The goals of the federal government are clear: 80 percent of electricity consumption in 2030 should come from renewable energies. But the current electricity market is not made for this. With a fundamental reform, climate-neutral electricity should be offered around the clock in the future.
Germany wants to largely complete its preparations for a reform of the electricity market design this year in order to adapt the system to the planned complete switch to green electricity. Federal Economics Minister Robert Habeck explained that key results would already be presented in a summer report. According to Habeck, the premise for this work on the “heart rhythm system” of the energy transition is the security of supply with electricity at any time of day or night, affordability of electricity for private consumers and companies, the achievement of climate neutrality and the 1.5 degree target as well as the European integration.
Habeck said during the first meeting of the “Climate Neutral Electricity System Platform” in Berlin that it would be a “dangerous operation” if you wanted to readjust the cardiac rhythm system in Germany as the geographic heart chamber of the European electricity system.
“The day today and this platform is extremely important. If you like, the electricity market is the heart rhythm system of the energy transition and with the great importance that electricity will have in the future even more than now, and therefore also of the economic system ‘ Habeck said.
At the platform’s kick-off meeting, stakeholders from politics, science, business and civil society will come together for the first time to discuss the design of a climate-neutral electricity system. The current electricity market design has to be changed, since renewable energy plants do not provide constant amounts of electricity, as coal, nuclear or gas power plants currently do, but produce different amounts depending on the wind and sun. According to federal government plans, by 2030 80 percent of the gross electricity requirement should come from renewable energies. They currently cover 50 percent of the energy requirement. By 2045 at the latest, renewables should cover the entire demand in all sectors.
Habeck emphasized that when reforming the electricity system, the different needs in Europe must also be taken into account. In the future, the power system of some countries, including Germany’s, would be very strongly determined by the fluctuating availability of renewable energies, while this would be less the case in other countries, as they would rely more heavily on energy systems with a base load, such as nuclear power. This is a problem as the European discussions about the electricity market design are not necessarily congruent.
The European Commission would first promptly submit proposals on how to protect the energy market against crises in the short term. But the long-term reform of the electricity market design requires thorough preparation. “I’m not counting on it and I also think it would be wrong if very far-reaching market interventions suddenly came out of the cold kitchen or shot from the hip,” says Habeck. He expects that this discussion at the European level will probably only start “at full speed” after the European elections in 2024.
Germany has set itself the goal of doing most of its work by 2023. “We can already do a lot this year,” said Habeck. A summer report is planned, which should already have “essential” results. The work should then be largely completed with a subsequent winter report. In the debate about the climate-neutral electricity system, the federal government now wants to deal with how cheap electricity prices are ensured, how the right investment signals are set so that investments are made in renewable energies and in hydrogen power plants, and how the system becomes flexible.
“In addition to grid expansion, we need regional control of generation and loads such as electrolysers in the vicinity of offshore areas. In addition, renewable electricity should be able to be used locally instead of being curtailed due to grid bottlenecks. I look forward to the debate in the coming months – with bright minds who contribute their different perspectives,” said Habeck.
According to the Ministry of Economic Affairs, the “Platform for a climate-neutral electricity system” is to discuss options for the further development of the electricity market design in four thematic working groups and develop well-founded proposals. The different perspectives of the players in the electricity market are to be used and brought together in a participatory process.
