Markus Krebber, the CEO of RWE, Germany’s largest power generator, has indicated that the draft “Electricity Supply Security and Capacity Law,” presented by Federal Minister of Economic Affairs Katherina Reiche (CDU), requires amendments. Speaking to the publication, Krebber stated that while the fundamental direction of the law is correct, some of the criticism surrounding it is well-founded.
RWE’s chief criticized the legislative proposal for including price ceilings, which could discourage numerous investors from building new power plants. Furthermore, he argued that setting demands for investors to provide grid services was inappropriate for the law’s scope. Despite these reservations, Krebber expressed confidence that the parliamentary process would result in a strong piece of legislation. He added that RWE aims to be among the successful applicants in the initial auction round scheduled for September, as the company can offer the lowest-cost facilities.
This landmark energy law, driven by the coalition government, establishes the terms under which the federal government will subsidize the construction of gas and other dispatchable power plants. The program is designed to safeguard the electrical supply against the potential failure of wind and solar facilities during periods of low wind generation. However, critics have noted that the funding criteria specified in the law may be financially unfeasible for smaller energy providers, such as municipal utilities or battery park operators. The bill is currently undergoing its parliamentary procedures, with its second and third readings expected in the Bundestag next week.
RWE plans to participate in the auction for a 3 GW capacity of gas-fired power plants. Overall, the federal government intends to award licenses for fifteen gigawatts of dispatchable capacity. Concerns have also been raised that, through these power plant tenders, RWE could gain excessive market power in Germany. Discussions therefore emerged regarding the implementation of an upper limit per bidder in the auctions.
Krebber strongly warned against this specific measure. He stressed that RWE has been forced by political decisions to decommission power plant capacity in the tens of gigawatts, leading to the loss of over 10,000 jobs. He criticized the current proposals by stating that building up to three gigawatts would not even remotely replace the capacity already taken offline. In his view, such a limitation would send “a devastating message” to both the company and the region.
