To avoid future electricity price hikes, the German government is seeking to reverse the liberalisation of its electricity market and move towards a more interventionist approach by establishing a fixed-price capacity market.
In the late 1990s, Germany, at the urging of Brussels, undertook an unprecedented liberalisation of its energy markets, with utilities moving to a business model of selling kilowatt-hours on a competitive market.
This was a great result for the German market, but the country Its sheer scale meant that it would have implications for the whole of the EU.
In other words, a liberalized market would enable Germany to export electricity equivalent to the current annual consumption of Belgium. German electricity Prices fell 49% Prices fell between 2010 and 2016 and then stabilised, benefiting all of Europe.
But this free market era is coming to an end.
“Germany is moving towards de-liberalisation of the market in many areas,” explains Christoph Maurer, an expert on Germany’s electricity market and managing director of consultancy Consentec.
What began in February as a compromise to support new gas-fired power plants has become a hotly debated issue in Berlin.
Looking for a safe investment
In August, the German Ministry of Economy said:Option PaperRegarding the future of the country’s electricity market, he said: “We propose to combine elements of electricity market liberalisation and centralisation, as in other European countries.”
Among its proposals, the paper calls for the creation of a new “capacity market” in which generators would be paid a flat rate based on size, as opposed to the current free market, where generators are remunerated based on the energy they sell.
According to the German government, such a capacity-based market would provide “long-term investment security through centralized bidding with long contract periods.”
“Since the price hikes, at the very latest, it has become clear in my view that the expansion of large power plants cannot be secured by the free electricity market alone,” said Green MP Ingrid Nestle, who speaks for the party on energy issues.
By combining a central capacity market with local markets, the government hopes to retain the efficiency of freer markets at the expense of added complexity.
However, the capacity market proposal is still under discussion in Berlin.
Utilities association BDEW and natural gas industry group Zukunft Gas have voiced partial support, preferring a simpler capacity market than the proposed mixed model, but renewable energy lobby groups fear disruption to their business models.
“We warn against risky experiments at this delicate stage of the energy transition,” said Simone Peter, chairman of the renewable energy association BEE.
The consultation period with stakeholders closes on September 6, and participants in the government’s Electricity Market Discussion Forum are due to discuss its findings on September 26.
European Energy Union
Despite the large amount of electricity flowing in and out of Germany, Euraactive understands that neighbouring countries have yet to be consulted about Germany’s plans to move away from its current liberal model.
Ministry of Economy “The company has a range of dates planned, including meetings with affected neighbouring countries (electricity neighbours) and the European Commission on an options document for a forward-looking electricity market design,” a spokesperson told Euractiv.
Luxembourg, which has a free flow of electricity between it and Germany, welcomed Berlin’s cross-border coordination initiative, telling EuraActive it would allow for “detailed assessment and discussion of the cross-border impacts” before any final decisions are made.
Germany would not be the first European country to move towards a less free capacity market.
“We believe that Germany is in good company in Europe, where various countries already have capacity mechanisms in place,” Nestle said, adding that Belgium, France and the UK have all opted for some form of capacity mechanism. already.
But Maurer believes Berlin’s change of policy could have a knock-on effect.
““I do not exclude the possibility that in the coming years we will see a clear trend towards more capacity mechanisms in Europe,” the energy expert added.
[Edited by Donagh Cagney/Daniel Eck]
Read more at Euractiv
#Berlin #considers #scaling #liberalized #electricity #market #bets #fixedprice #model