The 51st Energy Dialogue at the Reichstag – at the invitation of Prof. Dr. Friedbert Pflüger, Janusz Reiter and Central Europe Energy Partners (CEEP) – discussed capacity markets and public utilities. The panel discussion was held on July the 6th, 2014.
Mr. Michael Feist, Chair of the Board of Directors and Commercial Director of Enercity, opened the panel. From his perspective as the head of a public utility which is also one of the ten largest energy providers in Germany, Mr. Feist bemoaned the fact that – despite the crucial role of coal and gas power plants in handling up to 150 re-dispatch orders every year – currently, only an inadequate 20 per cent of investments in the energy sector go into preserving this capacity. The current market structure is simply not suitable for encouraging investment in conventional energy sources. Therefore, companies are pursuing a “squeeze the assets” strategy. According to Mr. Feist, the solution is establishing a decentralised capacity market, based on market principles and free from political interference.
While Dr. Patrick Graichen, Director of the think-tank Agora Energiewende, agreed with Mr. Feist on the need for a capacity market, he underlined that decentralised does not equate to unregulated. He also identified the potential loss of basic load capacity, due to the lack of incentives to fossil fuels, as a threat to energy security. Nevertheless, Dr. Graichen challenged the assumption that it alone has the potential to cover the entire shortfall of investments needed for the non-renewable energy sector in Germany. According to him, a capacity market can only provide a maximum of € 4 billion Euro, and the need for public utilities to re-invent themselves will still arise. . He concluded by asserting that “suppliers of energy” need to become “energy service providers”.