German power sector needs oversupply to create more competition

Feb 19, 2008 01:00 AM

The German power sector needs oversupply in order to create more competition and guarantee security of supply, the president of Germany's federal grid agency, Matthias Kurth, said during the e-world energy and water exhibition in Essen, Germany. Kurth said that experience from opening Germany's telecommunications sector 10 years ago showed that when the grids were expanded and modernized to the point of oversupplying the system, prices started to fall and a competitive market was created.
"We therefore need bigger grids, more renewables generation and more conventional power plants in order to create more competition and guarantee security of supply in the power sector."

According to Kurth, investment in Germany's power sector nearly doubled from EUR 600 mm to over EUR 1 bn between 2002 and 2007 and Germany is currently building 7-9 GW of new fossil power generation.
"However, we need more like 20 GW in order to achieve our goals," Kurth said. Kurth also said that "this issue [grid and generation expansion] is much more dramatic for competition and security of supply than ownership unbundling [and] that is why the EU has to see energy as one single entity rather than dividing the issue into subdivisions and commissions such as climate protection, consumer policies, security of supply, competition and ownership unbundling."

Concerning unbundling, Kurth said he finds it "incomprehensible that grid systems where generators and grids are wholly or majority owned by states -- such as in France -- are considered unbundled just because one area is under the responsibility of the economy ministry and the other under the finance ministry.
“Those who know French president [Nicolas] Sarkozy know this means nothing," Kurth said.

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