As the Steag Iqony Group, we operate seven hard coal-fired power plants in Germany – six of which are classified as ‘systemically important’. But what does that actually mean?
Grid reserve power plants safeguard Germany’s electricity supply when the grid needs them. So they remain idle until the going gets tough. Particularly in winter, there are times when the wind isn’t blowing and the sun isn’t shining. That’s when back-up power plants step in and generate the electricity required. As an industrial nation like Germany relies on a constant and secure electricity supply, these power plants are considered systemically important.
Bergkamen A
Period of grid reserve: April 2024 to at least the end of March 2028
Bexbach
Period of grid reserve: May 2017 until at least the end of March 2031
Herne 4
Period of grid reserve: August 2024 until at least the end of March 2031
Modellkraftwerk Völklingen
Period of grid reserve: February 2024 until at least the end of March 2031
Heizkraftwerk Völklingen
Period of grid reserve: February 2024 until at least the end of March 2031
Weiher 3
Period of grid reserve: May 2017 until at least the end of March 2031
In the energy system, ‘systemic importance’ refers to the role a power plant plays in ensuring the stability of the electricity grid: Because the grid has not been expanded and upgraded over recent decades to the extent required to integrate a large number of new, small-scale energy generators with fluctuating output and to balance regional fluctuations through load distribution, power plants are needed that can be made available at short notice on demand to compensate for these fluctuations with their output.
“Under the current system of pure cost reimbursement for power plants in the grid reserve, we are a long way from receiving appropriate remuneration for our business activities. We need to be able to earn money from these plants. After all, only companies that generate profits are in a position to invest.”
Gundolf Schweppe, CEO of the Steag Iqony Group
Systemic importance in figures
Six out of seven power plant units belonging to the Steag Iqony Group were designated as systemically important during 2024. Since 1 April 2024, and 1 August 2024 (Herne 4) respectively, the power plants have been on standby to step in during grid bottlenecks, thereby ensuring security of supply in Germany.
In concrete terms, this means that during the period in 2024 when our power plants are system-relevant, they will be called upon for over 1,912 operating hours, generating around 595,700 MWh (which is equivalent to supplying around 176,106 households with electricity for one year*) and 162 days of operation on which at least one of the power plants was called upon. This impressively demonstrates the importance of the Steag Iqony Group’s power plants for security of supply in Germany.
*Source: Household equivalent: 3,383 kWh per household (latest available data from Destatis)
How are power plants classified as systemically important?
Systemically important power plants are grouped together in what is known as the ‘grid reserve’. These are power plants that were originally intended by their operators to be decommissioned, but which must now be kept operational by the power plant operators without participating in normal market operations. The process for classifying a power plant as systemically important is as follows:
When the Bundesnetzagentur receives an application to decommission a power plant, the regional transmission system operator first assesses the impact that the plant’s closure would have on the electricity grid. If the operator considers the plant to be indispensable, it applies to the Bundesnetzagentur for it to be classified as systemically important.
If the Bundesnetzagentur approves the grid operator’s application, this is usually for an initial period of two years. During this time, the plant operator must keep the power plant permanently ready for operation and stand by on request to stabilise the electricity grid. The company is reimbursed for the costs incurred in carrying out this work, but does not earn any money from operating the plant, even though it bears the responsibility of contributing to the security of supply in Germany – with people, machinery, capital investment and expertise.
Systemic importance restricts business operations and investment opportunities
This is a problem insofar as it denies operators of grid reserve power plants the opportunity to generate revenue with which to invest in future projects and the further transformation of the energy system. At the same time, the responsibility for ensuring grid stability and security of supply thus rests on the shoulders of power plants that, in the coming years, will often be approaching their 50th anniversary and are expected to remain reliably available on call at all times, despite age-related increases in maintenance costs.
In terms of the electricity grid and energy system, these plants thus effectively take on the role of a fire brigade: when there is a fire, the grid reserve is on standby to put it out. But the fire brigade is not only paid when it is actually called into action, but on a permanent basis – and therefore even when its services are not required. Above all, regular investment is made in the fire brigade’s equipment to ensure it is as well-prepared as possible for its tasks.
Applied to the issue of power plant capacity and ensuring security of supply, this means that not only is there a need for prompt clarification of the framework conditions under which new power plants are to be built, but also for appropriate remuneration for the provision of system-relevant power plants beyond cost recovery, so that power plant operators can actually make the investments expected of them.
Our demand to policymakers: Fair remuneration
We therefore call for fair remuneration for keeping our power plants on standby to meet system-critical needs, in addition to mere cost reimbursement. A commercially viable margin is needed to fulfil our corporate responsibilities and to make a genuine contribution to the success of the energy transition. Returns are important for:
The people behind systemic importance
For us as a company, power plants being deemed systemically important means that we cannot generate a return on investment. As a result, there is a lack of investment in future-oriented projects, such as the development of our power plant sites into the energy hubs of tomorrow. This also affects our employees and their career prospects within the energy sector. Despite their important role in the energy infrastructure, many power plant employees feel uncertain. Despite their commitment to their power plant, the transition to renewable energies raises questions about long-term job security. Clear prospects and appropriate remuneration are necessary to retain and motivate skilled workers in the sector.
