Strengthening Markets, Securing Supply Conceptual Framework for Implementing a Strategic Reserve in Germany

8/13/2019 Strengthening Markets, Securing Supply Conceptual Framework for Implementing a Strategic Reserve in Germany

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Strengthening Markets, Securing Supply

Conceptual Framework for Implementing a

Strategic Reserve in Germany

Report on the Outcomes of the Expert Dialogue on the-

Strategic Reserve-

May 2013-


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Executive Summary

The energy supply system in ermany an! Europe is un!ergoing a transformation

process "hich em#races several aspects$ the further !evelopment of the European

internal electricity mar%et& the phasing out of nuclear po"er in ermany #y 2022& an!

the increasing integration of rene"a#le energies' Over the coming years& this may

"ell lea! to uncertainties for investors& exacer#ate! #y the current !e#ate a#out

changes in mar%et !esign' Even in a fun!amentally "ell(functioning electricity

mar%et& these uncertainties coul! ) at least for a transitional perio! ) !elay

investments in ne" po"er plants an! slo" !o"n the flexi#ilisation of !eman!' *nor!er to ensure a continue! high level of supply security nonetheless& a mechanism

%no"n as the +strategic reserve, shoul! #e !eploye! !uring the transition process in

or!er to safeguar! the electricity supply'

The fun!amental concept of a strategic reserve is that the reserve capacities are

a!!itional to& an! stan! alongsi!e& the capacities existing in the normal electricity

mar%et& thus increasing supply security' The strategic reserve capacities "oul! only

#e activate! in scarcity situations in "hich the po"er exchange lac%s sufficient

capacity to meet !eman!' The effect of the strategic reserve is to provi!e security of

supply' *t is simple to implement& re-uires little regulation& maintains the functionality

of the electricity mar%et& incurs relatively lo" cost an! is highly compati#le "ith the

E. internal mar%et' This paper !efines the conceptual frame"or% implementing a

strategic reserve in ermany'


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Contents

' *ntro!uction''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''1-

' /ontext$ supply security in a changing energy system ''''''''''''''''''''''''''''''''''''''''''''1-

' mar%et !esign for the transformation''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''-

' Structuring the strategic reserve''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''-

' 5enefits of the strategic reserve ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''13-

References ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''16-


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1. Introduction

The future !esign of the electricity mar%et is currently the su#7ect of intense !e#ate

among energy in!ustry experts' One option for ensuring the security of electricity

supply is to intro!uce a +strategic reserve,' *n accor!ance "ith this mo!el& a small

num#er of reserve po"er plants "oul! #e maintaine! outsi!e the mar%et an! "oul!

only #e activate! in exceptional circumstances "hen the electricity mar%et is una#le

to meet !eman!' Recently& a num#er of concepts& "hich vary on points of !etail&

have #een presente! for !eveloping a strategic reserve' *n or!er to translate these

concepts into a ro#ust& "i!ely accepte! an! "or%a#le proposal& the erman 8e!eral

Ministry for the Environment& 9ature /onservation an! 9uclear Safety :5M.; invite!

%ey sta%ehol!ers involve! in this !e#ate to engage in a !ialogue process' This paper

presents the outcomes of this expert !ialogue "hich involve! the erman

ssociation of Energy an!


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:energy(only mar%et;& these uncertainties coul! ) at least for a transitional perio! )

!elay investments' The strategic reserve can #e !eploye! to guarantee electricity

supply security at its usual high level !uring this perio!'

Development of power generation capacities

The prevailing vie" is that sufficient generation capacities are availa#le in the

European electricity mar%et for the short to me!ium term :i'e' to aroun! 201@;'

Aie"e! from a purely national perspective& ermany ) at least on paper ) "ill not

face any short( to me!ium(term capacity pro#lems& even if no ne" po"er plants are

#uilt !uring this perio!' *n!ee!& accor!ing to figures from the 8e!eral 9et"or%

gency& #ase! on current plans& ermany "ill gain an a!!itional 4 < of installe!

po"er plant capacity #et"een 2013 an! 2014 !espite the po"er plant closures'1

>o"ever& in vie" of the increasing coupling of national electricity mar%ets in the E.Bs

internal mar%et& supply security must& in practice& #e consi!ere! from a #roa!er& i'e'

European& perspective'

