After years of intense study and consultation, the German government has proposed final changes to the design of their electricity market. Rejecting PJM-style capacity markets as expensive and bureaucratic -- you know you're in trouble if the German government is calling you bureaucratic -- they are instead planning to foster greater competition, to increase customer responsiveness to prices, and to create backup features to ensure reliability.
Like Texas, after their debate about capacity markets in 2013, they are planning to let prices go where they will, to encourage market investment as needed. They did create a "capacity reserve" of plants equal to 5 percent of peak demand, which will be dispatched only when operating margins are too tight. (And in a sop to the lignite industry they are putting a number of lignite plants into a four year retirement plan before decommissioning.)
But all in all, Germany has decided to let the free market solve the financial aspects of the Energiewende.
You can read more in my article in POWER Magazine.
Like Texas, after their debate about capacity markets in 2013, they are planning to let prices go where they will, to encourage market investment as needed. They did create a "capacity reserve" of plants equal to 5 percent of peak demand, which will be dispatched only when operating margins are too tight. (And in a sop to the lignite industry they are putting a number of lignite plants into a four year retirement plan before decommissioning.)
But all in all, Germany has decided to let the free market solve the financial aspects of the Energiewende.
You can read more in my article in POWER Magazine.