Bundeskartellamt’s 2021 market power report on the electricity generation sector

The Bundeskartellamt has today published its third market power report on the conditions of competition in the generation of electricity in 2021. As in the previous years, the report analyses the market power situation in the generation and first-time sale of electricity. For the first time, the report provides indicators of the market situation in certain areas of balancing services in greater detail.

Andreas Mundt, President of the Bundeskartellamt: “The past year was characterised by a resurgence in electricity demand and the first shutdowns of power plants carried out as part of the phase-out of coal power. This was accompanied by a comparatively low feed-in of electricity from renewable sources. As expected, this made the power plant fleets of the electricity supplier RWE, which remains the largest supplier, indispensible for meeting the electricity demand in a significantly higher number of hours. According to our investigations, RWE thus is above the threshold for a dominant market position. RWE’s market position is likely to be further strengthened by the shutdown of three more nuclear power plants in late 2021 and the continuing phase-out of nuclear and coal power.”

The report analyses the market and competition conditions on the German-Luxembourg market for the first-time sale of electricity from 1 October 2020 up to and including 30 September 2021. The analyses are based on extensive data on the utilisation of all power plants in Germany. The results of the analyses show that RWE is currently the only power generating company which clearly exceeds the threshold for the presumption of market dominance applied by the Bundeskartellamt. The analyses also show that power plant capacities outside Germany have become more important for the market for the first-time sale of electricity in Germany.

Provision of balancing energy

In the area of balancing services, which are required to balance out frequency fluctuations in the grid, the framework conditions for competition were fundamentally changed with the introduction of the balancing energy market in November 2020. Against this background, the Bundeskartellamt has for the first time determined indicators of the market situation for different forms of balancing energy.

Andreas Mundt: “The power plant data we analysed point to a very high concentration in certain areas of balancing services, which applies in particular to positive secondary control power. Pump storage plants are particularly important in this regard, and EnBW is the leading supplier. The question as to whether its position is dominat still has to be examined in greater detail, taking into account more factors. We will continue to keep a close eye on the pricing behaviour of the major providers in the area of control reserves.”

Prospects

The Bundeskartellamt has a statutory responsibility to publish a separate report on the competitive situation in the electricity generation sector at least once every two years. The reports are intended to provide greater legal certainty for market players with regard to their current market position. In view of the dynamics of the transformation process in the context of the ongoing phase-out of nuclear and coal energy and the forthcoming establishment of European platforms for the procurement of balancing services, the authority is considering publishing also the next market power report sooner than the statutory two-year period.

The 2021 market power report is available in German here.