Federal Ministry for Economic Affairs plans comprehensive reform of the electricity system

The Federal Ministry for Economic Affairs and Energy presents plans for the complete supply of Germany with renewable energies, including a capacity mechanism for flexible power plants and storage systems.

8/5/2024, 3:09 PM
Eulerpool News Aug 5, 2024, 3:09 PM

The Federal Ministry for Economic Affairs has presented proposals for the reform of the German electricity system, aiming for a complete supply with renewable energies. A new capacity mechanism is to be introduced by 2028 to ensure that flexible power plants and storage serve as backups when wind and sun do not provide enough energy. A corresponding paper from the ministry under the leadership of Robert Habeck (Green Party) outlines various models for this mechanism.

In the future, renewable energies from wind and solar sources are to cover the majority of the power supply. However, in order to ensure a reliable power supply during "dark doldrums," when neither wind nor sunlight is available, flexible power plants such as new gas power plants and storage facilities are to step in. These should also balance out seasonal fluctuations. These "controllable loads" may be used for only a few hours a year. Through the capacity mechanism, providers are to be compensated via tenders for providing power plant capacities, even if they do not produce electricity.

The ministry's paper identifies four key areas for action. In addition to the reform of renewable energies and the introduction of the capacity mechanism, this also includes greater flexibility in electricity usage. For example, users should be incentivized to charge their electric cars when electricity is cheap.

The Ministry emphasizes that Germany's power system is undergoing a comprehensive modernization phase to become climate-neutral by 2045. Sun and wind are increasingly expected to be the main sources of electricity generation. The next phase aims to ensure a complete power supply from renewable energies and to definitively replace fossil energy sources such as coal, oil, and gas.

Goal of the new electricity market design is a secure, affordable, and climate-neutral electricity system. A public consultation on the proposals will initially take place until the end of August, where various interest groups and citizens can contribute their opinions.

With these plans, the Federal Ministry for Economic Affairs and Energy aims to create the foundation for a future-proof and sustainable energy system that meets the requirements of the energy transition and advances Germany on its path to climate neutrality.

Own the gold standard ✨ in financial data & analytics
fair value · 20 million securities worldwide · 50 year history · 10 year estimates · leading business news

Subscribe for $2

News