Energy company RWE remains dominant in German electricity market – competition authority
Clean Energy Wire
Energy company RWE has been found for the fifth time in a row to be in a dominant position in the German electricity market, according to a report by the Federal Cartel Office. Although time periods when electricity demand could not be met without the company have decreased, the market situation is expected to shift back in its favour, the report said.
Electricity consumption was reduced last year due to a weak economy, Tagesspiegel Background reported. The effect could be reversed, however, by an increasing number of consumers using heat pumps and electric vehicles, or by economic recovery. “We assume that RWE power plants have again been indispensable more often since May 2024 and that this trend is likely to continue,” said Andreas Mundt, president of the Federal Cartel Office.
Conventional power plants are especially indispensable for meeting electricity demand when production of wind and solar power is low in periods of high electricity demand. The recent price spike on 6 November 2024, when supply of wind and solar electricity was extremely low (Dunkelflaute), was a striking example of this, the cartel office said.
RWE has shown an ability to systematically predict when its plants are essential to meeting energy demand and therefore could in theory drive up prices, the report said. Electricity imports have also increased when compared to previous years, with the report finding that they were increasingly important for restricting the market power of domestic electricity suppliers.
The Federal Cartel Office has a statutory responsibility to publish a report on the conditions of the electricity market every two years, but overall, this has no direct legal consequences, Tagesspiegel said.
On LinkedIn last week, RWE CEO Markus Krebber warned that Germany must quickly decide on the construciton of new power plants to ensure a secure supply in the transition towards renewables and prepare itself for times of very little output of wind and solar power installations.
He argued that the system could not be kept stable during severe Dunkelflaute events if no new secure backups are built while older fossil power plants are being taken off the grid. Already at the end of 2023, Krebber had said that an earlier coal exit in Germany hinges on the construction of new gas-fired and hydrogen-ready power plants.
Reforms to the German energy market were proposed by the climate ministry in August to help move towards a decarbonised energy sector. The collapse of the coalition government has raised concerns around energy and climate policy in recent weeks, with the outstanding Power Plant Security Act that is meant to prepare auctions for plants that act as a backup for the electricity system being a major concern for many energy industry stakeholders.