The !evelopment of po"er generation capacities from 201@ on"ar!s is more !ifficult

to pre!ict' 8or example& nuclear po"er plants "ith an installe! net capacity of more

than < are !ue to #e ta%en off the erman gri! #et"een 201@ an! 2022'9onetheless& to meet the longer(term po"er plant !eman! ) given the right economic

con!itions ) numerous options are availa#le regar!ing generation an! loa!

management' The 8e!eral 9et"or% gency estimates that conventional po"er plant

pro7ects amounting to aroun! 32 < are currently planne! in ermany :inclu!ing

pump storage& #ut exclu!ing pro7ects un!er construction;'2 ccor!ing to information

from the 5DE


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management& energy efficiency an! European gri! expansion coul! also help to-

re!uce the capacity re-uirement'

enerally spea%ing& ho"ever& "hen assessing supply security& it must #e #orne in

min! that over the coming years& other as yet unplanne! closures coul! occur for

economic reasons& in a!!ition to the measures aime! at re!ucing overcapacity' *t is

therefore sensi#le to monitor !evelopments very closely an! to a!opt a precautionary

approach #y esta#lishing a strategic reserve'

Grid bottlenecks in southern Germany

The sometimes tense situation in southern ermany& particularly in 5avaria an!

5a!en(


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po"er plant fleet' Most of ermanyBs existing po"er plant fleet !ates #ac% to a time

"hen fluctuating rene"a#le energies provi!e! only a small proportion of the

electricity supply' /ompare! to a cost(optimise! structure& it has too many #ase( an!

me!ium(loa! po"er plants an! not enough pea%(loa! po"er plants' 8or that reason&

the electricity prices are often set #y po"er plants "ith very lo" marginal costs' *n the

long term& ho"ever& the po"er plant structure "ill have to a!apt to mar%et forces an!

the price level "ill sta#ilise at an e-uili#rium level :cf' Ecofys 2012#& p' 10 ff';'

further cause of the current lo" prices on the po"er exchange is the su#stantial

overcapacity in the electricity mar%et' The reasons for this inclu!e the increasing

coupling of the European electricity mar%ets& the fact that ne" capacities have come

on(stream an! the on(going economic slo"!o"n in Europe' 8urthermore& partly in

response to the !e#ate a#out the intro!uction of capacity mechanisms& sche!ule!

po"er plant closures in ermany are currently #eing postpone!' *n conse-uence&

more po"er plants are operating in the mar%et than are re-uire! for efficient loa!

coverage' This has a !etrimental effect on the economic efficiency of ne" po"er

plants& storage facilities an! loa! management& for example'

*n vie" of the mechanisms that& generally spea%ing& help to sta#ilise electricity prices&

the -uestion is "hether the existing electricity mar%et ) once overcapacity has #een

re!uce! an! the structure of the po"er plant fleet has #een a!apte! ) "ill again offer

sufficient incentives for investment& or "hether a fun!amental failure of the mar%et is

to #e expecte!'

Functionality of the energy-only market

The functionality of the energy(only mar%et is an issue "hich cannot yet #e fully

resolve!' *t !epen!s on a num#er of !evelopments that may or may not ta%e place

!uring the on(going transformation of the energy system' Over recent years& the

!esign of the electricity mar%et has !evelope! further in %ey respects& mainly as a

result of the flexi#ilisation of the control(energy mar%et& mar%et coupling "ith a

num#er of neigh#ouring countries an! a more flexi#le operation of conventional

po"er plants' This has facilitate! the integration of rene"a#le energies into the

po"er supply& "ith the rene"a#les share no" amounting to more than 20 per cent'

Due to the rene"a#les expansion& the re-uirement for #ase(an! me!ium(loa! po"er plants isre!uce! an! the re-uirement for pea%(loa! :i'e' pea%ing; po"er plants increases'


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*n principle& in scarcity situations& a "ell(functioning energy(only mar%et can set

prices at a sufficiently high level that they provi!e incentives for investments& for

example in a!!itional generation capacity& storage technologies or loa!

management' ey prere-uisites for a sustaina#le an! "ell(functioning energy(only

mar%et are ) #esi!es the avoi!ance of politically motivate! intervention in a

competitive mar%et ) sufficient elasticity of !eman! an! a "illingness to accept price

spi%es' The impact of price spi%es on final consumer prices is very limite!& #ut they

sen! out an important signal an! act as an incentive for all pro!ucers an! consumers

to align their investment an! consumption !ecisions to the re-uirements of a future

energy supply system "hich accommo!ates a high proportion of rene"a#le energies'

