The German minister for economic affairs and energy and the head of the country’s biggest utility have delivered sharply contrasting speeches in recent days, which illustrate the stark differences in opinion between both entities towards the possibility of a capacity market.

Minister Sigmar Gabriel labelled calls for a market for surplus energy capacity to be provided by gas and coal-fired power plants as ‘senseless’. Meanwhile his counterpart, Johannes Teyssen, the head of E.ON, told the Handlesblatt conference that “conventional and safe power plants will remain irreplaceable for a long time” and expressed the view that Germany should follow the UK example in facilitating a capacity market.

Gabriel told Handelsblatt: “Power plant operators are only interested in capacity payments so that they can conserve surplus capacities at the cost of electricity consumers.”Sigmar Gabriel

Calling that scenario the opposite of a sensible energy policy, he added: “A functioning electricity market requires real scarcity prices. They send the necessary investment signals.”

Warning against a new surcharge scheme, Gabriel said the energy-intensive industries in particular are “very afraid” of this.

However Teyssen continues to insist on fossil power plants role in energy security and the fair price it should be given for its role in that function, given the variability of renewables.

“There is a threat of closures in the wrong place at the wrong time,” said Teyssen, insisting that coal- and gas-fired power plants are still needed. “Wind and solar can only supplement and cannot replace conventional power plants, not only in our latitudes, but in almost all industrial societies,” he commented.

The head of E.ON said he expects other states in Europe will develop capacity markets and said the UK system had not led to skyrocketing costs.

Johannes Teyssen Meanwhile, Euractiv reports that the Association of Municipal Companies (VKU) pointed out the significance of conventional power stations for Germany as an industrial hub.

“The municipal utilities in Germany have a power station park with many modern, highly-efficient power plants and cogeneration systems which are not, or are almost not, economically feasible to operate at the moment,” said VKU president Ivo Gönner.

“These power stations have an important function for the security of supply in Germany: They supply electricity when not enough power can be generated by the fluctuating feed-in from renewables,” Gönner pointed out. “From a security of supply perspective, the German government must ensure that the energy market is structured in a way that highly-efficient power plants are not thrown to the dogs.”

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