Visit windpowermonthlyevents.com for the latest on our upcoming conferences and webcasts

Germany

Germany

German liberalisation

Germany's progress towards liberalisation is both slower and less radical than for other national energy markets in Europe. The government believes that its liberalisation law, the Gesetz zur Neuregelung des Energiewirtschaftsrechts, which came into force in May, has created the foundations for two competitive pillars on which the market will come to rest: Negotiated Third Party Access (nTPA) and the so-called Single Buyer system. Renewables and combined heat and power have priority access to the grid. There is no trading exchange or bourse to set a market price for electricity -- and no regulatory authority. The government is putting its faith in anti-trust laws and the federal cartel office to prevent utility sector abuse of its dominant market position. Many fear the result will be years of legal wrangling preventing progress.

Theoretically the law has removed the utilities' demarcated monopoly supply areas and given consumers the freedom to choose their electricity or gas supplier. In practice there is no administrative infrastructure requiring or allowing this to happen. As a result only major industrial consumers, such as Daimler Benz, have so far shopped around for the best deal. Meantime the utilities have been jostling for the best competitive position, sparking a series of co-operation agreements, mergers and to a lesser extent takeovers. Of the nearly 1000 utilities active today, the industry estimates that only 80-300 will still be in business in 15 years.

Under nTPA, a third party generator must not only draw up contracts with its customer, but also with the owner of one of the grids through which the power will pass. Regulations for such contracts have already been drawn up -- but not by government. Instead they form an agreement between the utility sector and big industry, though nTPA in eastern Germany is ruled out by government until 2003-2005 to protect investment in lignite generation. To avoid problems with the cartel authorities, the agreement is not binding, but it would take a powerful small consumer to mount a legal challenge.

Alongside nTPA a second competitive system, the so-called Single Buyer, is being tested. Here, a utility effectively adopts the supply contract signed between a third party and a customer in its supply area and integrates the power purchased into its own load management. The third party has to pay the utility for use of its grid when supplying the customer. The tariff for using the grid has to be authorised by the regional supervisory authority and publicised.

The law requires the utility owned grid to be run autonomously. From 2000, grid operators must publish an annual guide to nTPA access charges, based on average values in the previous 12 months. Utilities must unbundle generation, transmission and distribution in their book keeping and separate electricity from non-electrical activities.

In September, the eight utilities operating the high voltage grid in Germany published their own "GridCode" for co-ordinating power dispatching and access to, and transmission on, the high voltage grid. The code is being discussed with other German and foreign utilities.

Although Germany has no electricity bourse, Lower Saxony is determined to have one in operation before the end of the year. Last month the state government signed a letter of intent with the New York Mercantile Exchange (Nymex) for a power exchange in Hannover. Nymex has pioneered futures trading in electricity in the USA and its trading system, Access 11, may be used as the platform for a German futures market in power.

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus

Windpower Monthly Events

Latest Jobs