Capacity market
A capacity market describes an element of the market design for the electricity market in which trading takes place not with the amount of electricity consumed but with the power provided. This means that producers receive money regardless of whether a feed-in (temporarily) generates less or no electricity. The trading of capacities takes place mainly to cover a long-term demand (for example: annual demand plan). In contrast to this, there is a so-called energy-only market, where work is traded in (watt hours). A capacity market therefore mainly serves to secure investments and less for the operational part of the power supply.
background
Due to the increasing share of renewable energies in electricity generation in Germany, it is discussed in the context of the energy transition whether the current electricity market design can cope with the special requirements of the more volatile energy supply of fluctuating regenerative energies. In particular, the question arises as to whether it is necessary to keep controllable power plants available as reserve capacity in order to be able to bridge supply bottlenecks. In the current electricity market , the provision of capacity (performance) is not remunerated in monetary terms, only the amount of electricity (work) actually delivered. One therefore speaks of an energy-only market. With the increasing share of renewable energies (in Germany especially wind and photovoltaics), the operation including maintenance of many conventional power plants is becoming increasingly unprofitable, so that there could be a shortage of secured capacity in the future. One speaks here of a coverage gap. This means that there may not be enough capacity available to cover peak loads in particular during times of low wind and solar power feed-in .
Political reform process
In October 2014, the Federal Ministry of Economics presented a green paper on the reform of the electricity market, in which several measures for the safe, cost-efficient and environmentally friendly use of all producers and consumers as well as possible solutions for sufficient, cost-efficient and environmentally friendly capacity provision are discussed. It discusses which measures are required so that the electricity market will continue to generate sufficient investment in the required capacities in the future and whether a capacity market must be introduced or a reformed energy-only market will suffice (i.e. whether or not the power plant services provided must be remunerated - in the energy-only market - only energy supplies are remunerated).
After a public consultation phase, the Federal Ministry of Economics presented a white paper on specific reform measures (July 2015). In it it spoke out in favor of developing the electricity market into an electricity market 2.0 and against a capacity market.
rating
The introduction of capacity markets is judged controversially. The latest reports on behalf of the Federal Ministry for Economic Affairs and Energy show that capacity markets would lead to additional costs of up to 15 billion euros by the year 2030, which customers would have to pay for the maintenance of loss-making power plants. This amounts to a “socialization of the risks”. Capacity markets are therefore also not suitable for reducing CO 2 emissions. Bottlenecks in the power supply are not seen in a period up to 2018. As an alternative, the experts suggest making the existing system more flexible, e.g. a. through strategic reserves.
In an earlier report for the Federal Ministry of Economics from 2012 on the topic of sustainable electricity market design , the Institute of Energy Economics at the University of Cologne advocated that the establishment of new capacity mechanisms could be “a sensible and important component” of a major restructuring of the electricity system.
The German Institute for Economic Research, on the other hand, described the establishment of a capacity market in 2013 as "neither necessary nor useful".
The energy industry disagrees on how to evaluate capacity markets. While E.ON and RWE consider the introduction of capacity markets to be urgently required, as in their opinion this is the only way to keep older fossil fuel power plants in reserve, an internal analysis by Vattenfall came to the conclusion that capacity markets are superfluous. There will be enough power plants in Germany until at least 2020, especially since the current (March 2014) low electricity market price will recover when “the most uneconomical power plants are eliminated”. Vattenfall did not want to comment publicly on the subject yet.
The German Renewable Energy Association (BEE) rejects capacity markets. These would represent a subsidy for old fossil fuel power plants, which would generate billions in costs for consumers and would block the conversion of the energy supply, and would also not create jobs. In view of the overcapacity of around 100 GW, a reform of the energy-only market (in which only energy supplies are traded, in contrast to the capacity market, in which capacities are also remunerated) and a strategic capacity reserve are sufficient to ensure security of supply.
The Federal Association for Renewable Energy, together with the Federal Association of Energy and Water Management , the Federal Environment Ministry and scientific research institutions, developed a concept for a strategic reserve that is better suited than capacity markets based on the criteria of efficiency, competitive intensity, flexibility and European integration.