*f flexi#le !eman! pushes the price a#ove the marginal po"er plantsB generation

costs& all po"er plants ) inclu!ing those "ith the highest marginal costs ) achieve

revenue that is sufficient to cover their fixe! costs'

Demand elasticity

Some ma7or electricity consumers are alrea!y a!apting their !eman! to the

"holesale price to some extent' /ompare! "ith the theoretical potential& ho"ever&

the !eman! elasticity currently #eing achieve! is still relatively lo"& #ut this is mainly

!ue to the fact that the current "holesale po"er prices offer little incentive for further

flexi#ilisation of !eman!' Due to overcapacity& prices are lo" an! price spi%es are a

rare occurrence& so prices offer very little economic incentive to re!uce consumption'

>o"ever& it is safe to assume that ma7or electricity consumers are a#le to a!apt their

!eman! relatively -uic%ly if mar%et prices #egin to fluctuate more strongly in future'

To "hat extent can more !eman! elasticity in response to price signals #e

anticipate!J That is still an open -uestion' t present& there is a lac% of relia#le !ata

on the technical an! economic potential of loa! management' enerally spea%ing&

ho"ever& it is clear that the share of loa!(metere! consumption in ermany amounts

to more than 0 per cent an! that this customer group generally has metering

e-uipment in place to ena#le them to a!apt their consumption in line "ith their o"n

"illingness to pay' *n the me!ium an! long term& smart metering coul! also

encourage final consumers "hose consumption is not currently loa!(metere! to

#ecome active participants in the mar%ets& "hich "oul! also contri#ute to the further

flexi#ilisation of !eman!'

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3. A market design or the transormation

*n or!er to safeguar! the transformation of the electricity supply system& the

electricity mar%et shoul! #e !evelope! further on a progressive #asis' The concept

consists of t"o pillars$ firstly& optimisation of the electricity mar%et& an! secon!ly& the

intro!uction of a strategic reserve as a safety net for the electricity mar%et'

Optimising the electricity market

5y optimising the electricity mar%et over the coming years& it is possi#le to create

stronger incentives for investment in ne" po"er plants& storage facilities an! loa!

management systems' 8urthermore& it is #ecoming increasingly important to ensure

that consumption an! generation respon! -uic%ly an! flexi#ly to the changes insupply that result from increase! fee!(in of electricity from fluctuating rene"a#le

sources' *n their report to the erman /hancellor& energy in!ustry sta%ehol!ers

#elonging to the Rene"a#le Energies =latform set out numerous options that have

the potential to increase flexi#ility in the existing electricity supply system'7

To!ayIs electricity mar%et provi!es incentives for the expansion of elasticity of supply

an! !eman!& !oing so through increase! volatility of po"er prices an! through the

control(energy mar%ets' >o"ever& it is crucial to ensure that this incentive reaches as

many electricity pro!ucers an! consumers as possi#le "ithout !istortions an! that all

mar%et actors have e-ual opportunity to generate revenue #y mar%eting these more

flexi#le options' t present& ho"ever& regulatory impe!iments continue to hamper this

flexi#le response #y mar%et participants in some cases' 5y removing these

o#stacles& the functionality of the electricity mar%et can #e optimise! for supply

security an! rene"a#les integration' Examples of potential measures are liste!

#elo"$

6=lattform Erneuer#are Energien& 5ericht !er 3 *ntera%tion an !en Steuerungs%reis !er =lattform

Erneuer#are Energien& !ie 5un!es%anFlerin un! !ie MinisterprKsi!entinnen un! MinisterprKsi!enten!er Kn!er' 14'10'2012 :"""'#mu'!eLp21@; L Report #y


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The further strengthening of the E. internal mar%et through mar%et coupling-an! European gri! expansion can increase supply security an! efficiency

through large(scale compensatory effects'

8urther flexi#ilisation of the control(energy mar%ets ma%es it easier for loa!

management& storage options an! rene"a#le energy systems to ma%e a

contri#ution'

8urther !evelopment of regulatory an! remuneration structures can remove

o#stacles to loa! management& particularly for in!ustrial customers'

*mplementation of smart metering stan!ar!s an! alternatives to procurement

processes #ase! on a stan!ar! loa! profile can provi!e incentives for the use

of loa! management #y small(scale consumers'

