SUMMER SPECIAL Episode 5: President of the Council of European Energy Regulators

This is the fifth episode of Plugged In’s five-part CEO summer series, where Richard interviews prominent leaders in Europe’s energy sector. 

In this final special episode, Richard speaks to Dr Annegret Groebel, President of the Council of European Energy Regulators and Director of International Relations at the German Regulatory Authority, BNetzA. 

They talk about the challenges with energy regulation in 2025, and what the next move is for Germany and its bidding zones. 

Presenter: Richard Sverrisson - Editor-in-Chief, Montel News

Guest: Dr Annegret Groebel - President of the Council of European Energy Regulators & Director of International Relations at BNetzA

Editors: Bled Maliqi, Sarah Knowles

Producer: Sarah Knowles

Transcript

Richard Sverrisson - Editor-in-Chief, Montel News: 0:05

Hello listeners, and welcome to Plugged In - the Energy News podcast from Montel, where we bring the latest news issues and changes happening in the energy sector. Welcome to the fifth and final episode of our CEO Summer series where we put the big questions to key energy leaders. We've heard from Energiy UK, the CEO of Eon, the finnish TSO, and the founder of Rystad Energy, and now we finish off our series back in Germany where we're talking about regulation. What are the challenges for energy regulators in 2025? Are they seen as a help or a hindrance to market participants? And what does Germany's bidding zone or zones look like in the future? In this episode, I put all these questions to Annegret Groebel. The President of the Council of European Regulators and Director of International Relations are the German regulatory authority, also known as the BNetzA. I hope you enjoy this final episode of our summer series. A Warm welcome to the podcast Annegret.

Dr Annegret Groebel - President of the Council of European Energy Regulators : 1:13

Thank you. Thank you, Richard.

Richard Sverrisson - Editor-in-Chief, Montel News: 1:15

There has been a lot of criticism that the, these grids or the grid expansion from north to South Germany has been very slow. W would, is that something that you would accept and how can that be speeded up?

Dr Annegret Groebel - President of the Council of European Energy Regulators : 1:26

Yes, exactly. So I mean, it was slower than we hoped for. The permitting took longer. And in particular also the construction took longer. Yeah. Or takes longer. Now we have this element of the overriding public interest, which speeds up the permitting. And we also see now that construction takes up Yeah. So that we are now trying to catch up. Reducing. Then of course the loop flows, the dispatching, et cetera. Now, there was at the end of April the ENTSO-E, the European Transmission System Operator Organization. And ENTSO-E published their bidding zone review report or study. And while they have not mentioned that there is a structural congestion or structural bottleneck, nonetheless, the recommendation is that Germany would be split up in five zones. We have one bidding zone now. And now the ball lies with the member states. They have to look into this. And a is going to give a recommendation or a, an assessment then of what the member states decide or not decide. And then finally, the commission is again looking into this. There is a little bit of a discussion of who has the final say or who has the final word. Member states clearly say that this should go, or that this is lies with the member states. And of course, I mean, you have heard certainly the new government, which in Germany entered into into the, into force in into office on May 6th. We con reconfirmed that Germany is not ready to accept a split of the bidding of the uni of the German bidding zone. Yeah.

Richard Sverrisson - Editor-in-Chief, Montel News: 3:20

Is that also the position of the regulator Annegret?

Dr Annegret Groebel - President of the Council of European Energy Regulators : 3:22

Yes. Yes.

Richard Sverrisson - Editor-in-Chief, Montel News: 3:23

Okay. So there are Keep the single bidding zone. Yeah.

Dr Annegret Groebel - President of the Council of European Energy Regulators : 3:26

Keep the single bidding zone. There may be different reasons why the government says it, but for us the main argument is that the German bidding zone is one of the biggest, or probably the biggest, and is one of the few that has a very, that has a high liquidity.

Richard Sverrisson - Editor-in-Chief, Montel News: 3:45

It's probably the most liquid in the world, isn't it? The most,

Dr Annegret Groebel - President of the Council of European Energy Regulators : 3:47

it's probably the most liquid in the world. Exactly. And any split would reduce this liquidity and we doubt that this brings in the end more benefits than it does damage now, because every, everyone relies on the liquidity in the germ bidding zone. We think that this is an argument, an economic argument, and we are an economic regulator to maintain the germ bidding zone.

