Second Power Plant Forum: Economics Ministry discussing the design of the electricity market with Länder and business associations
The Federal Ministry of Economics and Technology today discussed a viable design for the wholesale electricity markets of the future with representatives of the Länder and business associations at the second Power Plant Forum. The main question was how the wholesale electricity market needs to be organised in order to ensure that the security of the power supply remains guaranteed in future. A comprehensive report on the design of the electricity market produced by the Institute of Energy Economics at the University of Cologne (EWI) on behalf of the Economics Ministry formed the basis for the discussions.
Philipp Rösler, Federal Minister of Economics and Technology, stated: "We want to see an ongoing increase in the share of electricity generated from renewable sources. If we are to ensure that our electricity supply remains affordable and secure, we will continue to need conventional power stations for a long time to come. This is because they are capable of delivering electricity even when the sun stops shining or the wind stops blowing. For this reason, we need to discuss whether the current electricity market design is in a position to continue to provide sufficient generation capacity. It will be crucial to continue to rely on market-based efficiency."
The authors of the study conclude that guaranteeing security of supply will be an increasing challenge for the wholesale electricity market. There are a variety of capacity mechanisms under discussion or already in use in various countries, and the study examines two of these models in terms of their ability to generate sufficient investment in power plants. For reasons of efficiency, the authors recommend a competition-based model in which capacities are acquired in a bidding procedure and the spot market remains largely untouched - a model they term the "security of supply market".
An alternative model (the "strategic reserve") is rejected by the study, since it would result in unnecessarily high electricity prices.
The Economics Ministry welcomed the study as an important basis for an open-ended discussion. It is up to the state to provide appropriate rules so that the necessary investments in security of supply will pay off. However, it is not up to the state to build power stations or maintain surplus capacity.
The Länder and the business associations are now called on to comment in writing on the study's findings and possible conclusions by this summer.