The Electricity Market Act
The third law which was passed last summer is intended to maintain a stable balance between supply and demand on the electricity market. This will become increasingly important as the proportion of electricity obtained from weather-dependent sources becomes greater. The act makes it compulsory for electricity traders only to sell electricity that they are feeding into the grid at the same time. This new regulation will lead to investment in new infrastructure over the next few years – electricity generating plants that have a high level of customer demand will be the main winners. In this way, market forces will drive further expansion of renewable power plants in Germany.
The background to the current comprehensive changes in the law is the success encountered in the changeover in energy policy so far. In 2015, 29 per cent of the electricity produced in Germany came from renewable energy sources, making the country a global pioneer in this field. Wind energy, including both onshore and offshore, supplies the greatest share of the market (12.3 per cent).
Germany’s first offshore wind farm Alpha Ventus started running six years ago and represents a significant milestone. Wind energy will continue to play a decisive role in the Energiewende (energy transition). By 2050, the aim is to have 80 per cent of electricity consumption coming from renewables. “Of course, this further expansion brings continued opportunities for manufacturers, suppliers and for the companies who service and maintain the growing number of plants,” says Deloitte consultant Einheilig. State funding programs will also provide an important incentive for future development.
Until then, producers and network operators will still need to make some fine adjustments in order to be able to guarantee supply at any time with the growing proportion of renewable energies. Experts consider that, in the long term, it will be the seasonal rather than the daily fluctuations in renewable energy production that will bring the biggest challenge. “In autumn and winter, it is dark for a longer period and, if there is also no wind, electricity production will drop noticeably,” says think-tank expert Podewils.
At such times, conventional electricity suppliers would have to step in as they are in a position to generate flexibly and efficiently. “That is often not achievable with traditional large power plants,” says Podewils, who suggests an alternative might be “modular-driven gas power plants which work with many small engines rather than one large turbine.” This represents another emerging niche in the market and an attractive investment opportunity.