Berlin, Leipzig, 11 July 2024 – How can security of supply be efficiently guaranteed in the electricity market? This question was analysed by the Berlin-based consultancy Connect Energy Economics on behalf of the Association of Energy Market Innovators (BNE), the German Chamber of Industry and Commerce (DIHK) and the European Energy Exchange (EEX) in the current study “The order of transformation – security of supply in the electricity market", which was published today.
Commenting on the results of the study, Achim Dercks, Deputy Managing Director of the German Chamber of Industry and Commerce, said: "It is important for the economy that the electricity costs of a secure energy supply are limited for companies. The aim should therefore be to incentivise investment in the market instead of providing permanent state support for individual technologies. The study clearly shows that a reliable power supply is possible through market incentives."
Under the German government's planned power plant strategy, (hydrogen-ready) gas-fired power plants are to be put out to tender in the short term. In addition, the development of a market-based and technology-neutral capacity mechanism has been announced, which should be operational by 2028. The aim is to find a mechanism that ensures the supply of electricity even during hours of "dark doldrums" and guarantees system stability.
Author Marco Nicolosi, Managing Director of Connect Energy Economics, concludes: "Strengthening the competitive electricity market enables a cost-effective and secure supply. Instead of discussing support schemes for power plants, which – as in the case of capacity markets – lead to a permanent need for support, incentives should be provided to strengthen the electricity market".
Robert Busch, Managing Director of the German Association of the New Energy Industry, agrees and emphasises: "We need an intelligent framework instead of the planned promotion of capacities. It is unacceptable for us to suppress the market growth of various flexibilisation offers in favour of promoting natural gas power plants with a hydrogen mortgage that is uncertain at best. The foreseeable subsequent subsidy race between renewable energies and new power plants should also be avoided.”
Instead, the hedging obligation from the European Electricity Market Directive (Art. 18a, source: LINK) should be taken up in particular. The study describes the economic background and requirements that should be met for implementation.
A strengthened competitive market design can be implemented promptly and therefore enables rapid investment in new capacities. This is also because this mechanism is open to different technologies and innovations. This means that the economic costs of security of supply are lower compared to capacity markets. The national implementation of the hedging obligation is also in line with the European legal requirements of the internal market. Time-consuming state aid reviews by the EU are thus spared.
Peter Reitz, CEO of EEX, says: "If the legislator consistently organises the hedging obligation, suitable products for hedging price risks that take into account the value of security of supply will be traded on the power market. This will allow electricity producers to generate secure income to finance their investments."
Busch, Dercks and Reitz agree: "The baseline study has a central message. There is no need for permanent power plant subsidy schemes. The further development of the market design and the power market are suitable for creating the necessary incentives for investments in controllable power."
The study by Connect Energy Economics was commissioned by BNE, DIHK and EEX and is available for download at the following link: LINK
About EEX
The European Energy Exchange (EEX) is a leading energy exchange which builds secure, successful and sustainable commodity markets worldwide – together with its customers. As part of EEX Group, a group of companies serving international commodity markets, it offers contracts on power, natural gas and emission allowances as well as freight and agricultural products. EEX also provides registry services as well as auctions for guarantees of origin, on behalf of the French State. More information: www.eex.com
About BNE
The Bundesverband Neue Energiewirtschaft (BNE) has stood for market, competition and innovation in the energy industry since 2002. The association represents companies that are active at all competitive stages of the energy industry value chain and develop pioneering business models for electricity, heat and mobility.
About DIHK
The German Chamber of Commerce and Industry (DIHK) represents commercial and industrial enterprises and those belonging to the service sector vis-à-vis politicians, administrators and the public. It represents the general interest of the commercial sector at federal and European level – for example for less bureaucracy, free trade or a fast internet. The goal: good framework conditions for successful business. The DIHK aggregates the interests of businesses across all sectors and branches of the economy in a democratic and deliberative manner. These interests are conveyed to it by the 79 local Chambers of Commerce and Industry across Germany. The spectrum of opinions on the various economic policy issues is as diverse as the business landscape in Germany.
Contact:
EEX Public Relations
T +49 341 2156-300
presse@eex.com | www.eex.com
BNE Press Contact
Robert Busch | Managing Director
T +49 30 400 548-12
presse@bne-online.de
DIHK Press Contact
Petra Blum | Pressesprecherin
T +49 30 20308 1627
blum.petra@dihk.de