Initiativkreis Ruhr Committed to Energiewende, But Demands Adjustments

Initiativkreis Ruhr (IR), an association of 66  leading companies in the Ruhr area (Ruhrgebiet) handed over an update of a position paper on the German energy transition towards a mainly renewable energy supply (Energiewende) to Federal Economic Affairs and and Energy Minister Sigmar Gabriel on 8 March 2014. “We are committed to the Energiewende”, Dr. Klaus Engel, head of  IR, said. “For our companies to be able to influence and shape the Energiewende without falling victim, we believe adjustments are necessary”, he added.

1. Key Demands of the 2013 Paper

The key demands of the 2013 paper were:

  • Competitive energy prices;
  • Security of supply;
  • Fair burden-sharing of the financial consequences of the Energiewende.

2. 2014 Update

IR points out that its demands are not restricted to the general conditions of the Energiewende, but shall also provide input for a market design of the future. The association also stresses that a market-oriented transition was a key prerequisite for a successful economic development of the Ruhr area (named after the river Ruhr), the largest industrial area in Europe and its “energy centre” (IR was founded in 1989 to promote structural change in the area).

a) Reliable Master Plan for the Energiewende

IR calls for a reliable master plan for the Energiewende that keeps energy prices on a competitive level and helps North Rhine-Westphalia (of which the Ruhr area is a part) to remain an industrial location, securing jobs in the region. This includes a fairer regional distribution of the financial consequences of the promotion of renewable energy sources (within Germany), IR says.

Assuming that renewable energy sources will be profitable in the medium term without receiving financial support benefitting future generations, IR recommends to examine a scheme that distributes the current financial burden fairly over the generations.

b) Holistic Approach

The Energiewende was a large-scale project for the transformation of the whole energy market infrastructure that included the integration of renewable energy sources, climate policy, the promotion of energy efficiency and solutions for the storage of energy, IR says. The association calls a coordinated approach of the growth of renewables and grid expansion between the German federation and the federal states that also includes the European dimension essential.

c) Cost-efficient, Step-by-step Integration of Renewables into Energy Markets

In line with the government’s latest draft for a reform of the Renewable Energy Sources Act (EEG), IR calls for mandatory direct marketing of energy generated by renewable power plants and says that financial support had to be provided by fixed premiums (in addition to the revenue obtained by the sale of green energy), the amount of which was established by auctions (regarding the EEG reform, direct marketing and auctioning, please see the first related blog posts below).

By 2017 at the latest, IR wants all climate protection tools to be aligned, saying that conflicting provisions in the European Emissions Trading Scheme (ETS) and the EEG should be eliminated.

Due to the financial burden created by the EEG (which has consumers pay a so-called EEG surcharge that adds considerably to the electricity costs) exemptions for energy-intensive companies subject to international competition were necessary IR says (regarding the investigation the EU Commission opened into the existing EEG surcharge exemptions for energy intensive companies, please click here. You will find more information on the modifications planned in the EEG reform in the first related blog posts).

d) Renewable Growth Has to Go Hand-in-Hand with Grid and Storage Expansion

Renewable growth has to go hand-in-hand with grid expansion, which includes more interconnectors with neighbouring countries, and storage expansion, IR demands.

e) Promotion of Energy Efficiency

To keep the costs of the Energiewende under control, measures to promote more energy-efficiency in the building and the heating sector have to be implemented when transposing the European Energy Efficiency Directive, IR says.

f) Strategic Reserve

To overcome scarce supply in the transition process towards a renewable energy supply (e.g. when renewable power plants do not deliver power due to weather conditions) IR proposes a Strategic Reserve made up of energy provided by conventional power plants and flexible loads, which shall be organised as a competitive scheme and be activated only under strict conditions.

In late September 2013, the Federal Association of the Energy and Water Industry (BDEW) presented a proposal for an energy market reform, which also included the creation of a decentralised German capacity market. To have time to prepare for the new regulatory framework, BDEW suggested to introduce a Strategic Reserve Model, it had already proposed in the past (for more information, please see here) for a transitional period.

e) European Dimension

IR advocates to see the German Energiewende in the broader European context, making use of over capacities in the electricity market (deemed to last until the end of the decade) by coordinating the expansion of transmission grids and the construction of interconnectors.

IR also wants to tap flexible industrial demand and strengthen the existing market for operating reserve.

To come to an efficient and cost-effective supply of renewable energy, IR suggests to harmonise the support schemes for renewable energy in Europe and engage in greater cooperation.

Besides IR advocates for a harmonised methodology for establishing the guaranteed capacity (gesicherte Leistung) and the operating reserves needed.

IR also says that the introduction of a cost-efficient, technology-open capacity market to secure generation adequacy should be examined, outlining that a capacity market should exclusively be aimed at the security of supply, providing a cost-efficient solution. In its coalition agreement the ruling Conservative/Social Democrat government also stated that while capacities sufficed at the present date, a capacity market should be developed in the medium term. It shall be cost-efficient, competitive, technology-open and in compliance with EU law.

Source: Initiativkreis Ruhr

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