Germany: Germany expands renewable energy targets, considers virtual baseload

Germany is expanding its renewable energy targets under a grand coalition agreement by the country’s two major political parties, but is also toying with the idea of introducing the concept of “virtual baseload.”

The government intends to investigate whether large renewable energy producers would need to guarantee a contribution to reliable baseload supply to enhance the security of supply.

They could possibly do this with contracts and individual agreements with storage operators, or by getting “insurance” from other electricity producers, such as gas-fired generation.

“This could mean that renewable generators may be forced to buy 'insurance' from conventional stations to provide this baseload capability (given the strong intermittency of wind, solar); this could likely imply some sort of a capacity payments from renewable generators to utilities,” a note from Deutsche Bank analysts said. Of course, geothermal energy generators will not have to buy insurance as geothermal is the ultimate baseload energy.

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