Johannes Teyssen, the chief of Germany’s largest utility, says Angela Merkel’s government needs to address the country’s broken power system quickly or risk wasting more money through ongoing inaction.

The E.ON chief, speaking at the Eurelectric annual conference in Berlin, said following the British example of creating a capacity market would allow utilities to provide the power capacity required to prevent shortages in the future. The UK system compensates utilities for keeping loss-making coal and gas-fired power plants online as backup.
Johannes Teyssen
“The question is should we heal the problem while it’s still cheap, like the British did, or do you run it down the drain and when it’s almost broken then you interfere?” Teyssen said, adding that the present inaction discouraged investment.

“I think a timely intervention usually is the cheaper one, more reliable, more consistent for investors than … waiting until it’s almost dead and then interfering at the last minute,” Teyssen said, pointing to the looming phase-out of all of Germany’s nuclear plants in 2022.

The German government is opposed to funding otherwise unprofitable gas and coal-fired power plants but utility companies say this would enable them to ensure supply and avert blackouts when intermittency associated with renewables affects the grid’s reliability.

The crisis has forced German utilities to write down nearly $13bn over the past year to reflect the drop in value of their conventional plants, many of them only running at a fraction of the time needed to make money.

Eurelectric celebrated its 25th year this week and its outgoing chairman Teyssen said it had been instrumental in initiating progress for the electricity sector in Europe during his tenure, including a call for 40 per cent reduction in emissions by 2030, which originated from the association.

He said the work of the organisation in promoting the Emissisons Trading System (ETS) should also be noted.

“We especially welcome the establishment of the market stability reserve under the ETS – but there are loose ends that need to be tied up before Paris for COP21 in order to help us towards a clear new target. The world of climate change is not waiting.”

“We are also pleased that the European Commission has considered reform of the downstream market. I believe the downstream market is more important with cities and customers leading the change.”

The focus of the conference centred on the need for utilities to grasp the dramatic changes to the energy sector in Europe and adapt effectively enough to capitalise on the new opportunities being presented.

Teyssen said there was a silent revolution in terms of new innovations within the revolutionised consumer-driven energy market and that power companies who failed to pay attention would be left behind.

“There are new needs and value segments that need to be responded to. Our (E.ON’s) new business centres on energy solutions. Consumers will find ways of reducing utility bills.”

“Technology remains a white card for all players with no one having a guarantee of success. It’s up to us to shape an intelligent transition of the energy system, to shape and nurture the transition to a customer centric energy market.”

Hildegard Mueller, Managing Director of the German energy lobby, BDEW, concurred, saying, “Only companies with innovative products will succeed in the market in the long term. No single solution to meet the challenges exists but we can improve our chances by communication and cooperating with one another.”