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Glossary · Energy industry & energy transition

Generation

generation electricity generation Energy power plant renewable energies power system

In the power system, generation refers to the provision of electrical energy. This involves converting another form of energy or discharging a storage unit. A coal-fired power plant first turns chemical energy into heat, then into mechanical work and finally into electricity. A wind turbine converts the kinetic energy of the air into electrical energy. A photovoltaic system converts radiant energy directly into electricity. The German Energy Industry Act (Energiewirtschaftsgesetz, EnWG) defines a generation installation concisely as an installation for the generation of electrical energy. It describes an energy storage installation as an installation by which the final use of electricity is shifted to a later point in time.

In the physical sense, a battery storage system does not generate new energy. During discharge, however, it feeds electricity into the grid and is therefore treated in the market and in grid operation much like a generation installation in this phase. In Germany this is also legally relevant: in November 2024, the Federal Court of Justice (Bundesgerichtshof) ruled that battery storage systems can qualify as generation installations within the meaning of the EnWG. According to this ruling, a storage system connected solely to a distribution grid can be a decentralised generation installation. Under the decision, this also applies if it only provides balancing energy. The Higher Regional Court of Düsseldorf had previously ruled differently. Whether a storage system is treated like a generation installation in an individual case, however, depends on the respective provision.

Energy quantity and capacity

Generation is measured as a quantity of energy, usually in kilowatt-hours, megawatt-hours or terawatt-hours. This must be distinguished from installed capacity. It indicates the maximum electrical power an installation can deliver under certain conditions. A power plant with 500 megawatts could theoretically generate at most 500 megawatt-hours per hour. Over a year of 8,760 hours, that would be around 4.4 terawatt-hours. In practice, this value is never reached. Maintenance, fuel prices, weather, grid bottlenecks, market prices and technical availability determine how often and how strongly an installation actually feeds in. A common indicator for this is full-load hours: annual generation is divided by installed capacity.

This distinction plays a role in almost every debate about electricity. High installed photovoltaic capacity says little about generation on a dark winter evening. High annual generation from wind energy says little about whether enough firm capacity is available in every hour. Conversely, anyone who looks only at peak capacity often underestimates how much renewable installations contribute to annual electricity volumes and how much fuel they save in fossil-fuel power plants.

Generation, feed-in and consumption

Generation is often equated with feed-in, but the terms do not coincide. Generation is the electrical energy that an installation provides. Feed-in is only the part of it that goes into the grid. Electricity that is consumed on site, for example in an industrial company with its own power plant or in a household with a solar system, does not appear as grid feed-in. From the grid's perspective, self-consumption initially reduces demand, even though electricity is generated and used. The Federal Statistical Office (Statistisches Bundesamt) expressly points out that such quantities are missing from its feed-in statistics.

Electricity consumption is also not simply the counterpart of generation. Several balancing levels lie between the two: gross generation, net generation, grid losses, the power plants' own consumption, storage and cross-border trade. Gross generation also includes the electricity a power plant needs itself, for example for pumps, conveying equipment or control technology. Net generation is the quantity delivered after deducting this own requirement. With electricity balances, it must therefore always be clarified at which level the measurement was taken.

The figures for Germany in 2025 show how much the levels differ. According to preliminary figures from the Federal Statistical Office, 438.2 billion kilowatt-hours were generated domestically and fed into the public supply grid. Of this, 58.6 percent came from renewable sources. Photovoltaics and natural gas reached new record highs, while wind power remained the most important source at 30 percent. If imports are added and exports deducted, around 457.6 billion kilowatt-hours were available in the grid. By contrast, the BDEW reports renewable gross electricity generation of 288.7 billion kilowatt-hours for 2025. That is around 58 percent of total gross generation. The figure is significantly higher because it also includes, for example, self-consumed electricity. The statutory expansion target, in turn, refers to gross electricity consumption. There, the share of renewables in 2025 was around 56 percent according to a BDEW estimate.

In the European interconnected grid, generation, imports, storage discharge and other feed-ins must at every moment be exactly as large as consumption, exports, storage charging and losses combined. This simultaneity distinguishes electricity from many other goods. Electricity can indeed be stored, but storage is limited, costs money and loses energy in every cycle. Therefore, it is not only the annual quantity that counts, but also the time profile of generation.

Dispatchable and weather-dependent generation

Generation installations differ greatly in how well they can be planned and controlled. Gas-fired power plants, hydro storage, biomass plants and many fossil-fuel power plants can adjust their output within a certain range. Limits are set by technical minimum loads, start-up times, and fuel and emission costs. Wind turbines and photovoltaic systems, by contrast, depend on the weather. Their generation can be forecast, but not freely determined. They can be curtailed when there is too much electricity in the grid or local bottlenecks threaten. They cannot, however, compensate for a lack of wind or sun. The EnWG groups wind and solar power under the term volatile generation.