The strategic reserve as a safety net

The #asic concept of the strategic reserve is that a specifie! amount of generation

capacity shoul! #e ma!e up of capacity procure! centrally through a ten!ering

proce!ure& #ut shoul! not #e !eploye! in the regular electricity mar%et' These

capacities are then availa#le as a reserve an! are a!!itional to the capacities

existing in the electricity mar%et& thus increasing supply security :ensuring electricitysupply;' The strategic reserve capacities are only activate! in situations in "hich the

electricity mar%et cannot meet !eman!& i'e' "hen there is no mar%et clearance' This

coul! occur& for example& if& in exceptional situations& high !eman! coinci!es "ith a

large num#er of unsche!ule! shut!o"ns of generation facilities in ermany an!

neigh#ouring countries'

The reason "hy the strategic reserve is not !eploye! in the mar%et is #ecause the

aim is to avoi! fee!#ac% effects on the electricity mar%et' *f strategic reserve

capacities that receive special support "ere to participate regularly in the mar%et&

other po"er plants an! loa! management systems "oul! #e s-ueeFe! out to the

!etriment of supply security' *t "oul! also put investments in the mar%et at ris%&

potentially increasing the nee! for a!!itional capacity'

The intro!uction of the strategic reserve !oes not constitute a ra!ical reform of the

current mar%et !esign& #ut merely a!!s to it' The pricing mechanisms an! efficient

incentives existing in the energy(only mar%et are fully retaine!' The incentives for

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investment an! for generation an! consumption !ecisions continue to #e create! #y -

the energy(only mar%et'

The strategic reserve thus acts as an a!!itional safety net for electricity supply' *t can

increase security of supply an! ) !espite the existing uncertainties in the electricity

mar%et ) can provi!e sufficient po"er plant capacity in a cost(effective manner in line

"ith mar%et economic principles'

ermany alrea!y has reserve electricity plant capacity ) %no"n as the net"or%

reserve& or the "inter reserve'


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The current !elays affecting the sche!ule! !ecommissioning of po"er plants-

are en!e! an! overcapacity is re!uce!&

The net"or% reserve for southern ermany can #e progressively integrate!

into the strategic reserve'

!. Structuring the strategic reserve

The strategic reserve can #e intro!uce! very -uic%ly' The reserve capacities can #e

progressively !evelope! over the coming years through a competitive procurement

process on the #asis of existing plants sche!ule! for !ecommissioning as "ell as

ne" plants' The follo"ing parameters must #e esta#lishe!$

Deployment of the strategic reserve in the electricity market

The strategic reserve capacities "ill #e activate! solely in exceptional circumstances

"hen the !eman! cannot #e met #y the !ay(ahea! mar%et on the po"er exchange

:E=EN S=OT;' To that en!& the capacity of the strategic reserve coul! #e offere! to

the mar%et in a secon! auction at maximum permissi#le prices :currently

3&000LMo"ever& the transmission gri! operators !o not

@Short(term a!7ustment of the po"er plantsI !ispatch to resolve congestion :#ottlenec%s;'


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o"n these po"er plants #ut contract them to provi!e reserve capacity' The gri!

operators shoul! perform this function un!er the strict supervision of the 8e!eral

Ministry of Economics an! Technology :5M


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!uring this phase' iven the scale of the po"er plant closures anticipate! over the

coming years& it is safe to assume that even "ithout the participation of ne" plants&

the procurement process "ill #e sufficiently competitive' To provi!e a!!itional

safeguar!s against mar%et forces& a maximum #i! price "ill #e set& correspon!ing to

the mar%et entry costs of a ne" plant'10

*n the follo"ing phase :operational perio! from 2016;& the ten!ering process for

capacity "ill ta%e place annually "ith a longer lea!(in time :e'g' three years; in or!er

to ena#le #oth existing an! ne" plants to participate& "ith the opportunity for #i!!ers

to specify an in!ivi!ual contract term& ranging from one year to 10 years' The reason

for this is that !epen!ing on the type of plant& !ifferent terms may #e technically an!

economically feasi#le' 8or example& ne" plants "ill #e a#le to ten!er for longer terms

than existing plants "hich are coming to the en! of their technical lifespan' t the

same time& #i!!ers must commit to maintain the capacities on stan!#y throughout

the specifie! perio!' The contract is then a"ar!e! on the #asis of the service price

offere!'11

"olume of the strategic reserve

*n line "ith the precautionary principle& the function of the strategic reserve as asafety net for the electricity mar%et re-uires a reserve #ase :minimum capacity; to #e

esta#lishe!' This shoul! #e set at 4 per cent of the annual pea% loa! :i'e' aroun!


