Redispatch & Redispatch 2.0

Definition of 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 bottlenecks or other unforeseen events in order to maintain the balance between electricity generation and consumption in the grid and to avoid bottlenecks. An increase in the supply to the network corresponds to positive redispatch; a reduction is called negative redispatch. For negative redispatch, network operators buy off part of the production obligation from power plant operators and instead commission operators on the opposite side of the bottleneck. In the event of an imminent bottleneck, power plants, immediately before the bottleneck, are instructed to shut down their electricity supply to the grid, while power plants behind the bottleneck must increase their supply accordingly. This creates a load flow that counteracts the bottleneck.

Redispatch can be used within a control zone as well as across the board and is only carried out by power plants with an output of more than 10 MW.

Where is redispatch regulated by law?

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

As part of these legal regulations, the Federal Network Agency, as the regulatory authority for the electricity and gas market in Germany, has issued further regulations that specify the redispatch process. This includes, for example, the Redispatch Regulation (Redispatch 2.0), which has been in force since October 1, 2021 and clarifies the requirements for implementing the redispatch process.

Definition of Redispatch 2.0

The new Network Expansion Acceleration Act (NABEG) also defined new requirements for measures to prevent or manage network bottlenecks. Since October 01, 2021, Redispatch 2.0 has been introduced. For this purpose, the EnWG was supplemented by paragraphs §§13a and 14. Specifically, Redispatch 2.0 has since provided that all generation systems with a size of 100 kW or more 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 plant pool to cover the area, higher efficiency can also be achieved compared to previous processes. The aim is also to reduce the steadily increasing costs for redispatch and network connection management in recent years and to achieve the non-discriminatory elimination of network bottlenecks.
In Redispatch 2.0 measures, renewable energy systems are only used when the possibilities of conventional energy sources have been exhausted or the costs of removing bottlenecks are 10 times lower or 5 times lower than with cogeneration. This system is compensated in Redispatch 2.0. However, network operators only pay a standard market premium.

How is Redispatch 2.0 paid?

The payment of the positive redispatch in Germany is cost-based and, in accordance with Section 13a EnWG, is intended to make the plant operator “economically neither better nor worse” after implementation of the measure. Changes to the redispatch process are regularly discussed. Since no profit is foreseen from redispatch, there is also little incentive for plant operators to participate in redispatch measures.
In general, the remuneration for redispatch measures that contribute to relieving the load on the power grid is lower than for measures that lead to an increase in generation output. The costs of redispatch are ultimately passed on to electricity customers and charged as part of the network charges.

Redispatch 2.0: Scope and costs

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

The reasons for the increase in redispatch costs are manifold. On the one hand, the supply of renewable energy, in particular wind and solar energy, is increasing, which leads to higher volatility in the power grid and makes redispatch more frequent. On the other hand, the power grids in many regions of Germany have not yet been sufficiently expanded to be able to absorb the increasing supply of renewable energy.
The vast majority of redispatch measures were carried out due to electricity and traced network bottlenecks to the root cause.

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