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The Monopolies Commission is investigating competition trends in Germany’s energy markets

06.10.2017

Press release

  • The Monopolies Commission proposes a regional grid charge levied on producers of renewable energy to limit the costs of grid expansion
  • To achieve greenhouse gas reduction targets, the European Emissions Trading Scheme should be strengthened by including further sectors
  • The Monopolies Commission is calling for changes to the way licences for grid operation are awarded, in order to ease the burden on consumers 

The energy transition poses major challenges for the entire energy system in Germany, for which targeted solutions must be found. In its special report published today, entitled ‘Energy 2017: A Targeted Approach, Avoiding a Patchwork Solution’, the Monopolies Commission sets out proposals on where the new federal government should focus its efforts. 

At present, we are seeing few concentration issues in the energy market. However, adapting the regulatory framework in the context of the energy transition poses a major challenge. A consistent regulatory framework could help to limit the costs of the energy transition.

Achim Wambach, Vorsitzender der Monopolkommission

The market share of the four largest energy suppliers has fallen once again compared with 2014. In 2016, it stood at 54 per cent (2014: 62 per cent). Other market power indices, which the Monopolies Commission calculates regularly – such as the Residual Supply Index (RSI) – currently do not indicate any market power issues in the wholesale electricity market either. 

One of the key focuses of the 2017 Special Report on Energy is the implementation of the energy transition in Germany. The primary objective of reducing greenhouse gas emissions should be achieved by strengthening the European Emissions Trading System (EU ETS). To this end, further sectors, such as the transport sector, should be included. A functioning, cross-sectoral EU ETS enables the phasing out of subsidies for renewable energy and supports sector coupling, i.e. the use of renewable energy in the relevant sectors. Subsidies for renewable energy installations, such as wind farms and solar panels, as well as the expansion of electricity grids driven by the energy transition, entail costs that are placing an increasing burden on electricity consumers in Germany. The Monopolies Commission proposes measures that could limit these burdens. Technology-neutral tenders for the support of renewable energy installations enable cost-effective expansion. Furthermore, the introduction of a regionally differentiated grid tariff for electricity generated by new renewable energy installations (‘renewable energy regional component’) would provide incentives for operators of such installations to take any grid expansion costs into account when choosing a location. This would limit the need for grid expansion and the grid charges payable by electricity consumers. 

Local authorities must regularly put out to tender the concession for the operation of the electricity and gas distribution networks in their area. The Monopolies Commission has identified shortcomings in the tendering procedure which often result in the contract not being awarded to the most cost-effective bidder. Local authorities should therefore also use competition to their advantage by offering a discount on the expected network usage charge (‘network dividend’), which would ensure that the concession is awarded to the bidder who can operate the network most efficiently. In this way, consumers could benefit from lower network charges. 

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