Renewable Energy Sources Act

Plans for a capacity market?

Tim Altegör, 30 Jul 14
Although the Bundestag only adopted the amended Renewable Energy Sources Act (EEG) in July, future changes to the act are already being discussed in Berlin. Following their summer recess, the German government will be considering the planned invitations to tender for green electricity projects, and the possible creation of a capacity market.

A capacity market should ensure the continued operation of fossil power plants rendered unprofitable by the increasing quantities of wind and solar power feeding the grid. In future they would be paid for simply making energy available. Proponents of the scheme – who include the major energy companies and business federations such as the Association of Local Utilities (VKU) – argue that as more and more power plants are being shut down, there is insufficient backup for weather-dependent renewables. Immediately after the resolutions on the EEG amendment, the VKU declared that a capacity market must now ensue “very quickly”.

However, exactly what form this would take is currently still unclear. Chancellor Angela Merkel said she is expecting “intensive debate” on the subject.At a recent event of the German Association of Energy and Water Industries (BDEW), which also supports such a market, Economy Minister Sigmar Gabriel denied any prospect of “social security benefits for power plants”, saying that money must be earned through work. How a capacity market might operate on the European level is being drafted for the Federal Ministry of Economics by Permanent State Secretary Rainer Baake. According to media reports, a series of meetings has already been held with representatives of various EU states to discuss their possible cooperation regarding the transition to sustainable energy.

In addition to addressing the harmonisation of individual green electricity promotion measures, these meetings have included negotiations for a European capacity market that would pay power plants a bonus for guaranteed electricity supplies. Scientific studies repeatedly conclude that a capacity market would be inefficient or even superfluous. The German news magazine, Der Spiegel, recently revealed that two unpublished reports commissioned by the Ministry of Economics considered the security of supply in the electricity market already sufficient and therefore an additional capacity market as unnecessary.

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