Richard Sverrisson - Editor-in-Chief, Montel News: 4:13

Yeah, I mean it's something I think your colleagues in, in, in the UK and in Sweden are also grappling with this issue of zone or pricing versus how many biddings is optimal. So I don't think it's unique to Germany, but I think certainly that's where it's very crucial in terms of the power flows in the region. But I'd like to ask you another question, and that is, you know. In your time in the energy sector what has surprised you the most?

Dr Annegret Groebel - President of the Council of European Energy Regulators : 4:36

What surprised me the most is probably how fast indeed renewables took up. Yeah. I mean, there, there was a doubt whether this energy transition that was called into action by chancellor Merkel in 2011. That we would have enough energy sources and that could that there could be probably a a problem of of security or supply. The opposite was the case. Yeah. As I said before we had to cut the bottleneck was not the energy sources. Yeah. Were not the renewables. They took up much faster and the cost digression was enormous. Yeah. Of course there was a lot of. Incentives of support schemes. Yeah. But I think no one would've expected the success. And that the both offshore wind, but also the solar panels et cetera, would take up at such a speed. And of course, we now have to make sure that the grid follows. Yeah. So that we can synchronize. This is our biggest challenge right now. Yeah.

Richard Sverrisson - Editor-in-Chief, Montel News: 5:39

I was at a conference in June, and it was very clear that, I'm hearing the same issues that, that creeping up again over the last 20 years. The two main issues, it's building out the grid to meet the demands of both supply and demand, but also permitting, dealing with permitting, speeding up, permitting, has anything changed in the last 20 years? Have, has this gone gone quicker or has it improved?

Dr Annegret Groebel - President of the Council of European Energy Regulators : 6:02

Well, the permitting certainly with this with this possibility to shorten the permitting by saying the grid here is an overriding public interest. You could. You could reduce certain checks and balances check, sorry, certain checks that you otherwise would have to perform. Yeah. And then there was also another element that regular regards, always the environmental testing. Yeah. And the impact on the environment. And beforehand, more or less, if there was any rare bird, you had to, more or less to stop it. And now we say it's not the single rare bird that counts as long as we maintain the rare bird class as such or category. So you see that there is a little bit of a, of interpretation now that we do. But also more or less that the, these overriding public interest saying that this is, this beats the other elements. Yeah. And I think rightly because otherwise the bureaucracy that we had before was enormous. Yeah. Was enormous. And there was also one thing that that, or two things that, that also speed up this permitting process. One is. That the legislation cut one instance of court appeal. Yeah. So that. That, that would not would be shorter. You still had the possibility to challenge something, but it is shorter. And now there's also the possibility to compensate, for example, farmers, when they allow a grid line to pass their their farmland or something like this. Sometimes this is a bit difficult and there are mixed experiences, I have to say, but alone the possibility to let's say to. Local local participants and to overcome with by, for example, saying you can profit from this wind park as well, or from this grid line as well. Helps to. To reduce this NIMBY effect. Yeah. Because that is something and of course the, there are some organizations that, that played on this Yeah. That try to block everything. Yeah. But now people, we try to have town hall meetings to make sure. That the grid is that we use the most efficient line, et cetera. We take up proposals from local NGOs, et cetera, and they do have a good, we have learn, we had a steep learning curve in this as well, so that we hope that. People accept that if they want renewables, and this is still the over the overarching goal and acceptance. Yeah. They also have to accept that the grid is, has to be restructured. Yeah. I mean this is, this is the reality. Yeah. You cannot have everything. Yeah. If. If you want to exit nuclear, and that is clearly the wish of the population, then you need to, and you don't want to go to Russian gas again. And that is clearly as well the case. Then you need to go for renewables and people accept this, but with renewables you also have to then adjust and yeah, adjust Mainly the grid.

Richard Sverrisson - Editor-in-Chief, Montel News: 9:12

And I think that's crucial, isn't it? The involvement of local populations. Involvement of local, yeah. And the acceptability or Yeah. Or their acceptance of grids.

Dr Annegret Groebel - President of the Council of European Energy Regulators : 9:20

Yes.

Richard Sverrisson - Editor-in-Chief, Montel News: 9:20

And of power plant facilities, of supply side. And I think in some countries they were even, even some of the revenues from these renewable plants go back into the local community and that's obviously quite crucial.

