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German industry asks for market-based electricity generation incentives

03 May 2012 18:52:38 | edem

German energy industry stakeholders told German Chancellor Angela Merkel that any solution to the country's long-term electricity generation shortage should be market based if possible.

Merkel met with energy industry participants on Wednesday, all keen to ensure that existing production capacity is secured and that at the same time the construction of new plants supported to ensure long-term security of supply, according to the country's association of energy and water industries BDEW.

The meeting was officially branded as an exchange of information rather than an energy summit. German utilities E.ON and RWE, municipal utilities networks Thuega and Trianel and the BDEW joined scientists, power plant construction companies and financial experts, the BDEW said in a press release on Thursday. The engineering company Siemens confirmed that it was also present at the meeting. However, utility EnBW confirmed that they were not invited.

The participants agreed that the solution should ensure as little state interference as possible and as much free market as possible, a BDEW spokesman told ICIS on Thursday.

Policy concerns

The meeting came after criticism of the government from the political opposition, utilities, and transmission system operators for its energy policy. After accelerating Germany's shift to renewable energy about one year ago with the decision to phase out nuclear energy following the Fukushima nuclear disaster, the country is facing unprecedented obstacles.

The issues range from slow grid expansion, both onshore and offshore, and a potential lack of flexible power plant capacity to balance out the fluctuating and ever increasing share of renewable energy power supply (see EDEM 24 February 2012).

The BDEW categorised the challenges into three phases: short-term for the next winter, medium-term for the period between 2014 and 2020, and long-term from 2020 on.

"Each of these phases require a tailor-made solution, which needs to be discussed intensively," BDEW President Hildegard Müeller said.

Among the different solutions being discussed in Germany are subsidy programmes for plants, as well as auctioning capacities in capacity market models (see EDEM 23 April 2012). MD

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