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Federal Cabinet approves temporary extension of the supply reserve as a hedging instrument for the coming winter
Today, the Federal Government adopted the Ordinance amending the Ordinance governing use of the supply reserve tabled by the Federal Ministry for Economic Affairs and Climate Action. The decision was taken on the basis of the evaluation report as per section 50j(1) Energy Industry Act, which was also approved by the Cabinet today.
Following the amendment of the Ordinance governing use of the supply reserve, the supply reserve, which used to be in service between 1 October 2022 to 30 June 2023, will be temporarily reactivated as an additional safeguard for the winter. The amendment makes it possible for installations for electricity generation that are part of the the supply reserve to temporarily participate in the electricity market from early October 2023 to 31 March 2024. However, their participation in the electricity market is subject to the declaration of the gas alert level or the gas emergency level.
The supply reserve is being reactivated with a view to conserving gas that would otherwise be used for electricity generation, and to thus preventing gas supply bottlenecks in the 2023/2024 heating period.
The objective of completing the phase-out of coal, ideally by 2030, does not change as a result of this measure, nor do the climate targets.
The ordinance is based on section 50d Energy Industry Act, which was introduced by the Act on the Maintenance of Substitute Power Plants and is intended to provide additional generation capacity so as to prevent any supply bottlenecks in the 2023/2024 heating period and allow for gas to be conserved.
The Ordinance is to enter into force on the day following its promulgation. The Ordinance does not require the approval of the Bundesrat.
The Ordinance amending the Ordinance governing use of the supply reserve can be found hier (PDF, 79 KB) (PDF, 79 KB) (in German).
In addition to the Ordinance governing use of the supply reserve, the Federal Government’s Evaluation Report as per section 50j(1) Energy Industry Act was also adopted.
Pursuant to section 50j(1) Energy Industry Act, the Federal Government reports to the Bundestag as to whether it is necessary and justified to keep the measures as per sections 50a to 50h Energy Industry Act in force, in particular with regard to their impact on the energy industry and on the climate.
The report that was adopted today meets these requirements. It uses a model of the European electricity market to assess the impact of having additional electricity generation capacity participate in the market, both on the energy industry and on the climate. The focus of the analysis with regard to the energy industry is on the impact on demand for natural gas at power plants and public heating plants in Germany and Europe (natural gas savings). Furthermore, the report looks at the impact on CO2 emissions from power plants and public heating plants (development of CO2 emissions) and on electricity prices.
The authors concluded that the two instruments under scrutiny, i.e. the temporary return of power plants from the grid reserve to the market and another temporary use of the power plants in the reserve, are individually and jointly suitable for replacing natural gas used for electricity generation in the coming winter, depending on the supply situation, and for reducing demand for natural gas overall. As per section 50j(3) Energy Industry Act, the Federal Ministry for Economic Affairs and Climate Action will conduct an assessment after 31 March 2024 to see whether and to what extent additional greenhouse gas emissions have resulted from application of this legislation. By the end of 30 June 2024, the Ministry will then table proposals for measures to be taken to compensate for these additional emissions.
In addition to this, the Federal Government stands by its legally binding climate targets for 2030 and for 2045 enshrined in the Federal Climate Change Act (2030: greenhouse gas reduction of 65% compared to 1990; 2045: greenhouse gas neutrality).