EU investigates German national electricity reserve

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The EU has launched an investigation into German plans to create a strategic electricity reserve, exploring if the measures amount to illegal state-aid that will distort competition in the electricity market.

Margrethe Vestager, EU competition commissioner, announced an in-depth probe on Friday into Berlin’s plan to set up an electricity reserve as a safeguard against supply shortages, while the nation switches its power to cleaner sources.

Mrs Vestager acknowledged Germany has a legitimate interest in safeguarding a reliable electricity supply.

However, she said: “it is our role to ensure that companies are granted state support only when it is truly necessary and in a manner that limits distortions of competition.”

“We currently have a number of concerns regarding the need and design of the German strategic reserve.”

Berlin’s plan requires German network operators to procure and hold 2GW of capacity outside the market as a buffer from winter 2018 for two years. To comply with Europe’s state aid rules, Germany must show the project is required, fit for purpose, and open to all capacity providers.

The commission’s investigation stems from concerns over the need for the project, worries it could be extended, and fears that it is not open to foreign capacity providers or customers who might be willing to cut their electricity use in the event of a shortage.

Brussels also believes the different German market reforms could also ensure a secure electricity supply without state intervention.

The regulator’s concerns uphold findings from a national capacity sector inquiry last year.

That report said strategic reserves should only be used in emergency situations to address temporary risks, they should be held outside the market to “minimise distortions to the market’s day-to-day functioning”, and should be phased out as soon as the accompanying market reforms take effect.

The commission investigation will gather information from Germany and other interested parties. No deadlines are specified.

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