Market Designs for a Completely Renewable Power Sector

Winkler, Jenny; Altmann, Matthias

doi:10.1007/s12398-012-0073-5

“…As a result, RES could no long er credibly claim to be niche technologies and power price impacts could no longer be neglected. Against this background, an ongoing debate on market and system integration of RES has come up (e.g., Kopp et al 2012, Winkler andAltmann 2012). The EU Commission has seized this op portunity to cover up their interest in becoming a genuine energy policy player by referring to the principles of the single market and the advantages of EU-wide competition and market integra tion of RES.…”

Section: Basic Design Options For Res Support Instrumentsmentioning

confidence: 99%

The political economy of renewable energy policies in Germany and the EU

Strunz

¹

,

Gawel

²

,

Lehmann

³

2016

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractIn this paper, we employ a public choice perspective to analyze the development of policies for renewable energy sources (RES) in the EU in general and in Germany more specifically. In doing so, we explain the main characteristics of current RES policies in the EU by reference to the self interest driven motivations of voters, stakeholders and political actors. One important puzzle, which we address, is the following: How could effective RES-policies be introduced against the political opposition of fossil-fuel interest groups in the past? Via analyzing the German example in more detail, we show how over time a self-reinforcing interplay of ideological and financial RES support has emerged. Moreover, we demonstrate that observed specific design choices for EU RES policies, such as largely riskless remuneration schemes, high degrees of technology dif ferentiation and decentralized decision-making across Member States, can be traced back to poli ticians' need to balance a variety of partly opposing interests. A major benefit of the presented analysis is that it provides a realistic assessment of the challenges for RES policy reform -any reform effort critically depends on its ability to balance stakeholder interests.

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“…In Germany, for example, the Renewable Energy Sources Act (ErneuerbareEnergien-Gesetz, EEG) aims to increase the share of renewable energy sources in electricity supply to at least 35% by 2020, rising up to 80% by 2050 (sec 1 (2) EEG 2012). With this, RES are rapidly outgrowing their status as niche technologies, moving towards becoming the dominant energy technology in the electricity sector in the long term (Eclareon & Öko-Institut 2012;Winkler & Altmann 2012).…”

Section: Market and System Integration Of Renewable Energies As Condimentioning

confidence: 99%

“…RES electricity production (EWI 2012; Kopp et al 2012;Matthes 2012;Winkler & Altmann 2012;Nestle 2011;Klessmann et al 2008). RES installatons like wind and solar power plants can bid into the market with marginal costs close to zero, thereby reducing market prices and income for all producers.…”

Section: Efficiency and Market Powermentioning

confidence: 99%

Promoting the market and system integration of renewable energies through premium schemes—A case study of the German market premium

Gawel

¹

,

Purkus

²

2013

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in UFZ Discussion Papers Department of Economics 4/2013 Promoting the Market and System Integration of Renewable Energies through Premium Schemes -A Case Study of the German Market PremiumErik Gawel, Alexandra Purkus January 20131 Promoting the Market and System Integration of Renewable Energies through Premium Schemes -A Case Study of the German Market PremiumErik Gawel 1 , Alexandra Purkus Abstract: With the share of renewable energies within the electricity sector rising, improving their market (i.e. inclusion in the allocative processes of the electricity market) and system integration (i.e. enhanced responsibility for grid stability) is of increasing importance. To transform the energy system efficiently while ensuring security of supply, it is necessary to increase the alignment of renewable electricity production with short-and long-term market signals. By offering plant operators a premium on top of the electricity market price, premium schemes represent a potential option for achieving this, and have been implemented by several EU member states. This paper focuses on the case study of the German market premium scheme, which has been adopted as part of the 2012 amendment of the Renewable Energy Sources Act. Building on an evaluation of early experiences, we discuss whether the market premium in its current design improves market and/or system integration, and if it seems suitable in principle to contribute to these aims (effectiveness). Also, potential efficiency gains and additional costs of "administering integration" are discussed (efficiency). While market integration in a narrow sense (i.e. exposing renewables to price risks) is not the purpose of the German premium scheme, it has successfully increased participation in direct marketing. However, windfall profits are high, and the benefits of gradually leading plant operators towards the market are questionable. Incentives for demand-oriented electricity production are established, but they prove insufficient particularly in the case of intermittent renewable energy sources. It seems therefore unlikely that the German market premium scheme in its current form can significantly improve the market and system integration of renewable energies. To conclude, we provide an outlook on alternative designs of premium schemes, and discuss whether they seem better suited for addressing the challenges ahead.

