Exclusive Exclusive: Uniper Chief Calls for Power Market Reform

The head of newly created utility Uniper, Klaus Schäfer, is calling for a reform of the German electricity market. “I’m being very clear: We’ll need a capacity market. The power market doesn’t produce the necessary price signals anymore,” Mr. Schäfer said in a Handelsblatt interview, the first since he took over at Uniper, a company created through spinning off the conventional fossil fuel business from Germany’s formerly largest utility E.ON. A capacity market, as demanded by Mr. Schäfer and other conventional power firms, remunerates energy companies for keeping plants at the ready in case renewable energy sources such as wind and solar cannot serve the current demand. The German government in the past rejected such a proposal, but the Uniper chief believes this will change. “I am deeply convinced that we will get this [capacity market] in Germany too,” he said. “To hedge renewables with all their strengths and weaknesses, we need technologies that produce reliably and can be called upon flexibly,” Mr. Schäfer added. He warned that otherwise electricity shortages might ensue, which can have grave ramifications. “For a big industrial country such as Germany, a blackout of only a couple of minutes would already be a major problem. This is not just about the interest of the energy industry, but of the entire economy and even the entire society,” the executive said. Mr. Schäfer is not worried about the business prospects of coal, gas and nuclear energy, he noted. “In Europe, conventional plants might currently have difficulties, but in emerging markets, demand is high,” he said. Commenting on a massive loss the former parent company E.ON suffered in Brazil in the past, he said: “Without a doubt E.ON had to pay its dues there – but people also learned from it.” “It makes more sense to commit to several smaller projects, and to contribute our knowledge rather than a lot of capital,” he added.   Read the full interview in Monday’s Handelsblatt Global Edition at 12:00 CET.