The German energy market is in a state of flux. Plans for its future development are manifold and the topic is complex. In an interview with en:former, energy market expert Julius Ecke talks all things power import and export, power plant closures, the consequences thereof as well as the future of the German power market and the part new technologies and market models will play moving forward.
en:former: We’re constantly being told that Germany could easily shut down additional coal power plants. Would you agree?
Closing power plants at short notice would quickly lead to a scenario in which Germany would no longer be able to cover its own peak load without foreign support. This would, of course, be a risky move as it would make us dependant on other European countries.
Transporting power across national boarders is becoming increasingly common. In theory, this increases security of supply as there are more available sources. According to the Federal Association of the German Energy and Water Industries, overcapacity of guaranteed supply is set to decrease Europe-wide. Does this, in turn, not jeopardise security of supply?
Imports and exports are fundamentally a good idea for the energy market as they lead to optimised power plant operation and improved electricity trading. However, they can pose a threat to security of supply if we become too reliant on the availability of foreign power plant capacities even during times of peak demand. As such, we should avoid becoming too dependant on foreign power plants which can be subject to technical uncertainties as well as political influences. Indeed, previously available overcapacity from other European countries is dwindling, not least due to a decrease in nuclear power and coal power plants in various neighbouring countries.
What effects would an expedited phase-out of coal-generated power have on the price of electricity?
We would most likely expect to see the price of electricity increase by around five euros per megawatt hour for the end consumer and more so for German industry. However, increased power consumption during a particularly cold winter or due to market fluctuations can cause this figure to rise significantly.
What impact would this have on the climate?
The energy, which would have been generated by decommissioned power plants, would then be provided by German gas-fired and European power plants. This would result in a decrease in emissions, however the interplay of European emissions trading could offset this in the long run.
Great Britain operates a capacity market where power plant operators are paid to keep plants on stand-by in case they are needed. Could this model be an option for Germany? In which case, would this require additional power plants to be built?
Due to the nuclear phase-out and the decrease in coal power plant capacities, we expect to see a call for new power plants from the mid 2020s onwards. As such, we expect the debate centred around ways in which to finance new power plants in Germany to be reopened. It is not yet possible to say which mechanisms will assert themselves. Capacity markets, similar to those used in Britain, would then be an option worth taking into account. An alternative, which is currently favoured by politicians, would be large-scale power plant reserves.
Which technologies will play a part in future?
Current long-term predictions, based on political targets, attribute a pivotal position to almost all technologies (gas power stations, CHP, battery storage, power-to-gas), with their respective strengths. However, their respective relevance increases in phases. As such, it is crucial to avoid overvaluing the importance of ‘new’ technologies to security of supply in the short to medium term, in particular.
Networks are expanding at a slower rate than the development of renewable energies. Virtual power plants are to improve both the generator network and the coordination of their production capacities. What solutions does this technology have to offer?
A number of different concepts are defined by the general term ‘virtual power plant’. Direct marketing has substantially improved the commercialisation of renewable energy in electricity and balancing power markets which has resulted in the successful use of ‘virtual power plants’. Furthermore, improved control of renewable energy within the network can prospectively facilitate improved cost efficiency and a decrease in output cut-offs. So far, however, promising options to avoid network expansion are few and far between.