Skip to content!

Strategic Reserve to Secure Electricity Market

Press Release of November 29, 2013

There is an ongoing discussion about whether the German electricity market offers sufficient incentives for investment in power plants and for keeping them connected to the grid, thus ensuring sufficient security of supply. Recommendations for further securing power supply include payments, some of them comprehensive, to power plant operators - in addition to energy revenues and based on their generating capacity ("capacity mechanisms"). Other suggestions are to keep individual power plants available that are used only during times of scarcity and high prices ("strategic reserve"). The present article analyzes the various reasons that could lead to a lack of incentives for investment and the extent to which they legitimize employing capacity mechanisms or require other approaches. It is concluded that a strategic reserve would suffice for securing generation adequacy, and finally, design options are discussed.