Germany and Texas: Energy twins?

Germany and the state of Texas, so different in so many ways, have some surprising similarities when it comes to their electricity systems. These similarities and differences will be explored at a symposium at the AT&T Executive Education and Conference Center on the University of Texas at Austin campus on September 2. 

Policy makers in both Texas and Germany believe strongly in competitive markets and have largely deregulated their power industries. Both regions have a large and growing amount of renewable energy, especially wind and solar, and are likely to see much more in the future—in Germany, driven by strong policies; in Texas, driven by abundant natural resources.

And in both places, the focus on competition has led to “energy-only” wholesale markets, where generators compete to sell their juice on daily and hourly markets. Unlike other states and countries, they do not get long-term payments to be ready to provide power as needed, called a “capacity” payment. 

These factors (and others) have led to very low wholesale prices in both Germany and Texas. Low prices are driving incumbent utilities toward bankruptcy, and shuttering power plants.

In Texas the result was a contentious debate about capacity markets. While some argued that prices were too low, and would result in power shortages in coming years, others maintained it was just market forces at work. In the end, the state utility commission decided the market was “healthy” and made only minor fixes.

In Germany, the debate is just heating up. The ongoing growth of wind and solar is pushing conventional technologies out of the market, yet those power plants are needed for when the wind doesn’t blow and the sun doesn’t shine.

To inform the debate, a delegation of German energy officials and experts is touring the United States to study market design issues, visiting Texas, the PJM Interconnection, and Washington, DC, during the first week of September. To welcome them, and give a full airing of the issues and their specific challenges, the University of Texas Energy Institute is convening a public symposium, with support from the Heinrich Böll Foundation, the Cynthia and George Mitchell Foundation, and CleanTX.

Oliver Krischer, a member of the German parliament, and a presenter at the symposium, said, “Germany has very strong energy and climate goals, including getting to 80 percent renewable energy by 2050.  As wind and solar become more mature and cost effective technologies, we are entering a new phase in our energy transition, known as the Energiewende.  The future will hinge on having an efficient, competitive, and cost effective market design that will make the transition as smooth as possible.”

University of Texas professor Michael Webber, Deputy Director of the UT Energy Institute and Co-Director of the ATI Clean Energy Incubator, will also present at the symposium. “These fundamental issues of market design are universal and will have a profound impact on the growth of renewables,” he said.  “Texas and Germany have a lot to learn from each other.”

The symposium will also feature: 

• Dr. Felix Matthes: Research Coordinator for Energy & Climate Policy, Öko-Institut (Institute for Applied Ecology), Berlin

• Dr. Christoph Maurer: Managing Director, Consentec GmbH, Aachen

• Walter Reid: The Wind Coalition, Austin

• Phillip Oldham: Partner, Thompson & Knight, Austin

• John Fainter: Association of Electric Companies of Texas, Austin

Event website:  https://germanpower.splashthat.com

Time and location:

September 2, 2014

2:00—5:00 PM

AT&T Executive Education And Conference Center, Room 203

1900 University Aveue

Austin, Texas  78705

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