WEC Germany explores energy market at a crossroads

12th September 2012

News ArticleEuropeEventsMarket DesignPolicy

Senior energy experts and politicians gathered at WEC Germany’s 2012 Energy Day on 10 September in Berlin to discuss how the country could navigate through the uncertainties of its future energy policy.

According to Leonhard Birnbaum, Chief Commercial Officer of RWE, Germany’s energy policy is at a crossroads as politicians try to decide whether they should frame future policy around a market economy model with greater integration with the rest of Europe, or to follow the model of a state-run economy.

He added that in order to promote renewables in Europe and to enable Germany to significantly increase its use of renewables, there needs to be a pan-European grid as well as coherent policy. Moreover, encouraging private investments will require a new market system for back-up power and a European emissions trading scheme that is free from government manipulation.

Renewable electricity generation and consumption have been rising steadily in Germany thanks to favourable policy and government-backed incentives.  In 2010, nearly 17% of electricity consumed in Germany was from renewables, up from 6.3% in 2000.  German energy policy mandates that by 2020, 35% of its electricity should be from renewables.  However, it is widely expected that Germany will beat its 2020 target as renewables are highly subsidised.

Jochen Homann, President of the German Federal Network Agency, explained that while government does need to regulate the transmission grid – a natural monopoly – it must avoid blanket regulation of the energy sector. His agency is tasked to assure the balance between market economy and regulation.

The discussions followed WEC Germany’s publication earlier this year of a report, which argues that policymakers must set the right framework towards a free and efficient electricity market.

Leonhard Birnbaum and Jochen Homann at the 2012 German Energy Day
Leonhard Birnbaum and Jochen Homann at the 2012 German Energy Day

The WEC Germany event also pointed out how recent developments in unconventional resources have fundamentally shifted the
distribution of energy wealth.

With the US reaching energy self-sufficiency due to the boom in shale oil and gas and with ever intensifying energy cooperation among OPEC and Asian countries, Europe risks being left behind, said Matthew Hulbert, Lead Analyst at European Energy Review.

At the conference, national and international experts agreed that the security of energy supply will remain an important issue for the energy sector for years to come.

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