Electricity market

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News German Market

Electricity Market Green Paper: TenneT proposal for structure of capacity reserve

  • Study describes specific structure of a capacity reserve ('safety net') as final safe-guard against possible supply congestions for the first time.
  • Electricity market design: TenneT declares itself in favour of market-oriented solu-tion instead of capacity mechanisms

With regard to the discussion of the future electricity market design, transmission system operator TenneT today confirmed its conviction that market-oriented solutions are preferable to capacity mechanisms. Ten-neT welcomed the fact that this is taken into account in the electricity market Green Paper issued by the German Federal Ministry of Economics. "An additional cornerstone of such a sustainable electricity market design is a temporary generation capacity reserve which functions like a safety net. It guarantees security of supply in the current transition phase of the energy transition, and at the same time it supports a competition-oriented electricity market. This means that it is considerably more efficient and more economic than a capacity market in the end," said Urban Keussen, chairman of the TenneT TSO GmbH executive board. A study from international consulting company E-Bridge, commissioned by TenneT, shows for the first time how such a 'safety net' of capacity reserve can be designed sensibly. "With this, we want to play our part in the ongoing Green Paper process which is dealing with the future electricity market design. "As a transmis-sion system operator, it is important to us that the supply of electricity can be ensured every minute of the day at a sufficient quantity and that the system stability is guaranteed. The 'safety net' can contribute to this", said Mr Keussen.

According to the study, the 'safety net' is not intended to be a permanent feature, but is to be available over the transition period until the electricity market has evened itself out. Unlike the grid reserve which is cur-rently being used in order to counteract grid congestions due to high feed-in levels, the 'safety net' reserves are primarily intended to compensate generation deficits caused by lack of feed-in from renewable ener-gies, and therefore ensure the supply. These will only be used at a point when all the other measures such as the flexibility already present in the market and the available control power for stabilising the grid are insufficient to counteract capacity congestions. The 'safety net' will then safeguard the system stability and prevent controlled switch-offs of consumers in individual areas. This means that it only intervenes in the electricity market operation as a safeguard and leaves it to the market parties to take up the most effective measures for guaranteeing security of supply. In order to provide an incentive to the market participants not to use the 'safety net' if at all possible, and to use the electricity market's facilities in the best possible way, the market participants who actually make use of the 'safety net' reserve are to carry the costs for this in principle. You can download the study at www.tennet.eu/de.

TenneT presented a study on sustainable electricity market design as early as the beginning of 2014, which was drawn up by consulting company E-Bridge on behalf of the transmission system operator. Some of the proposals contained in this study have been taken up by politics in the meantime and are also reflected in the Green Paper on the electricity market design of the German Federal Ministry of Economics.

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