Jan: How have clients reacted to adopting the technology?
Amani: It took some time to overcome the initial skepticism. Some of our clients are asset owners of small distributed plants. They might be farmers who own and operate a biogas plant. Another type of client includes the transmission grid operators, and we provide them with balancing energy. We had to convince both groups that our technology is up to the task of providing reliable balancing power on short notice, and that we could handle the administrative process. Since we are very good at doing both, they have come to trust and like us.
Jan: What sort of cost reductions have you helped realize for clients?
Amani: For the plant owners, we create additional revenue streams rather than reducing costs. We share profits from running their plants more flexibly in peak hours and we share the revenue from providing balancing capacity and balancing energy. We also have demand-side customers, and they benefit from notable cost reductions. One example is a public dike in North Germany, which pumps out water after heavy rainfalls. Their demand is very flexible, so we can flexibly run their pumps when power is cheap on the intraday markets.
When companies like us and our competitors enter the balancing energy market, it helps grid providers and end customers significantly reduce balancing costs. They have seen cost reductions of 25 percent – around 150 million euros – over the past four years.
Jan: Are clients solely profit-driven or do they also have environmental/CSR concerns?
Amani: Both, although they are mostly profit-driven. Our clients are businesses, so they react according to incentives. However, many of them have a green conscience and are excited to be part of Germany’s Energiewende. The fact that they can help balance the grid is certainly a cause for hidden and well-deserved pride which also helps us.
Jan: Last but not least: Should governments actively support decentralized energy or should it be left to the private sector?
Amani: As a power trader, I don’t believe there has ever been an energy system fully financed by the private sector. For instance, the new nuclear power plant at Hinkley Point in England receives a guaranteed subsidy of around 11 EUR cents per kWh. In Germany, there have been PV plants auctioned with a subsidy of 6 EUR cents per kWh. It is also important to remember that conventional plants do not pay their true costs, which would include their negative external costs. I would love nothing more than a system that would involve a CO2 price and honest Pigouvian taxes for conventional plants. If we had that system, we would not need to subsidize renewables. However, since we do not live in this beautiful technocratic world envisioned by economists, we will have to take the second best option and subsidize renewables for the foreseeable future. We must remember: if we do not take this step, sooner or later the real costs of conventional power will become painfully clear, and this is already starting to happen.
Market Access & Trading Services
Next Kraftwerke is a leading European power trader and provides access to day-ahead and intraday markets as well as long-term and OTC trading on various power exchanges in Europe. In addition to our trading services, which also include brp and portfolio management, we offer a trading platform for an easy and cost-effective market access.