EEX and EPEX SPOT call for Enhanced Market Integration of Renewable Energies

Joint position paper regarding the EEG revision: Renewables should become more demand-driven

Leipzig / Paris, (PresseBox) - Today, the European Energy Exchange (EEX) and the European power exchange EPEX SPOT published a joint position paper on the reform of the German Renewable Energy Act (EEG). In this paper, they call for stronger market integration of renewable energies which should go beyond today's options for direct marketing. In this respect, EEX and EPEX SPOT agree with the Federal Minister of Economic Affairs and Energy Gabriel's reform proposals, going one step further in their demands for market integration.

Marketing of renewable power, which is more strongly based on the current demand on the wholesale market, constitutes the core element of the proposal by the two exchanges. "At the moment, there can be overproduction of renewable energies during times with low demand. This leads to additional costs which can be avoided through the enhanced coordination of supply and demand", explains Jean-François Conil- Lacoste, CEO of EPEX SPOT. The wholesale price, which efficiently brings together suppliers and buyers, is suitable as a coordination signal. Market integration of renewable energies means that these sources will also base their generation activities on the current power price, which is what conventional power plants are doing already.

The mandatory direct marketing scheme for new plants adopted by the Federal Government constitutes a step in the right direction and, therefore, it is supported by EEX and EPEX SPOT. In the medium term, however, even mandatory direct marketing based on a sliding market premium will not be sufficient to make EEG plants adjust their power generation to the demand. For this reason, it should be based on a fixed market premium determined through a competitive tendering model in the future.

Specifically, EEX and EPEX SPOT propose the remuneration of new plants in accordance with the installed generation capacity under mandatory direct marketing, in addition to the revenue generated on the power market. As an alternative to this, energybased funding for a limited number of subsidised kilowatt hours should also be examined. This scheme would have a similar effect, provided it is implemented in line with the target. In any case, the fixed remuneration rates should be determined in a tendering procedure. The position paper provides a detailed discussion of possible designs of this model.

With the implementation of these approaches, the competitive power price component would be strengthened for all consumers. Today, 15 years after the liberalisation of the power markets, this component accounts for less than one quarter of the power price today. The power transport accounts for a similar share while, at the same time, levies and taxes account for more than one half of the private electricity bill.

As a supplement to this, trading in Guarantees of Origin should be intensified in order to alleviate the burden on consumers: "Separate marketing of the green property of EEG power through Guarantees of Origin is definitely sensible. In return for such an additional source of revenue for plants generating power from renewable resources, the EEG levy could be further reduced", explains Peter Reitz, CEO of EEX.

The EEX and EPEX SPOT position paper is available on their respective websites:

Link EEX: http://www.eex.com/dl/en/about/newsroom/opinions-and-expertreports/68104/file
Link EPEX SPOT: http://www.epexspot.com/en/extras/downloadcenter/position_papers

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