President of Cartel Office Calls for Change in Support Program for Renewable Energy

Andreas Mundt, president of the German Cartel Office, said promoting renewable energy should become more market-oriented. Admitting unlimited renewable energy into the German grid at fixed feed-in tariffs was incompatible with the concept of a free market.

In Germany the Renewable Energy Sources Act (Erneuerbare Energien Gesetz – EEG) provides for fixed feed-in tariffs for renewable energy.

Feed-in tariffs, especially those for solar energy have been much under discussion in the recent past. On 1 July 2010 a reduction of the solar feed-in tariffs became effective. With PV capacity believed to rise steadily, some industry experts criticize tariffs as still too high.

Feed-in tariffs that had nothing to do with market prices lead to the odd effect of negatives prices at the energy exchange, Mr Mundt said. Negative prices occur when too much power has to be fed into the grid, so that consumers who are “buying” electricity are actually being paid for it. Grid operators can recover the costs for renewable energy by charging consumers a reallocation fee. The total amount of these fees is estimated to amount to EUR 9 billion this year and EUR 15 billion next year. Customers and companies were soon at their financial limits, Mr Mundt warned.  The comparatively low share of renewables in the electricity consumption (renewables accounted for 16.3% of the electricity consumption in 2009) were proof that the feed-in tariffs in their current form did not provide satisfactory results. More market-oriented elements in the promotion scheme would help improve results and limit cost increases, he said. As a first step, Mr Mundt suggested pegging the feed-in tariffs to prices at the energy exchange.

Mr Mundt criticized the government for wasting an opportunity to create more competition in the energy market when agreeing to extend the operating time of nuclear power plants without an obligation for the operators to sell off other capacities, e.g. coal-fired plants. In view of the of plans of the big four utilities to expand in the renewables sector, especially the offshore wind power market, they would further enlarge their dominant position, Mr Mundt warned.

The government and the Cartel Office had the obligation to use the remaining options to create more competition, Mr Mundt stressed. In late autum the results of a thorough market survey shall be available, he announced. He said he hoped for an improved permanent monitoring system of market activities by a new “Market Transparency Office” located with the Cartel Office. In close cooperation with the Federal Cartel Office and the supervisory authority for the energy exchange, the new office shall obtain data about energy production wholesale prices in real time. “This will create the necessary pressure on companies to act in accordance with the relevant laws, especially competition law”, Mr Mundt said.

Source: FAZ

Related posts: