German court overturns mixed-price system for balancing energy market

Source: Xinhua| 2019-07-23 01:26:13|Editor: Mu Xuequan
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BERLIN, July 22 (Xinhua) -- The Dusseldorf Higher Regional Court (OLG) upheld the claim by Next Kraftwerke, which is marketing renewable energy units, and annulled the mixed-price system on the German balancing energy market on Monday.

"We are pleased that the Higher Regional Court has followed our reasoning and has judged the mixed-price system to be too intensive an intervention for the market participants," said Hendrik Saemisch, founder and Chief Executive Officer (CEO) of Next Kraftwerke.

The Dusseldorf court's decision was "good news for the electricity grid, the grid users and the energy transition," according to Next Kraftwerke CEO Saemisch.

In the trial, Next Kraftwerke had argued that the German mixed-price system had led to more extreme grid situations, pushed up the total costs for the balancing energy market and put cleantech solutions at a disadvantage.

A report by energy consulting company r2b, which was commissioned by Next Kraftwerke, had already warned that the mixed-price system would "contradict the principle of increasing flexibility in the electricity supply system through a technology-open and competitive selection process".

The system came into effect in October 2018 and Next Kraftwerke criticized that the mixed price procedure posed problems for the security of supply on the German electricity market.

In some cases, Next Kraftwerke found that it could be cheaper for electricity market players to simply use the reserve electricity than to buy electricity on the normal electricity market in Germany.

However, when the reserve capacity was actually needed, the power plant capacity would be missing and prices skyrocket, according to Next Kraftwerke.

The German transmission system operators (TSOs) reported such a scenario on three days in June, when electricity demand was much higher than production and the German power grid was overloaded.

On one of the days, the price for one megawatt hour of balancing energy shot up to almost 40,000 euros (45,200 U.S. dollars), the highest amount ever. One megawatt hour normally costs around 10 euros.