State aid: Commission clears German Network Reserve for ensuring security of electricity supply

On the 20 December 2016, the European Commission approved under EU state aid rules German plans to put in place for four years a reserve to ensure sufficient electricity capacity in Southern Germany (the Network Reserve). The German energy regulator Bundesnetzagentur estimated the costs of the Network Reserve to amount to € 126 million in 2016.

The Commission considered that the Network Reserve constitutes a type of strategic reserve and hence a capacity mechanism. The Commission found that in the case of Germany, State intervention is necessary in view of severe internal congestion in the German electricity grid that prevents sufficient power flows from Northern to Southern Germany.
In order to remove the necessity for the Network Reserve in the future, Germany would also implement a number of additional measures to improve congestion management by the transmission system operators.