Redispatch 2.0 and EinsMan May Increase Hourly Volatility in the Spot for Germany

Price sensitivity analysis conducted by Insight by Volue shows a drop in spot hourly prices as a result of Redispatch 2.0 and EinsMan.

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Insight by Volue analysts are forecasting a larger than usual downside in negative prices for the coming winter in Germany as a result of the adoption of Redispatch 2.0 from 1 October 2021 and the EinsMan measure.

Senior Analyst Silvia Messa and Quant Analyst Till Ilic performed a price sensitivity analysis of the new bidding strategy by wind operators in the bid-ask of the spot exchange, following the regulatory changes.

“The sensitivity analysis that we conducted shows a potential drop in the spot of the hourly prices down to -50/-500 euro/MWh depending on the feed-in scheme of the price-setting park/technology,” says Messa.

The analysis was conducted taking into account the aggregated curves of the German spot exchange and lifting the supply side from 1 up to 6 GW. The graph below was created for the month of February 2020: in green is the hourly delivery of the German market; the red lines show the various outcomes of the model.

Sensitivities 2

We see a potential drop in the spot of the hourly prices down to -50/-500 euro/MWh.

Silvia Messa Senior Analyst, Insight by Volue

Redispatch 2.0, as defined by the Network Expansion Acceleration Act, which entered into force on 13 May 2019, aims to achieve redispatch optimization through bottleneck grid management.

Among other things, Redispatch 2.0 establishes new data exchange requirements between grid operators (TSOs and DSOs) and market parties, the call to redispatch for units with an installed capacity higher than 100 kW (versus 10 MW today), and new management of the so-called EinsMan volumes.

Einspeisemanagement, also called EinsMan, is a specific measure adopted by TSOs/DSOs in order to guarantee the security of the grid and to avoid overloads. EinsMan is an automatic curtailment of renewables infeed, which takes place after curtailments of conventional plants.

Currently, TSOs/DSOs calculate the amount of curtailed energy per turbine/park and pay to the wind/PV owners the feed-in tariff (EEG Umlage) as if there were no reduction. The so-called “direct marketers” anticipate the EinsMan for their portfolios and do not sell these volumes in the spot exchange to reduce the risk of imbalance.

Under Redispatch 2.0, the direct marketers, instead, will sell the full renewable forecast in the spot exchange, and TSOs/DSOs will guarantee the transfer of the curtailed energy in their balancing circle.

“Due to this significant change, we can expect larger volumes sold in the spot on windy days (above 25-30 GW) in those hours, when the solutions of the spot exchange already foresee the net exchanges of Germany reaching the limits of the Flow Based domain”, says Messa. “The supply curve in the spot exchange might be lifted by 1-10 GW depending on the weather and load flow conditions.”

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