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sufficiently small in or!er to avoi! mar%et forces coming into play in the procurement -

process'

Expansion of the strategic reserve shoul! ta%e place only if this is 7ustifie! #y an

i!entifie! nee! in or!er to meet the !esire! supply security goal' European

perspective shoul! increasingly #e applie! "hen !etermining the re-uirement for

reserve capacities& "ith more intensive cooperation "ith neigh#ouring countries

ta%ing place' *n or!er to !etermine the re-uirement for reserve capacities&

transparent monitoring of supply security "ill #e carrie! out on an annual #asis #y

transmission gri! operators an! the 8e!eral 9et"or% gency for the follo"ing five

years' *nformation a#out po"er plant closures containe! in the #i!s su#mitte! in the

ten!ering proce!ure shoul! also #e utilise! "hen !etermining the re-uirement for

reserve capacities'

e#uirements for strategic reserve power plants

Strategic reserve capacities shoul! #e availa#le on a secure #asis& shoul! have

access to a secure fuel supply an! shoul! #e activate! "ith sufficient spee! "hen

calle! for' The functionality of a strategic reserve !escri#e! in this paper is #ase! on

a re-uire! maximum activation perio! of 10 hours'

emuneration for plant operators

=o"er plant operators "ill receive remuneration :service price; for provi!ing reserve

capacity& #ase! on the figures specifie! in their #i! su#mitte! in the procurement

process' *f the plants are activate! in the electricity mar%et& the po"er plant operators

a!!itionally receive an electricity charge per %ilo"att(hour& "hich is #ase! on actual

operating costs' *f& !ue to congestion :gri! #ottlenec%s;& the plants are activate! for

the purpose of re!ispatch& this is remunerate! in accor!ance "ith the rules "hich

normally apply to re!ispatch'

Funding

The costs of the strategic reserve are recovere! via the gri! charges' The maximum

a!!itional costs of the strategic reserve are thus !erive! from the contracte! plantsB

service prices' *f the plants are activate! !ue to a lac% of mar%et clearance in the

po"er exchange& this "ill create minimal a!!itional costs !ue to the payment of the

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energy charge per %ilo"att(hour& #ut this "ill #e more than offset #y the revenue

increases generate! in the electricity mar%et' The a!!itional revenue is passe! on to

the transmission gri! operators& thus re!ucing the strategic reserve costs that nee! to

#e recovere!' The a!!itional costs for the use of the net"or% reserve are very lo" as

the activation of the strategic reserve for re!ispatch is li%ely to #e a very rare

occurrence& as is the case "ith the net"or% reserve to!ay' The re!ispatch costs "ill

also #e passe! on& in line "ith the current rules on gri! charges'

". #eneits o the strategic reserve

$ompatibility with electricity market

The impacts of the strategic reserve on the existing energy(only mar%et "ill #e

minimal for t"o reasons' 8irstly& it consists solely of capacities "hich& "ithout the

strategic reserve& "oul! #e remove! from the electricity mar%et altogether :existing

plants; or "hich "oul! not enter the mar%et in the first place :ne" plants;' Secon!ly&

the strategic reserve capacities !o not participate in the regular electricity mar%et #ut

are activate! solely in exceptional circumstances "hen !eman! "oul! other"ise not

#e met #y the !ay(ahea! mar%et :E=EN S=OT;' The strategic reserve "ill not

ra!ically alter the current mar%et !esign& #ut "ill simply create an a!!itional reserve

mar%et :"holesale an! control(energy mar%et;' The pricing mechanisms an! efficient

incentives create! #y the energy(only mar%et& an! hence its innovation potential& "ill

#e retaine! in full'

!rere#uisite% no regular activation of the strategic reserve in the market

The prere-uisite for the !escri#e! functionality of the strategic reserve is its strictly

limite! activation' 8ee!#ac% effects on the energy(only mar%et are avoi!e! as thestrategic reserve is only !eploye! in situations in "hich the po"er exchange cannot

meet !eman! an! the input price correspon!s to the maximum permissi#le price on

the po"er exchange' Only if capacity scarcity is reflecte! in price spi%es in the mar%et

"ill sufficient investment incentives #e create!' lo" price for activating the reserve&

on the other han!& "oul! "ea%en the incentive for ne" investments& resulting in a

loss of effectiveness an! efficiency an! increasing the nee! for reserve capacity' 8or

the same reason& there shoul! #e no possi#ility for the plants contracte! to provi!e

strategic reserve capacities to #e re!eploye! #y their o"ners in the electricity mar%et'

