Government Adopts EnWG Amendment Preventing Shutdown of Power Plants

Yesterday, the government adopted an amendment of the German Energy Act (EnWG) that shall allow the Federal Network Agency (BNetzA) to order power plant operators to postpone planned shutdowns of power plants to improve the security of supply in Germany, especially in winter. The winter 2011/2012 was charcterised by an increased number of critical situations in the German power grids following the shutdown of eight nuclear power plants in 2011 in the wake of the nuclear accident in Fukushima, Japan, and the subsequent Germany energy policy shift.

The competent Ministry of Economics and Technology (BMWI) had origininally only published a short press release, but has meanwhile released the full text of the wording aid for the CDU/CSU/FDP amendment proposal.

The press release points out that operators of power plants shall have to notify the Federal Network Agency twelve months prior to a planned shutdown to increase the security of planning and the transmissions system operators’ and the Network Agency’s ability to react. In case a shutdown might endanger the security of supply, BNetzA shall have the right to forbid the shutdown. The power plant owners shall be compensated. Besides, electricity related and gas related provisions shall be more closely aligned to ensure the supply of gas-fired power plants considered crucial for the security of supply in case of supply bottlenecks, the press release says. 

The critical situations in the grid were in part caused by the fact that some operators had interruptible supply contracts. During the cold spells last winter, Russian suppliers therefore did not deliver, so that some gas-fired power plants could not operate, meaning that operating reserves (also from Austria) had to be procured in order to avoid electricity shortages in Southern Germany.

According to newspaper reports by Handelsblatt and others, the government adopted a “wording-aid” (Formulierungshilfe) for an EnWG amendment. The amendment shall be introduced in the ongoing legislative process for an offshore liability scheme that shall also modify the EnWG. While the amendment shall in principle enter into force in January 2013, it remains to be seen from when on the new 12 month period before shutdowns shall apply.

The government’s attempt to secure the security of supply is a consequence of the strong expansion of renewable energy in Germany over the last years. Due to the priority renewable energy is given in the Renewable Energy Act (EEG), the profitability of conventional power plants has declined. Hence conventional power plant operators are increasingly considering to shut down unprofitable plants and are also reviewing plans to build new plants. Conventional power plants remain necessary to balance the intermittent input of renewable energy into the grids (regarding the proposals to institute so-called capacity markets to secure the necessary supply, please see here).

The short press release regarding the short-term measures to stabilise the security of supply that may lead to postponements of shutdowns of older conventional power plants leaves many aspects still unclear. It does not specify for how long BNetzA shall be allowed to postpone a shutdown. While newspapers like Handelsblatt speak of postponements of “up to two years”, the Federal Association of the Energy and Water Industry (BDEW) speaks of an indefinite period. The press release also did not say to what extent and under which conditions the power plant operators shall be compensated. The costs for obliging power plant operators to leave plants online shall be charged to consumers together with the other grid costs, Handelsblatt says, quoting BMWi sources as saying the average household would be faced with additional costs of about EUR 2 per year.

The Federal Association of the Energy and Water Industry (BDEW) deplored that the government was seeking to ensure the security of supply by measures it considers not market-oriented. The government was “again hastily and massively infringing the property and the rights of power plant owners, the business model of the gas sector and the free market”, the association said. BDEW pointed out that it had proposed a market-oriented model to procure the necessary supply, the so-called strategic reserve model, a reversed auction. The association called on members of parliament to review the BDEW proposal against the “emergency legislation” proposed by the government.

The amendment has to go through the parliamentary process. It therefore remains to be seen what the final changes will look like.

[Updated]

Sources: Federal Ministry of Economics and TechnologyBDEWHandelsblatt

Related posts:

2 Responses to “Government Adopts EnWG Amendment Preventing Shutdown of Power Plants”


Comments are currently closed.