Create Investment Incentives, Secure Reserve Capacities: Options for the Market Integration of Renewable Energy

The expansion of renewables is central to Germany reaching its climate targets. However, the feeding of wind and solar power into the grid fluctuates with the weather, and this poses two problems for investment. Firstly, if too much is fed into the grid at once, the price will fall, creating financing risks for the operators of renewable energy plants. Secondly, if too little is fed into the grid, reserves must be available.

The experts of the Academies project “Energy Systems of the Future” (ESYS) have examined how the targeted adaptation of electricity market design can help solve these problems of investment and help integrate renewables into the market.

Key questions they asked included:

• What impact is the increasing proportion of renewables having on the electricity market?
• How can the electricity market contribute to the effective and efficient encouragement of renewables?
• Can renewables exist in the market in future without encouragement?
• How can security of supply in the electricity system be ensured during supply shortages, and are additional investment incentives required for reserve capacities?
• What role does greater flexibility in the electricity system play?

The statement shows that the electricity market is essentially fully functional. However, adaptation is required for the electricity market to perform optimally in a system with a high proportion of renewables. The ESYS experts make suggestions for this adaptation and discuss the respective pros and cons. Concepts put forward include fixed or sliding market premium models, contracts for difference as well as centralised and decentralised capacity markets.

To the press release (in German)

Recommended citation:
acatech/Leopoldina/Akademienunion (Hrsg.): Investitionsanreize setzen, Reservekapazitäten sichern: Optionen zur Marktintegration erneuerbarer Energien (Schriftenreihe zur wissenschaftsbasierten Politikberatung), 2023.