I OVERVIEW

The German energy sector continues to evolve dynamically. As Germany will probably miss its 2020 carbon dioxide emission reduction goals, the new government plans to intensify its efforts to pursue the reform of the German energy market (the 'energy transition'), meaning a shift of electricity generation to renewable energies, a substantial reduction of carbon dioxide emissions and a phase-out of nuclear energy. In particular, the share of renewable energy sources in the power generation mix shall be increased to 65 per cent by 2030. However, the side effects of these ambitious targets have resulted in rising costs for the support of renewable energies, the need for considerable network expansion and unintended effects on the viability of conventional generation capacities. At the same time, the large German utilities are adapting their business models to the changing market conditions.

II REGULATION

i The regulators

The responsibility for the energy transition and all aspects related to it, including climate change, are concentrated at the Federal Ministry for Economic Affairs and Energy (BMWi). The main national regulatory authority is the Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway (BNetzA) under the authority of the BMWi. BNetzA is responsible for the regulation of gas and electricity networks with at least 100,000 grid customers or networks that extend beyond the territory of an individual state. BNetzA also plays a key role in planning and approving large energy network extension measures according to the Grid Extension Acceleration Act. At regional level, the regulatory authorities of the 16 German states are in charge of the regulation of the smaller networks, in particular distribution networks. The regulatory authorities monitor the compliance of network operators with applicable law and determine the general market rules for transport of electricity and gas. Their duties include the supervision of non-discriminatory network access and determination of the grid operators' individual revenue caps, and they also ensure that grid operators comply with unbundling rules and with their system security obligations.

The Federal Cartel Office (BKartA) has jurisdiction to apply competition law to the non-network-related parts of the energy supply chain. The BKartA is also in charge of merger control.

Both the regulatory authorities and the BKartA have wide-ranging powers of enforcement, such as refusal of permits, issue of prohibition orders and imposition of fines.

Since 2013, a market transparency unit at the BKartA has been overseeing and publishing fuel prices in order to increase transparency and competition in these markets. Since 2015, a parallel market transparency unit at BNetzA has supervised the wholesale trade in electricity and gas markets.

Sources of law

The key source of legislation is the Energy Industry Act (EnWG), which sets out the main regulation of the German energy market including unbundling requirements, grid operation, energy supply, grid concessions, regulators and legal protection. It was adopted in 2005 and substantially amended in 2016. A number of ordinances set out further details, such as the Incentive Regulation Ordinance and the Electricity and Gas Grid Fee and Grid Access Ordinances. The Renewable Energies Act (EEG) sets out the priority network access and remuneration for the generation of electricity from renewable sources; since 2017 it is supplemented by the Offshore Wind Energy Act. The support for co-generation power plants is regulated in the Co-Generation Act.

Another important source of law is the administrative decisions of BNetzA, addressed to individual parties or to groups of network operators. BNetzA also issues general guidelines addressed to the public and interpreting energy sector legislation. The guidelines are not legally binding. However, market participants usually respect them as they form the basis of BNetzA's decision-making.

ii Regulated activities

Network operation

Operators of distribution and transmission networks must obtain a grid operation permit confirming their personal, technical and economic capability and reliability to ensure the long-term operation of the network. The permit has to be issued by the competent regulatory authorities of the federal states within six months of the authority having the complete application files at its disposal.

In addition, transmission system operators (TSOs) require certification by BNetzA confirming their compliance with unbundling regulation. Before taking a final decision, BNetzA has to submit its draft decision to the European Commission and must take utmost account of the European Commission's statement.

When using public roads, network operators must enter into concession agreements with the municipality owning the roads. Such concession agreements have to be tendered by the municipalities every 20 years in a non-discriminatory procedure without the possibility of unduly favouring their own utilities.

Generation and supply

The construction of power generation facilities requires a permit under the Federal Immission Control Act. The construction and operation of nuclear power plants requires a special permit under the Nuclear Energy Act. However, following the nuclear accident at the Fukushima Daiichi nuclear power plant in 2011, the German government decided to phase out nuclear energy by 2022. Hence, commercial nuclear power plants will no longer be authorised.

Besides, operators of power generation facilities with a capacity of 10MW or more have to inform the responsible TSO and BNetzA of their intention to shut down a facility at least 12 months before the planned decommissioning. Facilities with a capacity of 50MW or more may not be decommissioned for a maximum period of 24 months if the facility has been designated by the responsible TSO and BNetzA as relevant for system security. In this case, the operator is entitled to reasonable compensation for the necessary maintenance expenses.

Energy supply companies delivering energy to end consumers must notify the regulatory authority of the commencement and of the discontinuance of their supply activities, including proof of sufficient resources and reliability.

