To launch a capacity mechanism in Britain is the right approach to incentivise new investment for security of supply, says to Ray Tomkins, founder and director at Economic Consulting Associates.
"We have been lucky that due a combination of circumstances - such as the dash-for-gas, the investment strategy of the vertically integrated oligopoly, and more recently the recession depressing demand- that major blackouts have been avoided as private generators have 'over-invested'," he said. "This cannot be relied on in the future...
As Germany's power grid operators are busy negotiating with power plant operators over the amount of available cold reserves, the federal network regulator Bundesnetzagentur (BNA) confirmed that Germany will need over 2,000 MW of capacity reserve to guarantee supply security in during the upcoming winter.
The autumn statement of the UK finance ministry, set for 5 December, will impact on the timing of the Government's update on the Electricity Market Reform (EMR), JP Morgan Cazenove said today. As both the EMR and the gas generation strategy paper need to be consistent with the Government's fiscal targets, the papers are „only likely to be published once the fiscal targets are known in December," says Edmund Reid, analyst at the bank.
Germany's energy industry association BDEW on behalf of its members has submitted a discussion paper to the Ministry of Economics (BMWi) pushing for a deal to compensate operators for refraining from carrying out planned closures of fossil power plants to guarantee supply security during the upcoming winter period.
German utilities E.on and RWE have spoken out in favor of a strategic reserve as a quick solution to resolve a capacity squeeze in southern Germany in the coming winter. The debate over capacity markets, by contrast, would take years and the scheme is believed to proof counterproductive to energy-only-markets.
Doubts on the effectiveness of the energy bill have been raised by the industry. The reform "comes too late" and regulations are "unclear", is the verdict of some investors: "We have long been pushing for greater clarity on the detailed design of the EMR proposals, and greater expediency in the process as a whole," Volker Beckers, chief executive of RWE npower said in a statement to Gas to Power Journal.