generation capacity in the USA is awaiting connection to the grid — a significant issue for the country with the second-largest electricity demand in the world.

Smart grids: Germany as a pioneer

A digital tool that increases transparency of available grid capacities and automates request processing would be a great help to U.S. grid operators. Given the varied conditions and capacities of the U.S. grid, along with the need for energy transition readiness, time-series-based future grid studies and simulations are also essential. At envelio, we have recognized these circumstances as an opportunity, which is why we are currently expanding into the U.S. to support the global energy transition with our solutions.

Whether in Germany or the USA, the energy transition presents grid infrastructure and its operators with global challenges. If we aim to fully shift our energy supply to renewables, smart grids form the necessary foundation — worldwide. The fact that many of the required technologies and digital solutions originate in Germany makes our domestic energy industry a global leader in creating a more sustainable energy supply — a fact of which we should be proud.

Whether in Germany or the USA, the energy transition poses global challenges for grid infrastructure and its operators. If we aim to fully transition our energy supply to renewables, smart grids are key to achieving this — on a truly global scale.

The fact that many of the essential technologies and digital solutions originate in Germany makes our domestic energy industry a global leader in creating a more sustainable energy supply — a fact of which we should be proud.

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