Project

The expansion of renewable energies is crucial for an affordable, secure, and sustainable energy supply in a climate-neutral electricity system. Furthermore, the continued expansion of renewable energies is necessary to achieve the legally stipulated targets of greenhouse gas neutrality in Germany by 2045, a climate-neutral electricity sector by 2035, and a share of renewable energies of at least 80 percent of gross electricity consumption. In addition to these national targets, there are European legal frameworks for the design of renewable energy subsidies, such as state aid approvals and requirements under the Climate, Energy and Environmental Aid Guidelines (CEEAG), including the introduction of a repayment obligation and the introduction of two-way contracts for difference (CfDs) in accordance with the EU Electricity Market Design Regulation. Within the framework of the Climate-Neutral Electricity Platform, a wide range of models was discussed, from the status quo to production-based and production-independent CfD models. This project supported the BMWE in further developing these models with the goal of providing implementation-ready support instruments.

The aim of the project was to support the ministry in further developing the four financing instruments for renewable energies discussed in the option paper on the electricity market design of the future. As part of the option paper and the preceding discussions within the PKNS, a comprehensive description and discussion of the models were carried out and certain preliminary decisions were made. At the same time, numerous design issues (e.g., determination of production potential, reference periods, location control, etc.) still needed to be worked out in detail and different design options needed to be discussed and concretized in terms of a detailed overall support and hedging concept.

To this end, the central design elements and variants of relevant support concepts were first structured (e.g., suitable methodology for determining reference values for production potential and market price). In the next step, suitable evaluation criteria were defined and applied to enable a comparative evaluation of different concepts and design elements. The criteria included, for example, the achievement of expansion targets, subsidy cost efficiency, contribution to system and electricity market integration, and the conversion costs associated with a system change. Selected concepts were then further specified, and their specific design variants were evaluated in depth.

The project conducted a comprehensive investigation of the advantages and disadvantages of the various models, as well as challenges arising in their practical implementation. This also gave rise to the concept of a new class of “potential-based” models that combine the characteristics of production-based and production-independent models. These distinguish between hours without potential dispatch distortions, in which remuneration is determined based on actual feed-in, as in the current system, and hours with problematic dispatch incentives, in which remuneration is based on the production potential of a reference. This creates incentives for plant operation that are beneficial to the system and avoids the problems of production-independent models, such as increased risks of deviating from the reference volume for plant operators.

November 2024 - November 2026

• German Federal Ministry for Economic Affairs and Energy (BMWE)

• Guidehouse
• neon
• Consentec
• Becker Büttner Held