Germany's green power race: North vs. South in sustainable energy innovation

The tale of two-Germanies

It's striking to see that even after 35 years after the fall of the Berlin wall, Germany is still invisibly divided into two parts. Among the various facts that you can google online to prove this, one of the most visually striking and strategically crucial is the geographical mismatch between where much of the renewable energy is generated and where it is consumed. Germany is essentially divided into two energy zones:

• In the North, particularly along the coasts of the North and Baltic Seas, lies the nation's prime resource for wind power (Figure1). Strong, consistent winds, both onshore in the flat northern plains and offshore in vast wind farms, make this region an ideal location for large-scale wind energy generation. This is where Germany is building gigawatts of new capacity, tapping into a reliable and abundant natural resource

Figure 1

• In the South, states like Bavaria and Baden-Württemberg represent Germany's industrial heartland (Figure3). Home to major automotive manufacturers, engineering firms, and a dense population, this region has historically relied heavily on conventional power sources, including nuclear plants (many of which have now been shut down) and coal power. While the south also has excellent potential for solar energy (Figure2) — indeed, it leads in rooftop solar installations — its potential for the kind of large-scale, consistent wind power needed to replace baseload capacity is significantly less than the north. The demand for electricity here is immense and constant

Figure 2 

Figure 3

The resulting problem is obvious: The power is increasingly generated in the north, but the biggest consumers are hundreds of kilometers to the south. This creates a massive bottleneck in the existing electricity grid, which was primarily designed for a system where power plants were located much closer to consumption centres (often large power stations near cities or industrial areas). Traditional alternating current (AC) grid faces limitations over very long distances, particularly regarding efficiency and control.

To the rescue: HVDC superhighways

This figure shows the response to this challenge: A series of planned High Voltage Direct Current (HVDC) transmission lines (the bulk of which are to be built by 2030). Just one of these: SuedLink is a 700km, €10 billion electricity “superhighway” that when completed in 2028 will carry HVDC at 525 kilovolts from the northern state of Schleswig Holstein to the southern state of Baden-Wuerttemberg. Why HVDC?: Because larger quantities of power can be better controlled and transported farther with lower transmission losses.

Could Germany avoid this costly and complex grid expansion?

In theory yes, by simply building more renewable capacity closer to the demand centres in the south.

Scenario 1: The cost of building transmission lines from the North

To meet the southern demand of 150 TWh, an average power capacity of 17.1 GW is required. Accounting for industrial demand and reliability, the peak demand rises to 22 GW. The cost of building transmission lines to transport this power is estimated at €63 billion, with annual costs amounting to €2.2 billion. This includes both lifetime annualised costs and operation and maintenance expenses. The transmission cost per unit energy is €14.66 per MWh.

Assuming the electricity is generated from northern wind farms, the levelised cost of electricity (LCOE) is approximately €32 per MWh. When combined with transmission costs, the total cost reaches €48 per MWh. This scenario highlights the immense infrastructure investment required to bridge the geographical divide, ensuring a steady flow of renewable energy from north to south.

Key assumptions for this scenario include:
• Average power capacity needed: 17.1 GW
• Peak demand: 22 GW
• Transmission line cost: €3 billion per GW
• Lifetime of transmission lines: 40 years
• Operation and maintenance costs: 1% of capital cost annually
• Capacity factor for northern wind farms: 30%
• Capital cost for onshore wind: €1,350 per kW
• Lifetime of wind farms: 25 years
• Annual operation and maintenance costs for wind: €30 per kW/year
• Transmission losses are assumed to be negligible over 600 km

Scenario 2: Installing renewables in the South

An alternative approach is to build renewable capacity closer to the demand centres in the south. This scenario envisions a mix of solar and wind power, totalling 121 GW, to meet the 150 TWh demand. The generation cost for this mix is €6.5 billion annually, with a levelised cost of €43.33 per MWh.

To ensure reliability, a 4-hour battery storage system is integrated, adding €5.1 per MWh. The total cost, including generation and storage, is €48.4 per MWh. This localised approach offers a vision of self-sufficiency and sustainability, where the south harnesses its natural resources to fuel its future.

Key assumptions for this scenario include:
• Mix of 50% solar (75 TWh) and 50% wind (75 TWh)
• Capacity factor for solar in southern Germany: 11%
• Capacity factor for wind in southern Germany: 20%
• Capital cost for utility-scale solar: €700 per kW
• Capital cost for wind: €1,350 per kW
• Lifetime of solar and wind installations: 25 years
• Annual operation and maintenance costs for solar: €10 per kW/year
• Annual operation and maintenance costs for wind: €30 per kW/year
• Battery cost: €200 per kWh
• Battery lifetime: 15 years
• Annual operation and maintenance costs for batteries: 1% of capital cost annually
• Storage needs may vary, and existing hydro in the south could reduce battery costs

Based on current data and assumptions, building transmission lines to bring electricity from the north is marginally cheaper than installing more renewable energy resources in the south to meet the industrial energy demand. Although installing renewables on-site could become cheaper as time progresses.

Conclusion

Proponents of a more decentralised approach argue that placing generation near consumption reduces the need for massive transmission lines, potentially lowers costs (less transmission infrastructure), and increases local energy independence. South Germany certainly has potential, particularly for solar PV.

However, relying solely on local energy resources is not wise, especially due to the intermittent output from solar, and the lack of seasonal storage. Replacing the output of large conventional power plants requires vast amounts of energy, and the highest-quality, most reliable renewable resources at scale (especially wind) are undeniably located in the north.

When weighing the options — building HVDC lines vs. maximising local generation — the technical and economic realities point towards a necessary combination, with a strong argument for grid expansion. The geographical distribution of premium renewable resources dictates that large-scale, efficient transmission is indispensable. And as seen with recent grid related failures in Spain and Portugal, having a robust infrastructure is equally important as adding every kilowatt of green energy.

The HVDC lines are the necessary arteries of a decarbonised energy system, enabling Germany to move away from fossils and achieve its climate goals while maintaining a secure and affordable electricity supply for its industries and citizens. The debate is no longer about if these lines are needed, but how best to build them efficiently and gain the necessary societal acceptance for this vital infrastructure project.

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