Germany's transition to sustainable energy is having intriguing economic impacts

Sudden fluctuations in Germany's power grid are causing major damage to a number of industrial companies. Germany is undergoing a transition to renewable energy which is wreaking havoc on the German power grid. Spikes and dips in power are becoming a regular occurrence.

Grid Instability Has Industry Scrambling for Solutions

German Chancellor Merkel set the ambitious goals of boosting renewable energy to 35 percent of total power consumption by 2020 and 80 percent by 2050. Germany is phasing out their nuclear power reactors by 2022.

Some of these industrial companies are responding by brining online their own power generators to help minimize the risks.

Some companies might be forced to leave Germany if the government doesn't deal with the issues fast.

The Cause

It was 3 in the morning when the machines suddenly ground to a halt at Hydro Aluminium in Hamburg. The Aluminum rolling mill's highly sensitive production line stopped so abruptly that the aluminum belts snagged causing significant damage.

The reason behind this disaster: the voltage from the electricity grid weakened for a millisecond.

After the shutdown, workers had to free half-finished aluminum rolls from the machines. Several hours elapsed before the machines could be restarted.

The estimated cost was $12,300 USD (€10,000).

In the following three weeks, the voltage weakened at the Hamburg factory two more times, each time for a fraction of second. No damage was done because the machines were offline both times. A lucky twist of fate.

Power fluctuations could also lead to a plant fire and that would be expensive and threaten people's lives.

The problem is that wind and solar farms don't deliver continuous electricity when compared with nuclear and gas-fired power plants. To match traditional energy sources, grid operators must be able to predict how strong the wind will blow or the sun will shine. This is just not possible.

If grid operators estimates are off by just a few percentage points, voltage in the grid slackens. That has no affect on household appliances, such as vacuum cleaners and coffee machines. However, sensitive computer equipment and microelectronics can fail.

The Solution

The company invested €150,000 to set up its own emergency power supply, using batteries, to protect itself from future power fluctuations.

Other industrial companies are also thinking about freeing themselves from Germany's electricity grid to cushion their plants from the consequences of the country's transition to renewable energy.

More and more companies with sensitive control systems are securing production with batteries and generators.

Who is Benefiting?

Producers of batteries and other emergency energy sources are benefiting  the most from these disruptions.

Sales at APC, one of the world's leading makers of emergency power technologies, have grown by 10 percent a year over the last three years.

Resolving Financial and Threat Issues

Given the circumstances, Hydro Aluminum is asking the Federal Network Agency, whose responsibilities include regulating the electricity market, to set up a clearing house to mediate conflicts between companies and grid operators. Like a court, it would decide whether the company or the grid operator is financially liable for material damages and production losses.

This is a controversial solution and so far there is little action to create this type of clearing house. There are fears that the process would take too long and be too expensive.

Some companies are considering leaving Germany because of these power grid instabilities. It would just be too expensive for some company to build stand-alone emergency power supplies for all their plants in Germany. Losses from production failures will start to become too cost prohibitive for some manufacturers in Germany.

If Germany can't guarantee a stable power grid, companies will start to leave. North America will eventually embark on the renewable energy evolution of it's power grid and there are a lot of really useful lessons to be learned from the German experience.


What Is A Smart Grid?

A smart grid is an electrical grid that uses information and communications technology to gather and act on information, such as information about the behaviours of suppliers and consumers, in an automated fashion to improve the efficiency, reliability, economics, and sustainability of the production and distribution of electricity.

Roll-out of smart grid technology also implies a fundamental re-engineering of the electricity services industry, although typical usage of the term is focused on the technical infrastructure.

The smart grid represents the full suite of current and proposed responses to the challenges of electricity supply. Because of the diverse range of factors, there are numerous competing taxonomies, and no agreement on a universal definition. Nevertheless, one possible categorization is given here.


The smart grid will make use of technologies that improve fault detection and allow self-healing of the network without the intervention of technicians. This will ensure more reliable supply of electricity, and reduced vulnerability to natural disasters or attack.

Although multiple routes are touted as a feature of the smart grid, the old grid also featured multiple routes. Initial power lines in the grid were built using a radial model, later connectivity was guaranteed via multiple routes, referred to as a network structure. However, this created a new problem: if the current flow or related effects across the network exceed the limits of any particular network element, it could fail, and the current would be shunted to other network elements, which eventually may fail also, causing a domino effect. See power outage. A technique to prevent this is load shedding by rolling blackout or voltage reduction (brownout).

Flexibility in network topology

Next-generation transmission and distribution infrastructure will be better able to handle possible bidirection energy flows, allowing for distributed generation such as from photovoltaic panels on building roofs, but also the use of fuel cells, charging to/from the batteries of electric cars, wind turbines, pumped hydroelectric power, and other sources.

Classic grids were designed for one-way flow of electricity, but if a local sub-network generates more power than it is consuming, the reverse flow can raise safety and reliability issues. A smart grid aims to manage these situations.


Numerous contributions to overall improvement of the efficiency of energy infrastructure is anticipated from the deployment of smart grid technology, in particular including demand-side management, for example turning off air conditioners during short-term spikes in electricity price. The overall effect is less redundancy in transmission and distribution lines, and greater utilisation of generators, leading to lower power prices.