These characteristics shape the residual load. This is the load that remains after deducting wind and solar power and that must be met by other installations, storage, imports or flexible demand. The more wind and solar power there is, the more the role of conventional power plants changes. They deliver less electricity over the year, but remain important for certain hours, regions or grid situations, as long as other means do not take over this task.

The term generation becomes imprecise when every kilowatt-hour is valued equally. A kilowatt-hour of solar power at midday on a windy spring day affects prices, grids and the remaining fossil-fuel generation differently than a kilowatt-hour on a cold, windless evening. The quantity of energy is the same; the scarcity is not.

Market, grid and responsibility

In the electricity market, generation is organised through schedules, bids and balancing groups. Operators sell their electricity themselves, via traders or via support mechanisms. In Germany, every balancing group must be balanced in every quarter-hour: registered feed-ins and withdrawals are supposed to match. Deviations are settled via balancing energy. Anyone who wants to understand how generation works must therefore look not only at the installation, but also at the rules under which its feed-in is forecast, traded and settled.

Grid operation follows different rules from the market. An installation may be cheap in the market and yet not be allowed to feed in fully on site, because otherwise lines, transformers or voltage limits would be overloaded. In Germany, grid operators then intervene mainly through redispatch. Previously, the curtailment of renewable-energy and CHP installations was regulated separately as feed-in management under the Renewable Energy Sources Act (EEG). Since 1 October 2021, it has been integrated into the uniform Redispatch 2.0 system under the EnWG. A priority applies here: electricity from renewable energies and combined heat and power (CHP) that is entitled to priority may, as a rule, be curtailed only if this is significantly more effective than throttling conventional power plants. Generation therefore also has a spatial side. Not every megawatt-hour can be shifted at will from north to south or from the distribution grid to the transmission grid. Location influences grid expansion, congestion management and the distribution of costs.

Generation installations can also provide system services. These include frequency control, voltage control, instantaneous reserve, reactive power and black-start capability. In the past, many of these services came from large power plants with rotating, grid-synchronous generators. Wind farms and photovoltaic systems, by contrast, are coupled to the grid via power electronics. A system with many such installations needs different technical solutions and different rules for connection, operation and remuneration. How much energy an installation generates says nothing about these capabilities.

Typical oversimplifications

  • Generation is not the same as security of supply: High generation over the year improves the energy balance, but does not ensure sufficient capacity in every hour. Security of supply depends on firm capacity, grid condition, fuel availability, import options, storage, flexible demand and operational management. An electricity balance in terawatt-hours answers a different question than a capacity balance in gigawatts.

  • One-sided assessments of technologies: Fossil-fuel power plants are often described by their controllability, renewable installations by their weather dependence. Both fall short if costs, emissions, fuel risks, construction times, locations and grid connections are missing. A gas-fired power plant is technically flexible, but depends on fuel prices and supply chains. A photovoltaic system is weather-dependent, but has very low running costs and needs no fuel.

  • Storage as an energy source: Storage shifts electricity in time. When discharging, it appears as generation; when charging, as consumption. It can be very valuable because it balances price differences, grid bottlenecks and short-term deviations. However, it does not replace a primary energy source, and part of the energy is lost with every charging and discharging process.

  • Renewable does not mean without consequences: The energy source is renewable, not automatically every effect of the installation. Wind and solar power significantly reduce fuel consumption and emissions in operation. However, they require land, grids, materials, permits and balancing mechanisms. A careful assessment separates the question of the energy source from questions of integration, cost distribution and local acceptability.

Why generation alone is not enough

With the electrification of heating, transport and industry, more electricity is needed, while fossil fuels are phased out in these areas. Electricity generation can therefore rise while total final energy consumption falls. Electric motors, heat pumps and electric processes often work more efficiently than combustion technology. Electricity generation thus increasingly links areas that were previously separate.

This makes flexibility more important. Heat pumps, electric cars, electrolysers, battery storage and industrial processes can partly shift their consumption if rules, prices and control technology allow it. Generation and consumption are then no longer balanced only through power plant dispatch planning. What matters is the interplay of weather-dependent feed-in, dispatchable capacity, grid condition and adjustable demand.

The term generation shows which quantities of energy enter the power system when, where and with which technical characteristics. It does not, however, answer on its own whether this energy is usable at all times, what grid costs arise, what reserve is needed or who bears which risks. For a robust assessment, generation must always be considered together with capacity, time profile, location, market rules and grid operation. Only from this does it emerge what a generated kilowatt-hour contributes to a secure and affordable electricity supply.

Sources

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Edited by eCMS on 11.11.2026 19:47

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