BMU: Almost Half of the Renewable Energy Marketed Directly

More and more producers of renewable energy are selling the electricity directly, the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) informed. According to latest data from the transmission system operators (TSOs), almost half of the electricity from renewable sources has been traded entirely via the electricity exchange, and was therefore subject to competition in the wholesale market, BMU said. A year and a half after the EEG amendment (of 2012) and the introduction of the market premium, and only six months after the corresponding management premium ordinance entered into force, considerable progress had been made, the ministry stated.

If renewable power plant operators decide not to claim the fixed feed-in tariffs pursuant to the Renewable Energy Sources Act (EEG), but sell the electricity generated themselves, they are entitled to a market premium in addition to the revenue obtained by the sale of the electricity (Section 33g EEG). It is calculated as the difference between the EEG feed-in tariff for the respective renewable energy source and the monthly ex-post average price at the energy exchange plus a management premium that differs with respect to the various forms of renewable energy. The management premium covers transactional costs like the cost for the listing at the energy exchange and other trading related costs as well as the costs for forecast errors regarding the actual amount of energy fed into the grid. With effect of 1 January 2013 an ordinance cutting the management premiums for wind and solar power, which had been criticised as too high, entered into force.

The market premium provided the incentive to feed in electricity at times of high demand, i.e. when the market price was exceeding the average price, BMU pointed out. In return producers had to act like any other operator of a conventional power plant, i.e. sell the electricity themselves or with the help of specialised traders, prepare forecasts, inform about load time tables (Fahrpläne) and be accountable for them. Besides, operators of biomass plants offered operating reserve. In the medium-term they would help to avoid the minimum feed-in (must run) of conventional power plants, BMU said. According to the ministry, roughly 70 companies and electricity traders were involved in direct marketing of electricity from renewable sources. Producers of green electricity were increasingly reacting to negative prices at the wholesale market and curtailed plants in this event, BMU said. On 16 June 2013, when excess supply send electricity prices into negative territory, renewable power plants with a capacity of more than 3,200 MW (the equivalent of 1,500 wind power plants or three large lignite-fired power plants) cut back production, reportedly saving millions of Euros, BMU stressed.

According to data from www.eeg-kwk.net (the internet site of the German TSOs showing EEG related payments and revenue), the TSOs paid EUR 2,922,692,993.12 in 2012 for the premiums pursuant to Sections 33g EEG (market premium) and 33i EEG (so-called flexibility premium for biogas). Including June 2013 the TSOs have so far paid EUR 2,781,529,689.22 in 2013 for the market and flexibility premium, i.e. almost the sum they paid for the whole of 2012.

The market and management premium, however, contribute to the rising EEG related costs for which consumers have to pay with the so-called EEG surcharge that currently amounts to 5.227 ct/kWh and is likely to rise further. In February 2013 Economics Minister Rösler and Environment Minister Altmaier proposed to freeze the EEG surcharge for 2014 and thereafter introduce a cap to further increases. In order to limit EEG related costs, they inter alia proposed that EEG power plants which start operating as of 1 August 2013 shall be obliged to market the electricity themselves (mandatory direct marketing), except for plants with a capacity of below 150 kW. At the same time the management premium that is part of the direct marketing premium pursuant to Section 33g EEG should be abolished. These plans were not be implemented as the government failed to reach an agreement with the federal states, many of which are ruled by the opposition parties.

Source: Federal Ministry for the Environment, Nature Conservation and Nuclear Safety

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