Veronika Grimm: Der teure Irrweg beim Strom-Kapazitätsmarkt

Germany faces growing challenges in securing its electricity supply. The federal government has responded with targeted tenders to secure additional capacity. A longer-term market architecture is being discussed, with a focus on a comprehensive capacity market. However, a recent briefing I co-authored with Timo Schneider and Christian Sölch from the Energy Systems and Market Design Lab at the Technical University of Nuremberg suggests that the federal government should seriously consider alternative approaches.

The key is ensuring supply security, but we must not hastily create a new and perpetually costly subsidy architecture. The tenders initiated by the federal government are necessary to close foreseeable capacity gaps. At the same time, we must establish market design principles that mobilize investment, foster competition, and remain adaptable without unnecessarily driving up electricity costs.

Comparing different models for long-term security shows that central capacity markets perform relatively well. However, they come with significant risks. The regulator must determine capacity needs and administratively evaluate various technologies, leading to potential synergies but also increasing the influence of interest groups on capacity market design.

For consumers, this could ultimately prove costly. Long-term contracts may also create path dependencies and lock-ins, making it harder to adapt to new technologies.