Traders' Lobby Group Calls for Price Freedom
The European Federation of Energy Traders (Efet) believes that the electricity system in Europe is ripe for a major overhaul and a levelling of the playing-field. Despite significant progress in the opening and integration of electricity markets over the past two decades, truly free formation of prices remains an unattained objective in all member states so far, it said June 10. Energy prices should be allowed to reflect the true value of scarcity or abundance, even allowing for negative prices.
Liberalisation and integration are rising but patterns of generation and supply and the “massive” build-out of renewable capacity, with its own rules, distort the price, affecting both dispatch and investment and divestment decisions, it said in a position paper.
In the particular case electricity produced from renewable energy sources (RES-E), current priority dispatch arrangements, where they still exist, do not incentivise RESE producers to moderate their own output efficiently. Low or negative prices should arise naturally rather than through the operation of market-distorting privileges and subsidies.
To improve this situation, Efet believes all participants in the wholesale market should be treated equally, with no discrimination either in favour of internal flows and the price should not be regulated or distorted in an anticompetitive way.
“The time has come to do away with privileges, old and new, and to guarantee a level-playing field to all market participants, irrespective of their location, the technology they use, and the type of product or service they provide. A critical review of measures favouring specific technologies or preventing challengers – including on the demand and storage side – to enter the market should be launched,” it says.
"Renewable power generation has largely developed separately from the operation of the wholesale energy market. This situation has undermined the efficiency of the European carbon market. We believe that the central instrument to encourage support in investment in low-carbon technology should be the EU Emissions Trading System (ETS). It promotes the most cost-efficient form of abatement and does not distort the internal energy market."
Uniper goes to court
According to Uniper, in Germany redispatching events have risen significantly over the last few years, much to its own detriment and at the end of April it sued grid operator Tennet through the Bayreuth regional court to recover its full costs relating to redispatching the 800-MW Franken gas-fired plant, saying Tennet was not interpreting correctly the ruling by the Dusseldorf Higher Regional Court of a year earlier.
Uniper believes it is subsidising Tennet, allowing lower transport charges for customers as Tennet did not pay enough for this service in 2013 and 2014, even though the power plant was re-dispatched for grid-stabilisation purposes to a substantial extent.
"In 2010 we [Germany] had 364 hours of redispatch measures and in 2014, we had 8,453 hours, or one nearly every hour on average. This year we estimate the costs to be €1bn," a spokesman told NGE this month.
The reasons were more feed-ins of mainly renewable energy in the north, and relatively high demand in the south with the decommissioning of the nuclear plants there. Uniper argues that its own actions in providing flexibility were equivalent to an extra grid which only Tennet gets the full value of.
In its April 28, 2015 decision, the Higher Regional Court had determined that re-dispatching operations of a power plant were equivalent to an alternative for a grid asset because the intervention eliminates transmission network congestion. Such congestion could be remedied by expanding the transmission network. Regulated transmission network charges, on the other hand, are based on the premise that all costs must be reimbursed. It is therefore appropriate to also reimburse the pro-rated fixed costs of a power station used for redispatching, it said.
William Powell