Expert commission calls for new market mechanisms
Germany is facing a fundamental decision. The expert group, which annually assesses the progress of the energy transition, warns that the current electricity market system is no longer keeping pace with the reality of an increasingly renewable energy system. The previous market mechanisms date back to decades in which coal, gas and nuclear power plants formed the foundation. Today, however, fluctuating wind and solar yields shape the electricity landscape – and the existing design is hardly prepared for this. The Commission is therefore calling for a system that rewards flexibility, directs investments in a targeted manner and eliminates unnecessary inefficiencies.
1. Why the restructuring of the electricity market cannot wait any longer
Energy policy is under pressure: solar and wind power now determine electricity production much more than in the past. Price trends, load profiles and generation cycles are becoming increasingly dynamic – but many regulatory rules date back to a time when conventional power plants set the pace. According to the expert commission, the existing market design does not reflect this development. A sustainable system must reveal when electricity is scarce and when there is excess, so that consumers, companies and… network operator can react flexibly.
At the same time, Germany is going through a phase of profound change. Renewable energies are growing rapidly, while grid signals and market rules still follow the pace of past decades. If reforms are not implemented, there will be higher costs, inefficient expansion strategies and more and more situations in which wind or solar systems have to be curtailed. The Commission therefore emphasizes that political hesitation would slow down the energy transition – and that decisions must be made promptly.
2. Electricity market before the reorganization – what are the biggest opportunities?
The experts identify several areas in which politicians must take action. One of the most important points concerns transparent price signals. Electricity prices must reflect more closely when supply is high or low so that flexible consumers and storage can control their use in a targeted manner. In addition, the Commission is calling for strategic planning in order to dismantle fossil structures in an orderly manner and not to continue them unnecessarily in parallel.
Another point of criticism concerns energy efficiency – an area in which Germany has made little progress in recent years. Without an effective efficiency program, there is a risk of increasing energy consumption and higher costs for companies and households.
Economist Veronika Grimm puts it in a nutshell: “We have to rely more on market signals in order to direct investments in a targeted manner and keep costs within limits.”
3. Why this assessment is a clear warning signal
The Commission believes that a large proportion of the necessary investment is currently not taking place where it would bring the greatest benefit. A lack of price dynamics means that technologies such as stationary storage, flexible consumers or intelligent energy controls do not fully exploit their potential. However, these applications in particular are considered crucial building blocks for stabilizing an electricity system that is characterized by highly fluctuating production volumes.
4. What a future system based on the electricity market could look like
A market design that makes scarcity and abundance clearly visible could significantly accelerate the energy transition. Flexible technologies would have stronger economic incentives, companies would invest more in storage and load management and households with PV systems, heat pumps or electric cars could use price signals to reduce costs. At the same time, network operators benefit because fewer bottlenecks arise and load peaks flatten out.
The integration of renewable energies is also becoming more efficient: instead of switching off excess wind or solar power, flexible consumers and storage could absorb surpluses. The Commission sees this as a crucial lever for a climate-neutral and affordable energy system.
5. The current situation: Experts see politics as responsible
The expert commission agrees: Germany needs a future-proof market design quickly. If the electricity market remains stuck in the old system, not only costs will rise, but also the risks to security of supply and climate goals. The federal government should present concrete proposals that combine price transparency, efficiency and flexibility by 2026 at the latest.
The report concludes with a clear message: An electricity market of the future must allow innovations and specifically strengthen flexible technologies. Only if price structures, rules and investment incentives are tailored to a dynamic energy system will the energy transition remain reliable, affordable and plannable. Such a market creates space for technological development, promotes efficient solutions and ensures that renewable energies can develop their full potential in everyday life and in the overall system.