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The European Energy Exchange (EEX) has published a position paper discussing the need for, and design of capacity markets in Germany. By publishing such a paper, EEX is making an active contribution to the intense debate which has been underway in Germany for two years.
In its position paper, EEX concludes that, in a European single market, capacity markets intended to ensure the security of supply in Germany are not needed. However, better use should be made of the existing potential in order to strengthen the market. Peter Reitz, Chief Executive Officer of EEX, commented: “First, it is necessary to further develop the European single market, to implement energy efficiency measures, develop demand flexibility and, in particular, to improve the integration of renewable energies into the energy market. The introduction of a capacity mechanism should only be considered after that – provided there is both a demand for new conventional power plants and a lack of willingness to invest.“
That said, if a capacity market is to be introduced, it has to fulfil minimum requirements to ensure that it does not jeopardise the successes of liberalisation on the European internal market as well as ensuring that any disruption to the tried and tested markets is kept to a minimum: “Trading in or the remuneration for capacities should not have any impact on trading in power on the intraday, spot or derivatives markets. Regulatory interventions leading to inefficiencies have to be avoided.” EEX is convinced that, among the models which are currently being discussed, a decentralised capacity mar- ket corresponds to these minimum requirements as closely as possible as it is best able to support the market forces, provided the right design is selected: In this case, continuous and technology-neutral trading in capacities would lead to an efficient mix- ture of power plant technologies, storage facilities or demand-side measures.
The EEX position paper on capacity markets is published on the EEX website.
The European Energy Exchange (EEX) is the leading energy exchange in Europe. It develops, operates and connects secure, liquid and transparent markets for energy and related products on which power, natural gas, CO2 emission allowances, coal and guarantees of origin are traded. Clearing and settlement of all trading transactions are provided by the clearing house European Commodity Clearing (ECC). EEX is a member of Eurex Group.