Other than already mentioned, the supply or trading of energy does not require any specific licences under energy regulation provisions.

iii Ownership and market access restrictions

If a TSO or its owner is controlled by one or more persons from a country that is not a member of the European Union or of the European Economic Area, the grid operator will only be certified by BNetzA if in addition to compliance with the unbundling rules the BMWi confirms that the certification does not endanger the security of the electricity and gas supply of Germany or of the EU.

Under general foreign investment rules, the BMWi may prohibit on the grounds of public order or national security the acquisition by a non-EU or non-EEA investor of a participation of 25 per cent or more in a German company or asset. In 2017, the government has tightened the rules on foreign investment control, widening its scope and extending the time limits for review of potential acquisitions. The amended foreign investment control regime focuses on the acquisition of certain critical infrastructures, including from the energy sector, where the acquisition by a foreigner is by law considered to be a potential threat to public security. It is expected that such acquisitions will be more thoroughly examined by the BMWi in the future.

iv Transfers of control and assignments

The transfer of regulated assets (i.e., network assets) is not subject to any sector-specific restrictions. However, network operators have to inform the regulatory authority about transfers, mergers or the splitting of grid assets. In the case of a transfer of network assets, part of the revenue cap is transferred with the assets.

The acquirer of transmission assets must comply with the unbundling rules. TSOs have to inform BNetzA of any intended transactions that may require a reassessment of their certification, particularly in the case of a planned takeover or participation by an investor from outside the EU or EEA.

Any transfer of control or decisive influence must be notified for merger clearance to the BKartA or to the European Commission if certain thresholds are exceeded. A merger will be cleared if it does not significantly impede effective competition, in particular by creating or strengthening a dominant position. The BKartA decides within one month of notification or, if an in-depth investigation is initiated, within an additional four-month period. The European Commission has a maximum of 135 working days in which to carry out an in-depth investigation to review a merger (maximum of 160 working days if remedies are offered).

III TRANSMISSION/TRANSPORTATION AND DISTRIBUTION SERVICES

i Vertical integration and unbundling

In implementing the EU's Third Energy Package, the EnWG provides for different unbundling regimes for TSOs and distribution system operators (DSOs).

TSOs

As of 3 September 2009, the German transmission networks were all owned by vertically integrated energy supply undertakings (VIUs); the TSOs could choose between three unbundling models: ownership unbundling, the independent system operator model and the independent transmission operator model.

Most of the TSOs have opted for the independent transmission operator model and some for ownership unbundling. The independent system operator model has not been applied so far. Following several competition law procedures initiated by the European Commission, and owing to the increased regulation of grid assets, three of the four major German VIUs (E.ON, RWE and Vattenfall) divested their electricity and gas TSOs. This resulted in foreign TSOs and financial investors, such as infrastructure funds, entering the German transmission market.

With respect to the ownership unbundling model, BNetzA holds the view that a person controlling electricity or gas production, generation or supply activities may at the same time hold a minority participation in a TSO of up to 25 per cent, provided that this participation does not confer significant minority rights. This is evaluated on a case-by-case basis.

The European Commission has in the meantime recognised that a TSO may be certified as ownership unbundled despite having a shareholder with a participation in generation, production or supply activities if it can prove that no conflict of interest exists. This will be examined on a case-by-case basis, taking into account in particular the geographic location of the transmission activities and the generation, production or supply activities concerned, the value and the nature of the participations in these activities, as well as their size and market share.

DSOs and gas storage operators

Unbundling requirements for DSOs are less strict. DSOs with at least 100,000 grid customers and gas storage system operators must be legally and operationally unbundled from the VIU. DSOs are required to ensure that their communication and branding do not create confusion with regard to the supply branch of the VIU.

At the level of the DSOs there remains a large degree of vertical integration. DSOs typically belong to municipal utilities or to one of the incumbent energy suppliers.

ii Transmission/transportation and distribution access

Connection to networks and network access is regulated. Network operators have to ensure a reasonable, non-discriminatory and transparent connection and access to their grids for all third parties, including extension of the network if required and reasonable (regulated third-party access). By way of exception, priority will be given to network connection and access of operators of renewable energy facilities.

Costs for network connection are in general borne by the network customer, except for offshore wind farms whose connection costs are socialised.

Access to electricity networks is granted on the basis of standardised network access agreements concluded between the grid operator and the grid customer or, in the case of electricity suppliers, on the basis of supplier framework access agreements. The access agreement grants nationwide access to all electricity networks. The agreements are based on a model network access agreement developed by BNetzA.

Access to gas networks is based on capacity bookings in a two-contract entry-exit system: one contract is concluded between the grid customer and the grid operator for the feed-in of the gas, and a second contract is concluded between the grid customer and the grid operator for the offtake of the gas. Gas can be transported and traded without physical restrictions across networks, including on virtual trading points, within each of two gas market areas in Germany (GASPOOL and NetConnect Germany).