The so-called hybrid market model is a modification of the capacity market. With this model, electricity customers can purchase capacity shares in volatile electricity generation systems in order to coordinate consumption and generation (unlike in the previous system of the electricity exchange, where all electricity is marketed regardless of its origin). If the electricity drawn exceeds the availability of the system, the remaining electricity consumption is drawn as usual as electricity on the conventional market. This model realizes a capacity market to which only renewable plants have access and creates space for conventional power plants in the trading of electricity volumes.
In a current scientific statement by the Helmholtz Energy-Trans Alliance from January 2015, the establishment of a capacity market is not recommended. The main reasons given are the limited reversibility of such a decision and the existence of alternative instruments to solve the problem of security of supply. It is also pointed out that the environmental and social compatibility of a capacity market is questionable. An optimal mix of measures "that strengthens the electricity market, makes the feed-in of renewable energies more needs-based and provides incentives for the expansion of networks, storage and demand management" is sufficient to solve the existing problems and makes more sense than a capacity market.
Capacity reserve instead of capacity market
In the white paper An electricity market for the energy turnaround , the federal government spoke out against a capacity market. However, the introduction of a capacity reserve was established there, which in the future should step in after the control energy in the event of capacity bottlenecks in the power grid. The reserve capacity is to be provided primarily by old lignite power plants. The difference to the capacity market is that the power plants transferred to the capacity reserve are no longer allowed to actively participate in the electricity market and should be decommissioned after four years of use in the reserve. The power plants are therefore generally idle outside of the need, but are remunerated for this according to their performance. Since 2.7 GW of lignite capacity is to be withdrawn from the market at an early stage due to the capacity reserve , the Federal Government regards this measure as a sensible means of reducing CO 2 compared to the capacity market.
See also
Web links
- BMWi green paper on electricity market reform
- Electricity market or capacity market - overview page for discussion at the Sustainability Council
- badische-zeitung.de , February 23, 2015, Bernward Janzing : Fire department for the energy market
Individual evidence
- ^ BMWi: Green Book - An electricity market for the energy transition
- ↑ BMWi: White Paper: Power Supply Remains Safe and Affordable. July 14, 2015
- ^ Spiegel Online: Expert opinion for the government: Experts warn Gabriel about capacity market. July 17, 2014 ; BMWi: Scientific advisory board at BMWi publishes report on security of supply in the electricity sector. November 15, 2013 ; BMWi: Lead study electricity market - work package optimization of the electricity market design. Study on behalf of the Federal Ministry for Economic Affairs and Energy. June 2014 ; Lead study electricity market. Work package optimization of the electricity market design - summary in the research radar
- ↑ The electricity market faces major challenges in the long term - capacity markets as a possible answer
- ↑ Investigations into a sustainable electricity market design ( memento of the original from February 22, 2014 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ DIW Berlin, press release of November 27, 2013: Energy transition and security of supply: Germany does not need a capacity market
- ↑ dispute over electricity subsidies: Vattenfall opposes RWE and E.on . In: Spiegel-Online , March 24, 2014. Retrieved March 28, 2014.
- ↑ BEE: BEE statement on the BMWI white paper. 3rd July 2015
- ^ BEE: BEE statement on the discussion paper of the Federal Ministry for Economic Affairs and Energy (Green Paper). 2015
- ↑ BEE: No new subsidies for old power plants. Press release, August 1, 2014
- ↑ BEE: Capacity markets do not create sustainable jobs. October 8, 2014
- ^ Agency for Renewable Energies: Green Paper initiates electricity market reform of November 28, 2014
- ↑ BMU / BDEW / BEE: Strengthen markets, secure supplies. Concept for the implementation of a strategic reserve in Germany. May 2013
- ↑ Hybrid market in 100 words
- ↑ Policy Brief "Does Germany now need capacity payments for a secure electricity supply?" ( Memento of the original from February 6, 2015 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. , accessed February 6, 2015.
- ↑ Next power plants - capacity reserve [1]
- ↑ Bundestag - Power plants in the capacity reserve [2]
- ↑ Federal Government - Energiewende: The course is set for the electricity market [3]
