RWE has dominant position on Germany’s electricity market, watchdog warns

Germany’s competition watchdog has warned power company RWE not to abuse its dominant position in the country’s electricity market. "RWE is indispensable for meeting the demand for electricity in Germany in a large number of hours," the watchdog’s president Andreas Mundt said, adding that the company was thus "clearly above the so-called presumption threshold for market dominance." Utilities EnBW and Leag were also close to this threshold, he said. RWE was the largest electricity producer in Germany between October 2021 to March 2023, the period under review in the federal antitrust authority’s (Bundeskartellamt) latest market report. "The market relations in electricity generation have become entrenched,” Mundt said.

The authority explained that the competitive status of a company can often be gauged from its market share. “In electricity generation, however, market share is not meaningful because electricity cannot be stored. It has to be produced exactly at the moments when it is needed, every hour of the year. The level of market share over the year is therefore not decisive,” Mundt added. The watchdog said market power in the electricity sector is measured by how many hours per year a company is indispensable to meet demand, warning these moments of scarcity give suppliers the opportunity to manipulate the price. “The power plant parks of all three leading electricity producers are particularly indispensable for meeting demand when the feed-in of electricity from wind and solar is low, and demand is high,” Mundt said. He added that electricity imports will become increasingly indispensable in the future to keep the market power of the leading domestic suppliers in check. “Without sufficient electricity imports in moments of scarcity, the market power of domestic electricity producers would be even more pronounced,” he concluded.