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&upporting the integration of renewable energies

*n or!er to #e a#le to integrate large amounts of fluctuating rene"a#les(generate!

electricity into the supply effectively an! efficiently& the entire system must #ecome

more flexi#le in future' Through the "holesale price& the energy(only mar%et sen!sout a signal as to "hether electricity is in short supply at any given time& or "hether a

surplus exists' *t thus creates efficient an! effective incentives for more flexi#ility in

supply an! !eman!& e'g' through loa! management or the use of storage facilities'

The aim must therefore #e to achieve security of supply "ithout !ampening or

!istorting these price signals' Other"ise& flexi#ility must #e incentivise! through

a!!itional support mechanisms an! finance! through levies' *n principle& the strategic

reserve allo"s scarcity prices to emerge on the energy(only mar%et an! thusmaintains the mar%etBs a#ility to provi!e incentives for the restructuring of the

electricity supply system that is necessary to accommo!ate the integration of

rene"a#le energies'

&imple to implement ' rapid effects

further a!vantage of the strategic reserve is that it can #e intro!uce! s"iftly an! its

effects are felt very soon' =o"er plants sche!ule! for !ecommissioning in particular

can #e integrate! into the strategic reserve "ith a lea!(in time of 7ust a fe" months'

(ow costs

The a!!itional costs of the strategic reserve compare! "ith an energy(only mar%et

are lo"& as it only a!!resses the nee! for a!!itional reserve capacity' /onsentec

:2012a; has calculate! that a < strategic reserve #ase! on existing po"er plants

an! procure! through an efficient ten!ering proce!ure "oul! entail fixe! costs of

aroun! 10 million per year' 5ase! on total electricity consumption :approx' 400

T


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(ow potential error rate

The strategic reserve is a comparatively simple mo!el "ith a small num#er of

parameters& "hich must #e !efine! #y the regulatory authorities' #ove all& the

regulatory authorities must !efine the capacity to #e ten!ere! for as "ell as thetechnical specifications an! the ten!ering mo!alities' overnance of the strategic

reserve is therefore -uite straightfor"ar!' *n vie" of the lo" level of complexity of the

mechanism& the ris% of inefficiency !ue to the a!option of the incorrect parameters is

relatively lo"'

$ompatibility with the )U internal market

The strategic reserve is highly compati#le "ith the E. internal electricity mar%et& for

t"o reasons$ firstly& !ue to the lo" fee!#ac% effects on the regular electricity mar%et&

there is no !anger of capacities in neigh#ouring countries simply #eing relocate! to

ermany& "hich "oul! merely create the illusion that ermanyBs supply security ha!

#een improve!& perhaps at the expense of other countriesB security of supply' The

strategic reserve can therefore #e intro!uce! at national level #y any Mem#er State

that consi!ers this necessary& "ithout any !istortion of the E. internal mar%et' n!

secon!ly& the strategic reserve mo!el can also #e exten!e! "ithout any pro#lems to

other E. mar%ets or #e expan!e! into a European strategic reserve' Through the

!efinition of core components ) as is the current practice "ithin ermany in procuring

control(energy ) national minimum re-uirements for secure capacity can #e

guarantee!'

*arket-based approach

.nli%e the existing net"or% reserve& the strategic reserve mo!el propose! here is

#ase! on a mar%et(oriente! approach' This is generally the preferre! option& as

oppose! to a regulatory approach& in a mar%et economic system'

)asily adaptable

strategic reserve can #e !ismantle! "ithout any a!verse effects if it is no longer

re-uire!' *n that sense& it is a flexi#le component of a mar%et !esign "hich can #e

a!apte! to ne" challenges' The !ecision in favour of a strategic reserve "oul!

therefore not affect !ecision(ma%ing on the long(term !esign of the electricity mar%et'

14


19/20

The maintenance of the strategic reserve over the long term is conceiva#le& as is the

transition to a ne" mar%et !esign or a reversion to a straightfor"ar! energy(only

mar%et'

1


20/20

$eerences

consentec :2012a;$ =ra%ti%a#el umsetF#are usgestaltung einer StrategischenReserve' utachten im uftrag !es 5DE

Documents

Strengthening Markets, Securing Supply Conceptual Framework for Implementing a Strategic Reserve in Germany