06/23/2014, Berlin

BDEW Congress 2014:

Müller: We are seeing movement in energy policy issues - but one EEG reform does not make an Energiewende

Grand Coalition must make further decisions in the coming months

The energy industry expects politicians to make significant decisions this year for the implementation of the Energiewende. "After a long time with no activity, we are now seeing some movement in terms of energy policy. However, one EEG reform alone does not make an Energiewende. The Grand Coalition is faced with other, immense challenges and it is therefore essential that it makes further decisions in the coming months. There is currently a lack of direction nationally and in Europe in terms of important issues such as the conventional energy market, the heating market, the 2030 carbon reduction targets, the expansion of the grid and the cooperation between the Federal and state (Land) governments in Germany." Those were the words of Hildegard Müller, Chairwoman of the management board of the German Association of the Energy and Water Industries, BDEW, from the podium at Germany’s largest industry event. The motto of this year's BDEW Congress, which is taking place from 24 to 26 June in Berlin, is: "New business models for the energy and water industries".

"Within what is possible, companies are developing new business models. However, the freedom to act is hugely limited due to the increase in state regulation in recent years and a lack of a political framework. The German government now has the opportunity to take resolute action and show a willingness to make decisions", stressed Hildegard Müller.

The market-oriented further development of the conventional power station market is, in the opinion of the industry, top priority. "The legislator should create the basis for the introduction of a decentralised capacity market before the end of this year. We have already submitted an industry proposal to this effect. In the next few years, we will be in a situation where we will need such a solution," said Müller. The situation on the conventional power station market is growing ever more acute as renewable energy sources are increasing their market share. So far, applications for 47 power station closures have been received by the German Federal Network Agency (Bundesnetzagentur, BNetzA). The electricity price has fallen by another 13 percent since last summer. The capacity utilisation of gas-fired power stations has fallen in the same period by almost one fifth. 43 percent of all planned new large power stations have now been thrown into doubt. "The number of power stations which can no longer be operated profitably continues to rise. At issue is the security of supply for Germany as a business location in the next 10 to 20 years. For this reason, we are already in need of clarity now about the capacity market, with a view to the investment cycles", explained the chairwoman of the General Executive Management Board of the BDEW.

The course adopted by the German government in the reform of the Renewable Energy Sources Act is generally right. The measures provide a good basis for renewable energies to be gradually introduced to market forces and to include them in assuming responsibility for the system as a whole. The planned rule, to include new, own electricity generation facilities in the EEG levy, is another step in the right direction. "However, further improvements are also necessary. The BDEW continues to advocate a comprehensive protection of legitimate expectations for investors. We have also pointed out many times that the current Renewable Energy Sources Act (EEG) does not enable the achievement of expansion or modernisation targets for hydropower in Germany. Furthermore, the considerable reduction of compensation rates for biogas plants should not be implemented as planned", said Hildegard Müller. She also criticised the attempt, at short notice, to extend the Reserve Power Plant Ordinance (Reservekraftwerksverordnung) through the back door of the Renewable Energy Sources Act. This went against politicians' promises to address all issues in connection with possible capacity mechanisms together with industry.

Hildegard Müller also remarked, in the light of the recently arisen topic of the European law conformity of the EEG reform, "Companies within the energy and water industries need reliable framework conditions for their investments in renewable energies. Therefore, it is essential to have clarity now on the notification of the EEG. It is quite surprising that the EU Commission has presented such fundamental concerns about the EEG at such short notice."

Müller also commented that cost efficiency must be made the central goal this year, not only in the promotion of renewable energies but also in the reduction of greenhouse gas emissions. "If we want to reduce CO2 emissions significantly, Berlin and Brussels need primarily to tackle the heating market as well as transportation. The Federal Government should strengthen its support for energy related building renovation works as well as for measures to improve energy efficiency. The existing opportunities presented by the energy sources natural gas and biomethane in the heating market, electricity supply and transport sector should finally be utilised by the government. The BDEW advocates a new, Europe-wide carbon reduction target of at least 40 percent by 2030", explained Müller, in view of the European Council which is meeting on 26 and 27 June.

Network expansion also belongs on the agenda for the second half of the year. In the related discussion, the distribution network level is afforded far too little attention. However, as over 90 percent of renewable energies are fed-in at the regional and local network level, the distribution networks have a special significance. Müller: "The BDEW has repeatedly pointed out that the investment situation is problematic, in particular for the distribution networks. The current conditions lead to unnecessary delays in the urgently needed network expansion. For this reason, the regulation of incentives needs to be further developed. The BDEW has presented an industry solution in the form of an application process for companies which would be simple to implement."

Müller also remarked that an incomprehensible debate about the necessity and procedure of new transmission networks has once more flared up. "The Federal and Land authorities agreed to a joint, complex and transparent procedure for producing network development plans. It is hard to believe that just a few months later, some state officials are absolving themselves of their responsibility in this regard when conducting the necessary debate on a local level. This shows once more that the coordination between federal and Land authorities must be urgently improved", said Müller.

This year around 1,400 participants from business, politics and science as well as NGOs, are expected once again at the largest energy industry event of the energy and water industries. At the BDEW Congress, speakers including Federal Ministers Sigmar Gabriel and Peter Altmaier, advisor to the US President, John Podesta, EU Commissioner Günther Oettinger, General Electric CEO Jeff Immelt as well as numerous other business leaders, managing directors of municipal utilities and multi-utility companies will address attendees.

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