Innovative Approach to Enhance Germany's Power Supply Security
Key Ideas
- Energy experts in Germany propose a new approach where power suppliers hedge their promised deliveries on the futures market to strengthen the electricity market.
- This strategy aims to increase revenue for generators from market trades and promote the use of efficient generation technologies without the need for permanent power plant subsidy schemes.
- The study suggests that with the implementation of smart meters and this hedging plan, Germany could meet its power needs without government subsidies and without a capacity market.
- The proposal comes in contrast to the government's plan to support the construction of hydrogen-ready power plants and explore options for a capacity market by 2028.
Energy experts in Germany are advocating for a new approach to enhance the country's power supply security while reducing costs. The proposal involves requiring power suppliers to hedge their promised deliveries on the futures market, thereby boosting demand and revenue for generators from market trades. This strategy is aimed at strengthening the electricity market and promoting the adoption of efficient generation technologies without the need for permanent power plant subsidy schemes. The experts argue that by pairing this approach with the rollout of smart meters, Germany could potentially meet its power needs without government subsidies, ultimately creating incentives for investments in controllable power.
Contrary to the government's plan to support the construction of hydrogen-ready power plants and investigate a capacity market by 2028, the study suggests that a capacity market may not be necessary if this hedging plan is implemented. The paper, supported by the BNE Association of Energy Market Innovators, the DIHK German Chamber of Industry, and the EEX, emphasizes the importance of allowing markets to determine the industries that will succeed, rather than relying on government-led capacity markets. This innovative framework aims to advance the market growth of various flexibilization offers and move away from promoting natural gas power plants with an uncertain hydrogen mortgage. The proposal represents a positive step towards a secure and cost-effective power supply in Germany.
Topics
Utilities
Renewable Energy
Government Subsidies
Market Design
Energy Market
Power Plants
Electricity Supply
Capacity Market
Renewable Power Network
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