Germany’s 50Hertz says power reform a top priority for next government

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FRANKFURT — Tougher climate targets have made it more urgent for Germany’s next government to revamp energy regulations to protect the stability of power supplies and encourage much-needed investments, grid operator 50Hertz said on Friday.

“Bringing forward climate targets has become a game changer for transmission grid operators because we have to handle more system swings as conventional power goes offline,” said chief executive Stefan Kapferer in a call with reporters.

“Given new gas capacity takes between four and seven years to materialize, the new government’s term will be decisive for whether we get a good framework for investors in time.”

Germany goes to the polls in September and the current government has just raised carbon-curbing targets for 2030. Energy and industry firms must switch to wind and solar power more quickly, while nuclear and coal are being phased out under a goal for carbon neutrality in 2045.

That will pose challenges for grid operators tasked with keeping the system in balance and avoiding blackouts.

A study prepared for 50Hertz by consultants Consentec found that 55 gigawatts (GW) of coal and nuclear capacity will be lost by 2030, leaving Germany with 55 GW of firm – meaning non-variable – capacity, mostly gas.

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But a total 80 GW of power can be needed on winter days, of which 60 GW must be firm.

New capacity plans currently total just 1.2 GW, because investors are put off by planning and permissioning processes and doubt the ability of the wholesale market to deliver prices that will ensure future profitability.

50 Hertz pointed to so-called capacity markets in countries including France, Poland, Belgium and Britain, which help to organize back up supplies.

These could help deliver secure income and reduce costs for reserve power schemes in Germany that currently run to around 2.5 billion euros ($3 billion) per year.

Germany’s energy regulator is due to review permitted returns on capital for power grids by July for the five-year period from 2025 and could curb potential income to protect consumers.)

($1 = 0.8394 euros) (Reporting by Vera Eckert Editing by Mark Potter)