The German electricity market has been in motion for years. Especially with the deregulation of the electricity market in 1998 and the energy turnaround, new challenges keep emerging.
In order to understand these challenges and their effects on one’s own business or area, a basic understanding of the electricity market is important.
The players in the electricity market
There are some participants in the electricity market. These in turn have many different market roles. This results in many terms and buzzwords in the energy sector. To keep it simple, only the major players active in the market are presented here for now.
The electricity producers / generators
As the term suggests, any company or person that produces electricity is an electricity generator or producer.
Regardless of whether the energy was generated by wind, hydropower, photovoltaics, biomass or geothermal energy or by power plants that use fossil fuels such as lignite or hard coal, natural gas, oil or uranium; the result is a homogeneous product: electricity.
The “Big Four”, i.e. the four largest electricity producers in Germany, are RWE, E.ON, Vattenfall and EnBW. There are also a large number of medium-sized producers, mainly local or regional municipal utilities. These producers often also assume the role of basic supplier.
As a result of the energy transition, a new type of producer has emerged over the past few years: operators of biomass, wind power or photovoltaic systems. Today, a private person can also be a power producer if e.g. B. a photovoltaic system is installed on the roof.
The electricity suppliers
As a consumer, you usually get your electricity from an electricity supplier, which ensures that a household or company is supplied with electricity. Even if many generators, especially the larger ones, both produce electricity and supply customers, it is by no means necessary to produce electricity in-house to supply electricity to customers.
The electricity supplier procures the required quantities and reports the forecast electricity consumption to the grid operator on a daily basis. He also ensures that all processes run smoothly in the background and usually takes on the billing of all taxes and levies that are incurred in addition to the energy costs.
The quantities of electricity are procured via organized trading venues such as the electricity exchange in Leipzig or through direct trading between business partners. Different products can be bought, e.g. B. Electricity for whole years, certain months, individual hours or even quarters of an hour.
The electricity supplier is a kind of intermediary between the customer, the electricity producer and the electricity grid. He takes care of all the coordination so that the electricity can also reach the consumption points and be billed. The utility influences the electricity costs for the consumer through its procurement strategy and its own charges.
The network operators
The power grid operator is responsible for the infrastructure and the transport routes. He must ensure that the grids are stable and that the electricity generated reaches the consumers.
The grid infrastructure also includes the electricity meter infrastructure. The grid operators must ensure that every new building is equipped with an electricity meter as soon as it wants to draw electricity. Alternatively, electricity meters can also be installed and operated by electricity suppliers who are authorized to operate metering points. For example, Areva is an electricity supplier authorized to operate metering points.
In addition, the power grid has different voltage levels for which a grid operator is responsible. It ensures that the electricity is transferred from the high-voltage grid via the medium-voltage grid to the low-voltage grid of the connected households.
When it comes to grid operators, a distinction is made between transmission grid operators and distribution grid operators. The transmission system operators are responsible for the national distribution of electricity, the distribution system operators are responsible for regional distribution.
A further distinction lies between the fundamentally responsible and the competitive metering point operators. The basis of this distinction is the free choice of metering service providers by the points of consumption or connection users, as stipulated in the law on the digitization of the energy transition.
The state as a regulatory body
The power grids required for the distribution and transport of electricity represent a natural monopoly, since competition can hardly be established here. The transport and distribution of electricity are therefore regulated by the state. Accordingly, the state must be mentioned here as an additional player on the electricity market.
The state-regulated transmission and distribution grid fees now account for around a quarter of electricity prices. Additional state levies, taxes and levies – these include the concession fee, the EEG levy, grid fees, the offshore liability levy and others – contribute to the fact that the electricity price consists of almost 70% statutory levies.
Market roles in the energy industry
A key component of the energy transition is electronic data exchange and digital communication between the individual players in the electricity market. The goal is a so-called smart grid. In other words, a power grid in which communicative networking and control of all players in the power market is possible. Also referred to as the “Internet of Energy”.
In order to facilitate this communication between the market partners in the context of electronic data exchange, the Federal Association of Energy and Water Management e. V. (BDEW) developed and published the “role model for market communication in the German energy market” in May 2019.
However, it will probably be some time before the German and European electricity market corresponds to the market role model.