German Capacity Power Market Should Be Last Resort, EEX Says

The German power market is flexible enough to secure the nation’s power without the introduction of a mechanism that steers the availability of generation capacity, according to the European Energy Exchange AG.

European market integration, higher efficiency and more flexibility from consumers are measures that would help to ensure electricity supply in Europe’s biggest market, Leipzig, Germany-based EEX said today in an e-mailed statement. A capacity market, where utilities get fixed prices for guaranteeing backup power in advance, should only be considered after that, the bourse said.

German is rebuilding its energy system and gives priority grid access to renewable energy. A surge in supplies has pushed electricity prices to record-low levels and the number of hours thermal generation is needed to meet demand has shrunk.

“The turnaround in the energy sector is too complex to be controlled by central guidelines and with a limited, national focus,” Peter Reitz, EEX’s chief executive officer said.

Germany targets 35 percent of energy supply to come from renewables by 2020, from about 22 percent at the end of last year.

EON SE, Germany’s biggest utility, says a capacity market needs existing plants to stay open and new power stations built in the future, Markus Nitschke, a spokesman for Dusseldorf-based EON, said in an e-mail today. Such a mechanism should also be integrated into neighboring regional and European markets, he said.

German economic minister Philipp Roesler wants to rework the nation’s energy law that grants subsidies and priority grid access to renewables, he said in a July 24 interview with Bloomberg.

To contact the reporter on this story: Julia Mengewein in Frankfurt at jmengewein@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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