Liberalisation of the German electricity sector and the role of energy policy

This paper gives an account if the impacts of the liberalisation of the German electricity marktet and describes the existing energy policy and recent responses to the liberalisation with respect to the electricity sector. In the first section, supply, electricity consumption and the structure of the electricity market are describes. In the second section, the legal framework for the liberalisation of the electricity market in Germany and the consequences for prices, market structure, legal form of utilities, investment, cogeneration and products offered are presented. The final section first provides an overview of the national and international climate policy targets as well as the agreed upon phase-out of nuclear energy. Finally, existing electricity policy instruments and policy responses to the liberalised electricity market are reported. These policy instruments include support for hard coal and lignite, the new ecological- tax reform, the promotion of renewable energy sources, support for cogeneration, voluntary agreements, and the flexible mechanisms for greenhouse gas emission reductions as introduced in the Kyoto protocol.