Promoting the market and system integration of renewable energies through premium schemes - a case study of the German market premium

With the share of renewable energies within the electricity sector rising, improving their market (i.e. inclusion in the allocative processes of the electricity market) and system integration (i.e. enhanced responsibility for grid stability) is of increasing importance. To transform the energy system efficiently while ensuring security of supply, it is necessary to increase the alignment of renewable electricity production with short- and long-term market signals. By offering plant operators a premium on top of the electricity market price, premium schemes represent a potential option for achieving this, and have been implemented by several EU member states. This paper focuses on the case study of the German market premium scheme, which has been adopted as part of the 2012 amendment of the Renewable Energy Sources Act. Building on an evaluation of early experiences, we discuss whether the market premium in its current design improves market and/or system integration, and if it seems suitable in principle to contribute to these aims (effectiveness). Also, potential efficiency gains and additional costs of “administering integration” are discussed (efficiency). While market integration in a narrow sense (i.e. exposing renewables to price risks) is not the purpose of the German premium scheme, it has successfully increased participation in direct marketing. However, windfall profits are high, and the benefits of gradually leading plant operators towards the market are questionable. Incentives for demand-oriented electricity production are established, but they prove insufficient particularly in the case of intermittent renewable energy sources. It seems therefore unlikely that the German market premium scheme in its current form can significantly improve the market and system integration of renewable energies. To conclude, we provide an outlook on alternative designs of premium schemes, and discuss whether they seem better suited for addressing the challenges ahead

Die Governance der Bioökonomie - Herausforderungen einer Nachhaltigkeitstransformation am Beispiel der holzbasierten Bioökonomie in Deutschland

Um die Nachhaltigkeit wirtschaftlicher Prozesse und Produkte dauerhaft zu erhöhen, ist ein Übergang von der gegenwärtigen, vorwiegend auf fossilen Rohstoffen basierenden "Durchflusswirtschaft" zu einer auf nachwachsende Rohstoffe ausgerichteten Kreislaufwirtschaft, der sogenannten Bioökonomie, notwendig. Hierfür bedarf es eines geeigneten Governance-Rahmens mit (i) einer "Ermöglichungsfunktion", die faire Wettbewerbsbedingungen für effiziente Allokationsentscheidungen über biogene Ressourcen schafft, aber auch (ii) einer "Beschränkungsfunktion", welche die Nachhaltigkeit einer stärkeren Nutzung biobasierter Ressourcen sichert. Ein Pfadübergang wird jedoch u.a. durch interagierende Marktversagen, die Allokationsentscheidungen verzerren, sowie durch Unsicherheiten bezüglich der wirtschaftlichen, ökologischen und sozioökonomischen Auswirkungen verschiedener biobasierter Produktionspfade erschwert. Darüber hinaus erfordert der Übergang zu einem neuen "upper state"-Nachhaltigkeitsgleichgewicht auch ein entsprechendes politökonomisches Gleichgewicht auf Regulierungsmärkten, das erforderliche Transformationspolitiken realisierbar macht. Dieser Beitrag diskutiert die Herausforderungen, die mit dem Aufbau eines wirksamen Governance-Rahmens für die Bioökonomie verbunden sind. Anhand einer Fallstudie der holzbasierten Bioökonomie in Deutschland wird untersucht, wie die "ermöglichenden" und "beschränkenden" Governance-Funktionen in der Praxis umgesetzt werden. Auf dieser Grundlage werden Weiterentwicklungsempfehlungen abgeleitet

Herausforderungen einer nachhaltigen Bioökonomiepolitik

Um den Pfadübergang zu einer Bioökonomie zu ermöglichen und gleichzeitig deren Nachhaltigkeit zu sichern, spielt der politische Steuerungsrahmen eine zentrale Rolle. Der Beitrag diskutiert zentrale Herausforderungen der Politikgestaltung

Der Beitrag der Marktprämie zur Marktintegration erneuerbarer Energien - Erfahrungen aus dem EEG 2012 und Perspektiven der verpflichtenden Direktvermarktung

Mit dem EEG 2012 wurde die gleitende Marktprämie in das Förderregime der erneuerbaren Energien zunächst als Option eingeführt. Das EEG 2014 baut diesen Ansatz durch verpflichtende Direktvermarktung weiter aus, ohne die Grundstruktur der Prämie anzutasten. Mit dem Instrument verbinden sich hohe Erwartungen an Kostensenkungen, die durch eine Steigerung der Vermarktungseffizienz und eine verstärkte Bedarfsorientierung von erneuerbaren Energien erzielt werden sollen. Der Beitrag wertet die bisherigen Erfahrungen mit der Marktprämie aus und geht der Frage nach, welche Effizienzgewinne durch die Weiterentwicklung im EEG 2014 realistisch sind

Geothermal power production in future electricity markets--A scenario analysis for Germany

Development and diffusion of new renewable energy technologies play a central role in mitigating climate change. In this context, small-scale deep geothermal power has seen growing interest in recent years as an environmentally friendly, non-intermittent energy source with large technical potential. Following the first successful demonstration projects, the German geothermal industry is currently experiencing an internationally unparalleled growth. In this study we explore the factors driving this development, and the role geothermal power production could play in the future of the German electricity market. For this, we apply the scenario technique, based on literature analysis and interviews with companies operating actively in the field. Our findings highlight the importance of political support and framework conditions in the electricity market, with the best prospects in a decentralised energy system based on renewable energy sources, where high investment costs and the risk of discovery failure are balanced by the benefits of low-carbon base load power.Geothermal power German electricity market Scenario analysis

Market integration of renewable energies through direct marketing - lessons learned from the German market premium scheme

Background: Increasing the market and system integration of renewable energy sources (RES) is regarded as key to reducing the costs of RES support and transforming the electricity system. In several EU countries, feed-in premium schemes have been implemented to better align RES production with electricity prices and to enhance the efficiency of RES marketing by increasing direct participation of producers in electricity markets. This paper examines the lessons learned from the German market premium scheme, which was introduced in the Renewable Energy Sources Act 2012 as an optional alternative to feed-in tariffs. The 2014 reform of that law has made direct marketing mandatory except for small RES plants, thus establishing the sliding market premium as the new primary instrument of RES support. Methods: Combining a qualitative economic analysis with insights from sociological research on direct marketing and simulation results from agent-based modelling, we evaluate how well the optional market premium has performed in setting incentives for demand-oriented RES production and efficient marketing of RES electricity. Furthermore, we examine what efficiency gains can be realistically expected from the changes implemented in 2014, and discuss whether the direct marketing model adopted in Germany is a promising approach for improving the market integration of RES. Results: We find that direct marketing has made a positive contribution to the marketing efficiency of dispatchable RES; for intermittent RES, it provides few structural changes compared to marketing through transmission system operators. The benefits of a greater demand-orientation of RES feed-in remain limited when considering the extent to which load shifting is incentivised. For intermittent RES in particular, incentives for demand-oriented feed-in are only effective in times of negative electricity prices when voluntary curtailment is encouraged. Conclusions: For the further development of mechanisms to support greater market proximity, differentiating between the various RES according to their ability to respond to electricity price signals can prove advantageous. Also, objectives such as improving security of supply and reducing the costs of transforming the electricity system cannot be reached through RES market integration efforts alone but require an adaptation of electricity market conditions to the requirements of RES