Frequently asked questions about systemic importance
The Bundesnetzagentur is a regulatory authority in Germany responsible, amongst other things, for the supervision and regulation of the electricity, gas, telecommunications, postal and rail networks. Its remit in the energy sector includes ensuring network access and monitoring market processes. This involves ensuring a reliable and stable energy supply, particularly with regard to grid stability and the prevention of supply bottlenecks. At the request of electricity network operators, the Bundesnetzagentur declares power plants to be systemically important where necessary and determines the duration of this declaration.
If a power plant operator notifies the Bundesnetzagentur of its intention to decommission a power plant, the regional transmision system operator responsible will assess whether, under certain scenarios, it can guarantee the security of the electricity supply at all times without that power plant. If this is not the case, the system operator will apply to the Bundesnetzagentur for the plant to be classified as systemically important. If, following its own assessment, the Bundesnetzagentur approves the transmission system operator’s application, the decommissioning of the plant is prohibited and the power plant is generally designated as a grid reserve for an initial period of two years.
The Bundesnetzagentur generally classifies a power plant as systemically important for an initial period of two years. This period is not fixed and may be extended if necessary, should grid stability still be unable to be guaranteed without the facility in question. During this period, power plant operators must ensure that the plants are ready for operation at all times. This includes continuous maintenance and preparation of the plant, even if it is not actively operated for extended periods.
Grid reserve power plants are brought into operation when the grid needs to be stabilised. This is particularly common during the colder months – think of periods of low wind and low sunlight. The trend is on the rise. For example, our Bexbach and Weiher power plants were called upon 41 times during the winter months from November 2024 to February 2025 – with operating times peaking at up to 50 hours at a stretch.
The Steag Iqony Group operates a total of six coal-fired power plants at two sites in the Ruhr region (Bergkamen and Herne) and three in Saarland (Weiher, Bexbach and Völklingen), which have been classified as systemically important by the Bundesnetzagentur and must therefore be kept operational. According to the Bundesnetzagentur, several power plants in Saarland will still be needed until 2031 to ensure a secure energy supply at all times.
The operation of system-critical power plants requires a high degree of flexibility and a readiness to respond quickly. One of the operational challenges is to keep the power plants ready for operation at all times, even when they are not in continuous use. From a technical perspective, the plants must be maintained in such a way that they can be brought online immediately when required to fill supply gaps. Particularly in the case of coal-fired power plants, which are actually designed for continuous operation due to their technical nature, repeated start-ups and shutdowns place a considerable strain on the technology and equipment. This is all the more true when one considers that all system-relevant power plant were originally intended for decommissioning and have therefore been in operation for several decades. Some of the power plants are approaching their 50th anniversary. Another aspect is the high safety requirements. Systemically important power plants must be particularly well protected and stable, as a failure could have far-reaching consequences for energy supply security. Furthermore, there is constant coordination with the Bundesnetzagentur to ensure grid stability and meet the requirements for critical infrastructure.
As a rule, requests for the plants are made 10 to 12 hours in advance, when transmission system operators use weather data and consumption statistics to plan demand for the following day. This is also essential in view of the technical specifications of the Steag Iqony Group’s coal-fired power plants, as these cannot be switched on or off at the flick of a switch. In this respect, operation on demand does not differ fundamentally from normal control operations. However, it may be the case that a plant is not needed for weeks or months at a time. During this period, particular attention is paid to maintaining the plant’s technology and keeping it operational in case of an emergency. These preparations help ensure that staff are always ready for action and able to make system-critical decisions that guarantee both operational safety and general security of supply.
Being classified as ‘systemically important’ has far-reaching consequences for power plant operators and the affected facilities. By law, systemically important power plants must be kept operational, regardless of their economic viability or any originally planned decommissioning. This means that they must be maintained in a technical condition that allows for rapid restarting. Furthermore, operators must ensure constant coordination with the Bundesnetzagentur and the transmission system operators in order to guarantee grid stability and thus contribute to security of supply. In practice, this also means that power station staff must be regularly trained and the plants continuously prepared for possible operational scenarios.
Operators of grid reserve power plants receive, for their services, only reimbursement for certain recognised costs, but as yet no remuneration – that is, no margin that takes into account factors such as capital reserves, unforeseen events, opportunities and administration. These costs include, for example, maintenance, operational staff, materials and other expenses necessary to ensure operational readiness. No profit is generated from the actual operation of the plant. The operator’s revenue merely covers the costs incurred in making the facilities available for short-term use, but does not allow for the further development or modernisation of such facilities, as this is not reflected in the economic model.
We consider it unfair that foreign reserve facilities receive compensation, whereas our own facilities—which we are required to maintain under German law—do not. Unlike in the case of German reserve power plants, the compensation paid for foreign facilities ensures that transmission system operators use the reserve sparingly and in a way that keeps grid charges to a minimum.
Unlike public-sector bodies, private companies operate on a commercial basis. The long-term commitment of resources requires a return on investment. Returns are important in order to:
- be able to invest in forward-looking energy projects
- Position our company for the future in a changing energy landscape and offer our employees long-term prospects
- Make efficient use of our expertise
