European market integration needed because of increase in wind and solar energy in Germany
The German incentive scheme for renewable energy has led to a significant increase in the share of renewable energy. However, the way this scheme has been set up does have some negative effects on the functioning of the Dutch energy market. One such effect is that it can lead to a reduced availability of natural-gas power stations whereas such power stations are crucial for supplying power in situations of little wind or sun. Because more and more power is imported from Germany, power stations in the Netherlands are operational less frequently or are mothballed. In the long run, another effect may be that investments in new power stations are postponed, resulting in too little production capacity being available in situations of high demand and little wind or sun.
These are some of the conclusions the Netherlands Authority for Consumers and Market (ACM) drew during a roundtable discussion in the Dutch House of Representatives about the impact of the German Energy Transition (Energiewende) on the Dutch energy market.
Another effect of the German Energy Transition on the Netherlands is the reduction of cross-border available for importing and exporting electricity. Electricity production in Germany is shifting from southern Germany, where nuclear power plants are being closed, to northern Germany, where new wind turbines are located. Energy demand within Germany is the highest in the South, which means electricity for German domestic consumption is transported from the North to the South through the Netherlands and Belgium, among other routes. These power flows limit the possibilities for cross-border trade.
As a solution to these problems, ACM recommends first the completion of the European market integration process, as well as putting an end to any disruptive interventions in the electricity market. In that context, it is essential that solar and wind energy become an integral part of the market. This would prevent, for example, production and export of electricity in situations where there is no demand for it. In addition, in order to create the right incentives to invest in renewable energy, it is critical to have a well-functioning market for CO2-emission rights.
Geert Moelker, manager of the Electricity Wholesale Team at ACM, adds: ´The Netherlands has already benefited tremendously from the European market integration. To prevent the German Energy Transition from overshooting its mark, disruptive interventions in the functioning of the market must be avoided as much as possible, and the internal energy market process must be completed. We will continue to work on this, together with the European agency ACER and energy regulators in other Member States.’
In its consultation document ’Strategic priorities Electricity and Gas wholesale market,’ ACM identified its priorities in this area.