market formation activities in the process of ...€¦ · • new actors, technologies and rules in...

Stuttgart Research Center on Interdisciplinary

Risk and Innovation Studies ZIRIUS

Market formation activities in the process of transformation of the German energy system:

the case of direct marketing of electricity generated by renewable energies

Sandra Wassermann

Conference “Energy Systems in Transition”

Karlsruhe, 9th-11th October 2013



Background

• Market- and organisational-sociological perspective

• Input from interdisciplinary research and discussions with energy-economists

• Joint work on the set-up of an Agent Based Model “AMIRIS”

Thomas Kast

Simulation ∙ Solutions

2



Research question and methods

• The transformation of the German energy system takes place in several energy sub-fields.

• How are those sub-fields organised in the process of transformation? Who are the actors?

Which actors are successful?

What are the innovations they are developing?

…

• Sub-field “direct marketing”

• Document analysis

• 14 Expert interviews external experts to gain context knowledge of the field (associations, banks)

Internal experts: actors who actively organise the field

• Workshop with actors

3


Risk and Innovation Studies ZIRIUS Challenge: Direct marketing as alternative to

EEG • Direct marketing as solution in order to overcome negative consequences

produced by the EEG

• German instrument to support renewable energy sources (RES): “Act on Granting Priority to Renewable Energy Sources” (EEG) from 2000

Fixed feed-in tariffs (FIT) and guaranteed buy-offs for electricity produced by RES through Transmission System Operators

• Success Share of RES of the German electricity supply increased from 6,3% (2000) to 14% (2007) to currently 23%

Share is supposed to increase to 35% (2020); 50% (2035); 80% (2050)

Already now over 50% of the share are intermittent RES (wind, solar)

• Challenges Grid stability is threatened

Market mechanisms are ignored

Sometimes even negative spot prices

4



Direct marketing

• Organising direct marketing of electricity from RES Innovations needed in order to balance negative aspects of intermittent RES

• Instruments Forecasting technologies

Virtual power plants

Remote control technologies for better regulating RES

• Goal: Intermittent RES take on responsibility for grid stability and operating markets

More demand oriented feed-in

Provision of ancillary services (such as operating reserve) by RES

Majority of RES-power plant operators does not have those competences

5



Field of electricity generation from RES

Table 1: Operator types

Ownership

Privates Farmers Banks +

Funds

Project

developers

Municipal

utilities

Industry 4 major

utilities

Others

(contractors,

internat.

utilities)

Tec

hn

olo

gy

Wind 51,5 1,8 15,5 21,3 3,4 2,3 2, 1 2,2

Biogas 0,1 71,5 6,2 13,1 3,1 0,1 0,1 5,7

Biomass 2,0 0 3,0 6,9 24,3 41,5 9,6 12,7

PV 39,3 21,2 8,1 8,3 2,6 19,2 0,2 1,1

Source: trend: research 2011

6



Organisation of the new field

• Direct marketing interpreted as emergent strategic action field (Fligstein/McAdam 2011)

– No existing field structures, no routines and no rules

– New SAFs are likely to be populated by existing groups from neighbouring fields who try to translate their rules into the new field

– SAFs consist of three types of actors: incumbents, challengers and governance units

• New actors, technologies and rules in order to organise the new field of direct marketing

– Competing actors coming from neighbouring fields

– Cooperation with RES operators to buy their electricity

– Improving forecast and forecast-related technical services

– Scheduling communications with the grid operators and related tasks

– Developing ideas for new regulative mechanisms and subsidies

– Cooperation with governance units

7



Neighbouring action fields and actors

Conventional electricity trading

•Big municipal and international utilities •Small highly efficiency-oriented actors

Direct marketing

Green electrictiy trading •Niche actors with links to field of RES generation •Actors with green electricity as part of integrated concepts

Electricity generation from RES

•Marginal activities •Mainly cooperations with actors from other fields •Ideas on local marketing

8



Field activities

• Actors from the field of green electricity trading with first niche activities in 2006-2009, supported by §37 EEG (“green electricity privilege”)

• In 2010/2011 business models copied by actors from the field of conventional electricity trading

• Accuse of “windfall profits”: Debates on future design of the EEG • Actors from the field of green electricity trading developed ideas to improve the

regulative framework but to protect their business model

• Actors from the field of conventional electricity trading developed ideas to support trading electricity from EEG-power plants at the EEX or on balancing energy markets

• Actors from the field of RES-generation developed ideas for local direct marketing

• In 2012 new regulative framework (“market premium”, restricted “green electricity privilege”) • Selling electricity from EEG-power plants on conventional electricity markets (EEX,

market for balancing energy…) now supported

• Selling green electricity from EEG-power plants pushed back into niche

• Idea of local, decentralised direct marketing only in very small niches

9



Three ways of direct marketing

0

5000

10000

15000

20000

25000

30000

35000

Jan

-10

Mrz

-10

Mai

-10

Jul-

10

Sep

-10

No

v-1

0

Jan

-11

Mrz

-11

Mai

-11

Jul-

11

Sep

-11

No

v-1

1

Jan

-12

Mrz

-12

Mai

-12

Jul-

12

Sep

-12

No

v-1

2

Jan

-13

Mrz

-13

Mai

-13

Jul-

13

MW

Installed power of RES in direct marketing

direct marketing at the EEX

direct marketing of green electricity

local direct marketing

10 Source: own illustration, based on data from EEEG-KWK.net



Current situation

• Field still not finally settled, but more and more organised Specific rules, cooperation, routines have developed

Actors in the field know about each other: who is successful, who has influence

At present almost 50% of electricity of RES are in direct marketing contracts (35 GW)

In 2012 more than 70 actors

• Innovations Technological innovations (virtual power plants, remote control, forecast)

Business models still advancing (RES as balancing energy)

• Consolidation phase in 2013 Market share of market leader: 24% (8 GW)

Six actors have portfolios between 2,5 and 1 GW

Debates on the regulative framework and future design of electricity markets

11



Conclusion

• Competing actors coming from neighbouring fields started to organise a new field of direct marketing

– Cooperation and network activities

– Innovation activities

– Policy activities to influence the regulative framework

– Cooperation with governance units in new working groups and dialogue boards

• Winners and losers among all type of actors

• Successful incumbents and challengers from the field of conventional electricity trading

Early strategic cooperation wit RES-operators in 2010 and 2011

Innovation activities positively rewarded

Explicit goal to support RES and medium-sized structures

• Green electricity trading back in the niche (but successful)

• Local direct marketing in very small niches

12



Thank you for your attention!

Sandra Wassermann, M.A. CIRIUS – Stuttgart Research Center on Interdisciplinary Risk and Innovation Studies Seidenstraße 36 70174 Stuttgart Tel.: +49 (0)711/685-84812 Fax: +49 (0)711/685-82487 http://www.zirn-info.de [email protected]

market formation activities in the process of ...€¦ · • new actors, technologies and rules in...

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