German Industry Association Calls for Overhaul of Energy Policy after Federal Election

In view of rising energy costs in Germany, the Umbrella Organisation of the German Industry BDI has called for an overhaul of the German energy policy immediately after the Federal Election on 22 September 2013, with specific demands and proposals. Key aspects are a change of course regarding the support for renewable energy, a staggered approach regarding the procurement of reserve capacities and a closer alignment of the German energy policy shift towards a renewable energy supply with the EU policy.

The main aspects of BDI’s paper are:

  1. The demand for an integrated approach addressing the following issues: The profitability of power plants ensuring the security of supply, market integration and cost efficiency of renewable energy, incentives for investment in climate protection, financing of the necessary grids, incentives to create more flexible demand.
  2. Market instruments are considered preferable to regulation.
  3. Greater coordination of the German energy policy with the EU policy and the policies of neighbouring countries.
  4. The overall costs of the German energy policy shift have to become the yardstick, as costs for industry and consumers have already exceeded critical limits and are endangering competitiveness. Therefore cost-efficiency and competitiveness have to become decisive factors.
  5. No hasty implementation of a subsidized market for secure electricity. The “energy-only market” has to be strengthened (creating proper incentives) and the integration of the internal energy market pursued. If necessary a strategic reserve for procuring secure energy via auctions in a separate market should be created for a transitional period. Only if these measures are not enough capacity markets for back-up power should be envisaged.
  6. Market integration of renewable energy instead of payment of fixed feed-in tariffs and coordination of growth between the federal republic and the federal states. Renewable power plant owners shall be obliged to market green electricity directly. State support shall be provided by paying a market premium (Marktprämie), which provides for a certain income, but otherwise leaves plant owners subject to market risks. For technologies in its infancy, payments should vary depending on the technology.
  7. The EU ETS has to be established as the main tool for German and European climate policy, which has to be coordinated with the support for renewables and energy efficiency.
  8. Those who cause the need for grid expansion have to bear costs proportionately. Hence owners of renewable power plants have to bear the same grid connection costs as owners of conventional power plants.
  9. The potential for a more flexible demand has to be tapped not only through the use of storage facilities and flexible power plants, but also by demand-side management. The very last related post presents the proposals for an amendment of the Renewable Energy Sources Act (EEG) by the Economics and Environmental Minister made in February 2013.

BDI is not alone in demanding a new energy policy. Regarding similar proposals for an overhaul of the energy policy after the election by the Federal Association of the Energy and Water Industry (BDEW) and the German Engineering Federation (VDMA), please see the blog posts below. Regarding the parties’ energy policy positions please also see below.

Source: BDI

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