The German Electricity Market - A Brief Overview
The German electricity market is Europe's largest, with annual power consumption of around 530 TWh and a generation capacity of 184 GW.
Transmission system operators (TSOs) keep control power available to maintain stable and reliable supply. Demand for control energy is created when the sum of power generated varies from the actual load (due to unforeseeable weather fluctuations in the case of renewable energies).
Primary control, secondary control, and tertiary control reserve are procured by the respective TSOs within a non-discriminatory control power market (www.regelleistung.net) in accordance with the requirements of the Federal Cartel Office.
Procurement takes place in a competitive tender bidding basis within the German control power market in which a significant number of suppliers participate. Smaller suppliers are also able to participate in calls for tender by a pooling process. Almost 90 percent of all power generating plants capable of providing control energy are eligible for participation at the TSOs.
| Primary control reserve (PCR) | Secondary control reserve (SCR) | Tertiary control reserve (TCR) | |
| Time for activation | 30 s | 5 min | 15 min |
| Availability | Up to 15 min | 15 min to 1 hr | Minimum of 15 min |
| Previously required min. bids by regulator | 5 MW | 10 MW | 15 MW |
| Newly required min. bids by regulator* | 1 MW | 5 MW | 5 MW (10 MW**) |
| Tendering period | monthly | daily | |
| Tendering period (as of April 13, 2012*) | weekly | ||
| Focus on new technologies | Flexible/controllable plants, battery storage systems, renewable energy systems at direct marketing | ||
Source: Federal Ministry for the Environment, Nature Conservation and Nuclear Safety
*Changes occured in April 2011 for PCR ands SCR and october for TCR
**As transition bid amount before definitve reduction to 5 MW
Electricity is delivered to the end-consumer through the high and extra-high voltage grid system. Power is further distributed through lower level grids, with transformer stations used to transform electricity voltage levels. Major expansion of the high-voltage systems is required to meet Germany’s ambitious 2020 energy goals (see Network Development Plan).
European Union Electricity Directives
In the late 1990s, Europe adopted a number of directives created to open up EU member state domestic electricity and natural gas markets. European power markets were transformed in 1996 following the European Union (EU) Electricity Directive (subsequently replaced by successive directives in 2003 and 2009 further safeguarding principles of a level power-generation playing field, non-discriminatory transmission and distribution charges and third-party network access rights) enshrining the principles of an internal energy market and customer choice.
Domestic Energy Market Liberalization - Energy Industry Act
Germany’s domestic electricity market was fully liberalized in 1998 (Energy Industry Act). Prior to liberalization, a defined supply area was typically served by a single supplier (e.g. local utility) operating in near-monopolistic market conditions.
Today, the German energy market is a healthy market place with enough room for four vertically integrated suppliers – Amprion (formerly RWE), EnBW Transportnetze, TenneT TSO (formerly E.ON), and 50Hertz Transmission (formerly Vattenfall Europe) - who supply approximately half of the market, and a thriving regional and municipal supplier market with both distribution and retail assets. A single-price settlement scheme with quarter-hour settlement periods is implemented in the four control areas supplied by the four main suppliers, with the European Energy Exchange (EEX) acting as a common point of reference for domestic electricity prices.
More than one thousand market participants are active in the fully liberalized German electricity market, with new market actors – who do not own power plants or supplier networks - successfully entering the domestic electricity market.
Federal Network Agency
The creation of the Bundesnetztagentur ("Federal Network Agency") regulatory office for electricity, gas, telecommunications, post, and railway markets in 1998 further opened up the power market, thanks to the introduction of a raft of measures promoting competition including legal unbundling for suppliers with more than 100 thousand customers. The agency is responsible for ensuring non-discriminatory third party access to power networks and control fees charged by Germany's TSOs.
