ZEW Survey Among Energy Experts - Proposed "Power Shut-Down Regulation" Is of Limited Value - The Expansion of the Power Grid Is More Important

Experts consider the current plan of the German Federal Ministry of Economics and Technology (BMWi) to regulate "load shedding" major consumers in the power grid a step in the right direction, yet they regard the further expansion of the power grid as the most important measure for safeguarding electricity supply. This is a key finding of the recent ZEW Energy Market Barometer, a biannual survey of approx.

200 experts in the energy industry.

In November 2011, the ZEW Energy Market Barometer asked 200 experts for their opinions about the most effective measures for assuring the security of electricity supply. Among the experts, 64 per cent favoured further expansion of the power grid. Half of the experts surveyed supported the introduction of an auction for load shedding. This proposal foresees allowing network operators to "auction off" short-term power supply interruptions. Network operators may then select the lowest bidder among their energy-intensive consumers. By contrast, the power shut-down regulation currently proposed by the BMWi (known as the "Abschaltverordnung") would set fixed compensation payments for bilateral contracts between energy-intensive consumers and network operators. Yet as Prof. Dr. Andreas Löschel, head of ZEW’s research department of Environmental and Resource Economics, Environmental Management, points out, "Regulators have little knowledge about the actual potential for flexibilisation on the part of energy-intensive industrial consumers. However, it is only possible to efficiently regulate load shedding if we take this into consideration. It remains to be seen whether the regulation currently envisaged will promote flexibilisation of demand. But it would be an important step in realising the transition to an alternate energy economy."

Moderating household energy demand can also contribute to the stabilisation of electricity supply. In the opinion of almost half (49 per cent) of the energy market experts surveyed, "smart meters" are an appropriate tool for reducing household electricity consumption during periods of high load. Smart meters can let households know when electricity is available to them at an especially favourable price. In this way, households can help to shift aggregate electricity consumption toward periods of weak demand. The experts are less optimistic, however, about the effectiveness of informational and advertising campaigns. Only 30 per cent of those surveyed were convinced that advertising could induce households to change their behaviour with respect to electricity consumption.

For further information please contact

Prof. Dr. Andreas Löschel, Phone +49 621/1235-200, E-mail loeschel@zew.de

Nikolas Wölfing, Phone +49 621/1235-217, E-mail woelfing@zew.de

The ZEW Energy Market Barometer

The ZEW Energy Market Barometer is a twice-yearly survey of around 200 experts from academia and industry, including energy supply, trading, and service companies; regional suppliers; as well as electricity and green-power companies. The experts are asked about their expectations regarding short and medium term developments in national and international energy markets. The complete results of the current survey undertaken in November 2011 will appear in the January/February 2012 edition of ZEWnews.