London, 24 September (Argus) — The German government is preparing a draft law that aims to prevent the retirement of certain power plants and pave the way for prioritising fuel supply to system-relevant gas-fired units in an effort to avoid power supply bottlenecks after last year's nuclear phase-out decision.

The proposed measures could be used as a bridge solution, allowing policy makers to make a more in-depth decision on the future design of the German power wholesale market, according to a document seen by Argus.

German chancellor Angela Merkel's government has started to draw up key points for the draft law to ensure security of supply, especially in the demand-intensive winter period, after her coalition decided last year to immediately retire eight nuclear reactors and phase out Germany's remaining nuclear fleet gradually by 2020.

Under the proposals, plant operators will be obliged to notify transmission system operators (TSOs) and grid regulator BNA at least 12 months in advance if they want to retire power plant units to allow for “sufficient planning security and time for possible actions”.

Under the proposals, operators would be prohibited from retiring so-called system-relevant but unprofitable power plants — units that are necessary to keep the grid stable under extreme situations such as demand spikes during cold spells or a high influx of renewable power output.

Plant operators will be forced to ramp up such units at the request of TSOs if security of supply is at risk, but will receive “appropriate compensation” under the proposed rules.

Reserve capacity
The document also proposes a transparent and “systemised” approach to secure reserve capacity from winter 2013-14.

Older power plant units, often unprofitable because of their low efficiencies and high maintenance costs, would be kept in reserve “outside of the market” and called on line only if needed to avoid supply or grid bottlenecks in the winter.

These measures would have no impact on the current debate on “comprehensive changes” to the power market design which focuses on whether Germany should introduce a capacity market to incentivise the operation of existing and the construction of new fossil fuel-fired plants, according to the document.

Lastly, the document includes a proposal to oblige operators of system-relevant gas-fired plants to have fixed fuel-supply contracts in place.

And gas network operators will be obliged to prioritise system-relevant power plants first in times of supply bottlenecks to keep the power grid stable.

This comes after several gas-fired plants in southern Germany ran at reduced capacity or were forced out of service because of fuel supply issues during early February's cold spell.

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