Report on the “Effects of the German capacity reserve on neighbouring member states”

created May 2021

On behalf of the German Federal Ministry for Economic Affairs and Climate Action, we have prepared the just published report and consulted with neighbouring member states as well as Acer and ENTSO-E.

The qualitative analysis shows that the impact of the capacity reserve on the supply potential of power plants on the futures and spot markets in Germany and Europe as well as the repercussions on the balancing energy markets are low. However, it remains to be observed whether the participation of controllable loads in the capacity reserve withdraws supply potential from the spot as well as from the balancing energy markets. “The analysis shows that the German capacity reserve as a “braces to the belt” of a functioning energy-only market is a suitable and cost-effective instrument that additionally secures the energy transition. We consider the repercussions on the competitive electricity markets of Germany and its neighbouring countries and the investment incentives there to be fundamentally very low, as the capacity reserve is held outside the markets. Another positive aspect is that the introduction of the capacity reserve does not worsen climate protection in the electricity system” comments Robert Diels, project leader and manager at r2b, on the results.

The full report can be found here.