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Design Options and Impacts of a German Capacity Market

By June 28, 2024July 3rd, 2024Public, Europe, Showcase Feed, Germany, Insight

In response to concerns over security of supply, Germany is considering introducing a capacity mechanism as a complement to its Power Plant Strategy (Kraftwerksstrategie).

In this report, we explore Capacity Market trends and compare centralised and decentralised approaches. We then consider what a central Capacity Market could look like for Germany, and what can be learned from other countries.

Download the report for our detailed analysis, including the following key insights:

  • In a centralised Capacity Market, Germany would need to hold auctions at least 4 years before delivery to provide sufficient lead time for the buildout of new assets
  • When designing a German Capacity Market, it will be crucial to consider decarbonisation policies, as they affect procurement targets and the optimal price cap
  • Continuous adaptation and coordination with neighbouring countries will be key to balancing Capacity Market costs with security of supply

For more information, reach out to Kevin Caballero Henkel.

This report was first presented at a Public Webinar, which you can now watch the recording of.

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