Frontier sceptical about forced power plant divestment in Germany
The German state of Hessen is preparing a new legal initiative that would allow forced capacity divestments. The proposal is to amend the German competition law and allow for forced divestments in cases of proven abuse of a dominant position, or possibly already based on a proof of market dominance and an expectation of abuse. While the amendment would formally apply to any industry sector it is mainly aimed at the electricity sector and in particular at power generators such as E.ON or RWE. The aim of the proposed amendment is to increase the number of active players in the industry.
As part of its sectoral competition policy initiative ("Perspektive Wettbewerb") the Hessian Economics Minister, Alois Riehl, had invited experts to discuss his proposals during a workshop in Wiesbaden. Christoph Riechmann, head of Frontier's German office in Cologne and one of the invited experts said: "We have too many rather than too few players in the European energy industry. The issue is that they cannot all compete directly with each other as interconnections between countries have too limited capacity. The real challenge is to enhance physical and commercial market integration in Europe". He went on to explain that market integration may yield structural effects earlier than formal divestment processes, would be in line with EU competition policy and would not be interventionist. At any rate, whether market dominance exists in power generation in Germany is questionable.
In recent studies Frontier (Europe) has explored the social benefits of enhancing market integration by better auction mechanisms for the use of interconnector capacities. Frontier is currently investigating how to improve the investment environment for more cross-border interconnector investments. Recent studies by Frontier have also raised doubts about the claim that German power generators did not face competition from abroad.
Versión para imprimir