Dr Annegret Groebel - President of the Council of European Energy Regulators : 9:31

And that is a good thing. That is a good thing. To make sure that they participate and because we also need the participation, the active participation, not only the acceptance, but also in the future, the active participation. To provide, for example, demand side flexibility. Yeah. With for example, electric vehicle charging and things like that. Or the famous heat pumps. Yeah. That all brings, and that at the same time, it's not only something that that causes, let's say a change of behavior, but that also in the end brings you a lower bill. Yeah. This is probably the right now. In 2025 the difficulty we see that. It takes longer and is more expensive to adjust the grid than everyone expected. So that we have now a period where we have to explain people that it takes a bit longer, and that right now there is this transition phase where it also costs a bit more. But in the end, we are still convinced that when we have this flexible system and sustainable with sustainable renewables. Then in the end, the system and the costs will be lower. Yeah. This is now the most difficult phase, of course, because you have transactional or transformational costs. Yeah, for sure. And you need to, at the same time, incentivize people to buy in. Yeah. To participate, to buy in, so that they in the end know, okay, this is a period where we have to go through. Then in the end, we all profit not only because we have a climate neutral system, but because it's also less costly for ourselves and we have a reduced bill.

Richard Sverrisson - Editor-in-Chief, Montel News: 11:13

Yep. Absolutely crucial Annegret. But I let, I just wanna go back to 2005 Annegret.'cause I remember that. Yeah. When the BNetzA, the Federal Network Agency, when it was first formed or talked about, there was quite a lot of reluctance from the industry. It wasn't it wasn't warm, it wasn't warmly welcomed, shall we say. But 'cause they were, they had some kind of self-policing mechanism in their organization and in a way. But is it, are you now, do you feel that you're accepted within the energy sector in Germany?

Dr Annegret Groebel - President of the Council of European Energy Regulators : 11:41

I would say yes. But you are quite right In the beginning they were not happy that now someone else would do it. Ex auntie? Yeah. Be because, as you rightly say, there was some sort of self-policing. And the our National Competition Authority, the cartel office, they could intervene, exposed according to like saying this is an abuse of your market power. Yeah. That, that stands from the grid, because the grid is a natural monopoly.

Richard Sverrisson - Editor-in-Chief, Montel News: 12:09

So and so if we say, if we explain to the listeners who aren't aware of what ex anti and expost is, so ex anti, is something when you set the rules beforehand for the, , an expost is when you come in after the event and investigate. Yeah.

Dr Annegret Groebel - President of the Council of European Energy Regulators : 12:20

Exactly. Because and that of course means for the cartel office it, they see that the prices were extremely excessively high and the charges, but they had difficulty in intervening and it was too late. Yeah. They had a case and they had proven the case, but it never really entered into force. Yeah. And so then finally the law was changed. And the V nets a got the power to, to set the rules and in particular the network charges before they could. Take because before they could charge these to the users of the grid and to the suppliers, et cetera. So that was the major change from exposed to ex ante. And it was an external control. It was no longer the self policing, which near, almost nearly ever works.

Richard Sverrisson - Editor-in-Chief, Montel News: 13:12

Yeah. No, exactly.

Dr Annegret Groebel - President of the Council of European Energy Regulators : 13:13

But in, in a, in an industry that, that is a natural monopoly that's that's for sure. And yes, so they were not happy about this. There was, this was about the charging. But there were also, in 2006, one of the earliest events that we had to investigate was that there was a sort of regional blackout because of a huge storm of a thunderstorm in the north of Germany. Yeah. Where there was where the grid did not perform because the lines were broken. Yeah. And and also there was one other incident where the lights in Portugal went out because the ship crossed a crossed a line probably you have heard of this

Richard Sverrisson - Editor-in-Chief, Montel News: 13:53

in the canal, wasn't it? Canal then?

Dr Annegret Groebel - President of the Council of European Energy Regulators : 13:55