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“…Erneuerbare Energien entwickeln sich damit von Nischentechnologien zur langfristig dominierenden Energieerzeugungsform im Stromsektor (Eclareon u. Öko-Institut 2012;Winkler u. Altmann 2012). Die Ablösung einer auf zentralen, großskaligen Grundlast-Kraftwerken basierenden Energieversorgungsstruktur durch einen Mix aus vorwiegend dezentral erzeugten erneuerbaren Energien, in dem fluktuierende Energiequellen wie Wind und Photovoltaik (PV) eine große Rolle spielen, ist allerdings mit beträchtlichen Herausforderungen für Effizienz und Versorgungssicherheit verbunden (BMU 2011;Neubarth 2011), die nur systemisch gelöst werden können: Neben der Substitution fossiler und nuklearer Energien müssen daher insbesondere komplementärfähige Kraftwerkskapazitäten, der Ausbau von Netzen und Speichern sowie Fortschritte bei Energieeffizienz undeinsparung zum Gelingen der Energiewende beitragen (BMWi u. BMU 2010).…”

Section: Markt-und Systemintegration Erneuerbarer Energien Als Vorausunclassified

“…Anpassungen des gegenwärtigen Förderungsregimes erhöhen ggf. nur die Komplexität und könnten so einen späteren Systemwechsel erschweren (Winkler u. Altmann 2012).…”

Section: Markt-und Systemintegration Erneuerbarer Energien Als Vorausunclassified

Die Marktprämie im EEG 2012: Ein sinnvoller Beitrag zur Markt- und Systemintegration erneuerbarer Energien?

Gawel

¹

,

Purkus

²

2012

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWith the share of renewable energies within the electricty sector rising, improving their market integration (i. e. inclusion in the steering and remuneration processes of the electricity market) and system integration (i. e. enhanced responsibility for grid stability) is of increasing importance. To transform the energy system efficiently while ensuring security of supply, it is necessary to increase the alignment of renewable electricity production with short-and long-term market signals. The German Renewable Energy Sources Act 2012 introduced the market premium to provide market experience to renewable plant operators and incentives for demand-oriented electricity production. Half a year after its introduction, the instrument is already being criticised as ineffective and expensive. Building on early experiences, this article examines whether the market premium in its current design improves market and/or system integration, and if it seems suitable in principle to contribute to these aims (effectiveness). Also, potential efficiency gains and additional costs of "administering integration" are discussed (efficiency). While market integration in a strict sense (i. e. exposing renewables to price risks) is not the purpose of the market premium, it has successfully increased participation in direct marketing. However, additional costs and windfall profits are high, and the benefits of gradually leading plant operators towards the market are questionable. Incentives for demand-oriented electricity production are established, but they prove insufficient particularly in the case of intermittent renewable energy sources. A continuation of the instrument in its current form therefore does not seem recommendable. To conclude, potential alternative solutions are presented.

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Market Designs for a Completely Renewable Power Sector

Cited by 23 publications

References 18 publications

The political economy of renewable energy policies in Germany and the EU

The political economy of renewable energy policies in Germany and the EU

Promoting the market and system integration of renewable energies through premium schemes—A case study of the German market premium

Die Marktprämie im EEG 2012: Ein sinnvoller Beitrag zur Markt- und Systemintegration erneuerbarer Energien?

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