How long do utilities need a monopoly?

This is how our electricity market works today

This is how the price is formed

As is usual for an exchange, supply and demand determine the price. This is determined according to the so-called merit order curve. First of all, every energy supplier offers its electricity from the power plants available to it at a certain price. The basis for this - in a competitive market with sufficient capacities - are the marginal costs. This is understood to be the minimum costs that the power plants have to spend in order to sell electricity without losses. The costs for the construction of a plant are not decisive in the production decision. The main factors here are the production costs. The exchange price is also called the “marginal cost price”. This makes refinancing the systems more difficult, which is why there must be price peaks in the energy-only market when there is a shortage.

Green wave for renewables

The price bids are sorted according to amount on the exchange. The cheapest providers with the lowest marginal costs are those for electricity from renewable energies. They are followed by nuclear and lignite power plants in the so-called merit order; they also have low production costs. This is followed by hard coal and then gas-fired power plants with higher fuel costs that are dependent on CO₂ and fuel prices. If a certain amount of electricity is required, the exchange determines the price as follows: Starting with the lowest prices, power plants with higher prices are taken into account until demand is met. The most expensive power plant that is just needed to meet the target - called the marginal power plant - determines the electricity price on the spot market. If the consumption increases z. B. In the evening or if there is less electricity from renewable energy available, the price usually rises as well.

Price advantages also bring disadvantages

All players agree that the energy-only market rewards price advantages: the cheapest providers are used to meet the demand for electricity. Logically, the producers of cheaper renewable energy come first. There is electricity in abundance, depending on the weather, and large industrial consumers enjoy low wholesale prices. However, these make refinancing more difficult for the operators of conventional power plants. On top of that, providers with high costs, such as gas-fired power plants, are increasingly being pushed out of the market. They can hardly cover their costs due to the shorter operating times and the lower price level due to the merit order effect and the resulting lower revenues. After a broad and transparent discussion process with experts, business and consumers, the Federal Ministry for Economic Affairs and Energy decided in autumn 2015 to further develop the energy-only market. Nevertheless, many scientists and experts doubt that this market model in Germany can continue to send out the right investment and price signals in the future.