Exactly in the canal. Exactly. And then the operators came they were very small. Now there's a, that this shouldn't have happened. And what we said, well, look it happened, which shows that your famous operational handbooks, et cetera, do not work in the end. Yeah. So the European Commission then proposed binding network codes and we also investigated what we can do to make sure that they prepare for these type of incidents even if they have a rare probability. Yeah. And this is something that also of course made a change for them. And I think now they have also accepted this part because. Now, this is also something that the commission is reinforcing. Grids need to become more resilient and more secure. You remember because there, there is the grid is getting and the whole system is more complex with distributed energy et cetera, with a two way feeding in. Yeah. Not only for households taking out but also feeding in when they have a surplus energy in there from their solar panels or from their pvs et cetera. But, you see that what happened in, in Spain? Yeah. So everyone now is aware that the grid needs to get resilient, that needs to get secure. But at that time it wa and because the probabilities are changing. Yeah. And this again, is something you have to enforce with binding legislation and then also binding regulation. And that is what made the change. And then as I said there, there's, I think this was 2000 five, and I think we also have now the reputation of being a let's say a serious regulator. But of course there was also the change and we should not forget this in 2011 with the energy transition, which in terms of influence, political influence. I'm not talking on influence on the regulator. They tried of course as well, but but we have our measures to stay independent. But they lost I think a lot of the influence that the operators had before with this energy transition and the pushing through of the energy transition and the nuclear exit. Yeah. Beforehand. And of course this goes together with rules of unbundling. On the transmission level. Yeah. So because beforehand they were all the utilities, they were all, they had generation, they had the grid and they had the retail business. Yeah. And that of course gave them a lot of power. They only needed to wave and say the lights go out if you do, if you regulat us too hard or if you change anything in the system. Them and the government said we saw the risk that it has that has happened with nuclear in Japan. And we also now see that the regulator needs to enforce these binding rules on the security side, but also on the efficiency side because after all we have a duty vis-a-vis users industrial users as well as households, of course to make energy affordable. Yeah. And this can only happen if the system works. Efficiently.

Richard Sverrisson - Editor-in-Chief, Montel News: 17:13

And for, and for all sides. And just a final question really. You mentioned complexity and obviously what we're seeing now in, and the market in Germany is one of the most liquid markets. How in oversight the market oversight how confident you. Can you be to ensure that there is no market manipulation? There must be millions of transactions that you are looking at and all the data flows in the deals and the trades that are going on. How confident can you be that, that you catch market abuse or manipulation when it happens?

Dr Annegret Groebel - President of the Council of European Energy Regulators : 17:45

That's a very good question. So the you know that the ramit that is a regulation on electric on energy market integrity and transparency, and it provides us with the power to monitor to supervise the wholesale energy trading Yeah. On the wholesale energy market. And we do this together with ACA. ACA has a huge centralized databases so all market participants, operators, but also traders, et cetera. They have a duty to provide certain data, fundamental data, trading data to ACA and ACA puts it in their big data base. And then ACA has also a surveillance software tool, and we also do have, and if ACA sees some suspicious element in the trading, in the data of the trading, they provide us with an alert. After the, all the European regulators, and then we can investigate this. And if there is a cross border case, then we would liaise with, for example, the Austrian regulator or the other regulators that are, that could be involved in these type of possible misuse or, abuse of the trading. And so we would be able to prevent it in the best of cases or to sanction it if it already is ongoing. And you see a lot. We also had already cases the French regulator crew, Spanish regulator, CNMC recently also again, or Danish regulator, they all publish it. And since 2024. ACA also has under certain circumstances investigatory powers in cross border cases if the concerned regulators would not pick up an alert that they send us. Yeah. So that is the rule which I think it did not yet happen, but the, in the future there is this additional element. Again, of course. A lesson learned from the crisis to make sure that it also in, in times of, let's say volatility or of trading terminal the supervision is functioning and is functioning quickly. As I said, I'm very much convinced that the volatility and the trading and all the price increases that happened were explainable by fundamental factors like shortage of Russian gas. And but of course you have to be vigilant. And the therefore the, let's say the sharpening of the of the remit, Remit two now regulation has, it's, is a result of these lessons learned to make sure supervision is there and is timely there, and is also having a sort of, let's say we watch you effect.

Richard Sverrisson - Editor-in-Chief, Montel News: 20:42

Absolutely. Annegret, thank you so much for your, your look back at the start of the two thousands, but also a look into the future for the challenges ahead, for the energy transition. But thank you very much for being a guest on the Plugged In podcast.

Dr Annegret Groebel - President of the Council of European Energy Regulators : 20:55

Thank you. Thank you.

Richard Sverrisson - Editor-in-Chief, Montel News: 20:57

We hope you've enjoyed our CEO Summer series. Next week we'll be back to normal and we'll be bringing you the latest news stories affecting the energy sector. As usual, if you enjoy this discussion, please like rate and follow to make sure you get the latest podcast episodes as soon as we release them every Friday. We'd also love to read your reviews of the podcast. It helps us to keep up to date with what you, our listeners think of our podcast and what content. You want to receive more of? Finally, you can head to montelnews.com for more news and analysis from our team of journalists across Europe and beyond. See you next time.