BDEW Congress 2013 “Markets and Systems in Transition”
Industry expects politicians to make decisions after the German election on the energy market of the future
Müller: we have proposed solutions and can provide more detail if necessary / record numbers expected to take part in the largest industry gathering
The motto of this year’s BDEW Congress is “Markets and Systems in Transition”. “The design of a sustainable energy market of the future is the dominant topic. The economic situation for our member companies is already very difficult now. Increasingly, business models are proving to be no longer sustainable. Many power stations across Germany can no longer be operated at a profit. The more time passes, the more obvious it becomes that the present market design is reaching its limits. Ever more fundamental questions on the future of energy provision and energy providers are being raised. After the German general election, we expect answers and decisions from the German government, however it is composed, on the development of a sustainable energy market. The industry has already proposed solutions and is prepared to provide greater detail as necessary.” These were the words of Hildegard Müller, Chairwoman of the General Executive Management Board of the German Association of Energy and Water Industries (Bundesverband der Energie- und Wasserwirtschaft - BDEW), in the run-up to the Congress in Berlin.
There will be no honeymoon period for the new government. On the contrary, the important issues have all been brought into the open and are all known. Müller mentioned five crucial points which will have to be implemented by the government incrementally following the German general election: “Firstly, we need an improved coordination between the federal and state governments as well as a sensible project management. The quality of the project management will be decisive in determining whether the energy transition (Energiewende) is a success or failure.”
Secondly, Müller believes the further development of the energy supply system must be undertaken in a market oriented manner. “The legislator has intervened in the market time and again over the past few years. This has meant that companies and investors have been unsettled. Scope for entrepreneurial actions has to be created once more so that new business models can emerge. New business models are essential to the success of the energy transition”, explained Müller. For the direct further development of the conventional market system, BDEW has proposed the government introduce a strategic reserve. This reserve, as a market-like instrument, would contribute to ensuring security of supply.
Furthermore, the long-term development of the energy market, which has today been called into question by the dynamic deployment of renewable energies, to a market design of the future. “BDEW has drawn up some general requirements for capacity mechanisms. At its core, it is about finding a capacity mechanism which focuses on maintaining the security of supply”, stressed Müller.
Thirdly, the support for renewable energies has to be further developed. BDEW has prepared some initial requirements for the desired exchange of roles between conventional energy sources and renewable energies. “Three things are essential for a reform of renewable energy support: firstly, a binding direct marketing of all new plants should be introduced. Secondly, we need a coordinated deployment roadmap from the federal and state governments. Thirdly, we require stronger control elements in the deployment of renewable energies also in light of the fact that we will have to limit the overall costs to an even greater extent in the future and react even faster to undesirable trends”, stated Hildegard Müller. The desired exchange of roles has to be underpinned with specific ideas as to a target model.
The integration of renewable energies into the grid particularly affects the distribution networks. Müller commented, “Considerable investment is necessary for that to happen. Thus and fourthly, the regulation policy needs to be amended for the necessary extension and conversion of the network infrastructure. This applies in particular in respect of the distribution network.” It is necessary in the short term, to remove the existing delay in the recognition of investments in the low and medium voltage levels. In order to be able to plan and finance projects reliably, in future investments and the deployment of a smart-grid infrastructure should be recognised accordingly.
“Fifth, there has to be more focus on the market for heating as a significant factor in the realisation of the energy and climate policy objectives.” stressed Müller. She further explained that the German government wants to achieve almost half of the desired reduction in carbon-dioxide emissions. “As much as 40% of the final energy consumption and around a third of the CO2 emissions in Germany can be attributed to the heating market. Around two thirds of the heating systems in buildings are not up to modern standards. The CO2 reduction and energy saving potential is thus consequently high. In particular, natural gas system solutions such as natural gas fired condenser boiler technology play a key role. They are the drivers for quick, effective and affordable reductions in CO2 and improvements in efficiency in existing systems. Gas-based heating technologies offer the cheapest CO2 avoidance costs and thus represent an efficient form of climate protection. Natural gas is an enabler of the energy transition – not only in the heating market”, said the Chairwoman of the General Executive Management Board.
“At the same time, one must consider who can and should pay for this”, stressed Müller. The estimated total of state taxes and levies on electricity prices will, according to BDEW estimates, this year reach the record amount of 31.6 billion Euros, thus exceeding, for the first time, the level of 50 percent of the electricity prices for household customers. “We have to find a way, with all parties involved, to curb the total costs. Economic efficiency is an indispensible factor for the industrial nation Germany, in the achievement of its ecological aims”, said Müller.
A record number of visitors is expected this year at the largest industry trade show for the energy and water industries: more than 1,500 guests from politics, economics and science have registered for the event. Amongst the expected guests will be German Chancellor, Angela Merkel, SPD-chancellor candidate, Peer Steinbrück, EU Commissioner, Günther Oettinger, German Federal Minister for the Environment, Peter Altmaier, German Federal Minister of Economics, Philipp Rösler and Jürgen Trittin, the leading candidate of Bündnis 90/Die Grünen. Over 100 journalists from Germany and from abroad will be reporting from the event.