OPPORTUNITIES AND RISKS FROM TECHNOLOGY AND INFRASTRUCTURE
50Hertz's assets are widely distributed geographically and can be a potential target for theft, acts of terrorism and sabotage.
Furthermore, the assets are exposed to environmental influences, which can lead to sometimes significant damage in special
weather conditions or to faster wear and tear.
As an infrastructure operator for a safe and reliable power supply for around 18m people, 50Hertz is also obliged to be well
prepared for crisis situations. To this end, crisis tools have been further developed and crisis exercises conducted on a regular
basis to train its own skills and uncover potential for improvement.
In the event of voltage fluctuations or interruptions, grid failure or failure to implement legally required emergency measures,
50Hertz may be held liable for damages to its customers and/or damages to third parties. In addition, further costs may be
incurred, the regulatory assertion of which is unclear.
The connection and operation of OWPs is a business field with additional technical and organizational challenges, as legislators
have decided to allow wind farms to be built relatively far off the German coasts. Despite careful preparations and analyses,
technical problems are often only discovered in the implementation and operation phase and must then be solved
immediately. Delays and changes in the planning and construction phase as well as later unplanned changes in the operating
phase are therefore possible. If 50Hertz is held responsible for the delay or interruption, the company must compensate the
wind farm operator for the majority of the financial damage. The expenses associated with the damages can be partially offset
by compensation amounts through recourse to the suppliers. According to the EnWG, the risks for the TSO are limited: in the
event of culpable, non-intentional delay or disruption of the connection, the TSO only has to bear part of the damages itself.
Nevertheless, significant risks remain with the connecting TSO.
High-voltage cables increasingly represent a considerable value in the company's fixed assets, and the share of onshore direct-
current cables will also increase significantly in the coming years on a project-related basis. As there is as yet no
comprehensive long-term operating experience with these technologies, there is a risk of design errors that are only
discovered when the cable is in operation. As a preventive measure, various tests are carried out from the start of production to
commissioning. However, it cannot be completely guaranteed that all, even combined, causes of faults can be identified. In
extreme cases, this can lead to a complete cable system having to be replaced. This would result in high unscheduled
depreciation, compensation payments, e.g. to offshore wind farm operators, and investment costs. The risk is mitigated,
among other things, by close cooperation with suppliers, by extensive functional tests prior to commissioning, by monitoring
the cables in operation, by taking out insurance and by the possibility of rolling over costs via the regulatory framework.
The cost risks no longer necessarily and completely affect the TSO, but recognition risks remain in the event that the Federal
Network Agency classifies certain costs as not covered by regulation.
The construction of power lines is often associated with a low acceptance among local stakeholders and with lengthy and
complex administrative procedures. Delays in line construction are therefore still possible despite the intensive efforts of
50Hertz's approval and participation experts and the application of legal regulations to accelerate grid expansion. In addition,
the high number of parallel procedures harbors the risk of resource bottlenecks at the federal and state authorities concerned.
The market for required services (experts, environmental planning and route planning offices, engineering offices, mapping
experts) is also extremely tight throughout Germany due to the high demand for infrastructure. Timely access to suitable
resources and suppliers who can provide services in line with requirements appears to be increasingly important in this context
and, in addition to cost effects, can also entail time restrictions. In addition, due to the complexity of the projects, there are
other possible causes for delays and additional costs, which can be reduced with professional project management, but not
completely eliminated. Delays in network expansion can lead not only to an increase in operating costs to cope with grid
bottlenecks, but also to an increase in critical situations in grid operations. The reason for this is that the new lines are
essentially needed to transport the constantly growing variable feed-in of renewable energies in the 50Hertz control zone to
areas with higher consumption and planned shutdowns of conventional power plants near the consumption centers in the
south and west are approaching.
50Hertz uses a high-availability grid control system to ensure the secure operation of its transmission grid. The existing grid
control system is currently being replaced by a new system in a complex project. As this project has been delayed, the old grid
control system must be operated beyond the planned duration and its operation must be secured in cooperation with the
manufacturers of the subsystems.
In terms of the safe operation of grid systems, maintenance and the construction of new grid systems, there have only been
minor additional expenses or delays due to pandemics to date. Even in the future, negative effects on operations due to
restrictions or delays in the movement of goods or service providers cannot be ruled out in the event of prolonged pandemic
events. Furthermore, the change in the global environment generally results in additional risks in the supply chain, which
further increases the risk of supplying essential equipment and services.
However, the construction of new plants also results in opportunities due to the accelerated completion and commissioning of
plants. By transferring them to non-current assets at an earlier stage, higher returns are generated from these plants, which in
turn free up capital for further investment activities. Otherwise, the opportunities are limited due to the regulatory framework
in this area.
As an operator of so-called critical infrastructure, 50Hertz is exposed to the risk of targeted cyber-attacks. In order to prevent
this and ensure information security, 50Hertz is obliged by the IT Security Act to organize the processing, storage and