Network operators do not have exclusive rights to provide services within their network areas. Transmission and distribution networks are closely interlinked, and operators are obliged to cooperate. Contracts for network access and general terms and conditions are standardised and approved by BNetzA. BNetzA has the competence to set detailed rules on network access applicable to all network operators, for example in relation to balancing energy and capacity management.

Network operators may restrict network access to maintain system security. They must use non-discriminatory and market-based measures to prevent or eliminate bottlenecks. The increase in generation of electricity from renewable energy sources and the phase-out of nuclear energy is leading to a shift of generation to northern Germany, resulting in bottlenecks on the north-south transmission lines. Costs for re-dispatch measures of TSOs to relieve bottlenecks are socialised to all grid customers. Hence construction of additional electricity transmission lines is one of the key priorities of German energy policy. In addition, the installation of new onshore wind capacity in Northern Germany has been limited to 902MW per year.

TSOs have to establish 10-year network development plans for electricity, gas and for connection of offshore wind farms every two years. The development plans set out the required grid expansion measures. BNetzA reviews the development plans and may request modifications. The necessity of all listed projects is then legally determined by the federal government. BNetzA is responsible for the actual planning approval for projects that cross the borders between German states.

iii Rates

Since 2009, grid fees have been subject to revenue cap incentive regulation. Two years prior to the beginning of each five-year regulatory period, the competent regulatory authority determines a grid operator's allowed cost and asset base by analysing its costs of the preceding financial year (photo year). The cost and asset base in the photo year is the basis for the network operator's allowed revenues in the next regulatory period. The regulatory authority sets the grid operator's individual annual revenue cap for each year of the five-year regulatory period, taking into account individual and sector-specific efficiency targets and an allowed rate of return on equity set by BNetzA. During the regulatory period, the annual revenue cap will in principle only be adjusted in the case of an adjustment of the consumer retail price index or a change of the grid operator's permanently non-controllable costs. As a result, the grid operator has an incentive to outperform its efficiency targets before the revenue cap is reset for the next regulatory period. Based on their fixed revenue caps, the grid operators charge the corresponding access fees to their grid customers.

The permitted rate of return on equity as set by BNetzA for the second regulatory period (gas: 2013–2017, electricity: 2014–2018) is 9.05 per cent before tax for new assets and 7.14 per cent before tax for old assets (commissioned before 2006). For the third regulatory period (gas: 2018–2022, electricity: 2019–2023), BNetzA has set the allowed rates of return on equity to 6.91 per cent before tax for new assets and to 5.12 per cent before tax for old assets. In March 2018, grid operators successfully challenged the new rates as too low before the Higher Regional Court of Düsseldorf. BNetzA will have to recalculate the allowed return on equity in favour of the grid operators unless it successfully appeals to the Federal Court of Justice.

In 2016, the Incentive Regulation Ordinance was amended mainly to improve investment conditions for DSOs. Capital costs for network investments made after the photo year are now recognised in DSOs' revenue caps without delay. Very efficient DSOs may receive an efficiency bonus.

Grid customers with atypical grid use or with continuous and very high consumption (at least 7,000 hours and more than 10GWh per year) have a right to individual network fees below the regulated tariffs. Such individually agreed fees have to be notified to the competent regulatory authority.

iv Security and technology restrictions

There are no specific restrictions on technology transfer for the energy sector.

Based on a report from the TSOs, every two years BNetzA reviews whether the disruption or destruction of transmission assets in Germany could have a material impact on at least two EU Member States. BNetzA can declare such assets to be critical European infrastructure. TSOs have to develop specific security plans for such assets, including access control, security of IT systems and emergency protocols. In 2015, an IT Security Act was adopted that shall tighten IT security requirements and extend their scope to all assets required for secure network operation.

IV ENERGY MARKETS

i Development of energy markets

Gross energy consumption in 2017 increased by 0.8 per cent compared to 2016; gross electricity consumption increased also by 0.8 per cent. In 2017, gross energy consumption was composed of oil (34.5 per cent), natural gas (23.8 per cent), hard coal (10.9 per cent), lignite (11.1 per cent), nuclear energy (6.1 per cent) and renewable energy sources (13.1 per cent). Gross electricity generation in 2017 was composed of lignite (22.5 per cent), hard coal (14.1 per cent), nuclear energy (11.7 per cent), natural gas (13.2 per cent) and renewable energy sources (33.3 per cent), the latter mainly consisting of wind power (16.2 per cent), hydropower (3.1 per cent), biomass (6.9 per cent) and photovoltaic (6.1 per cent). These figures illustrate that despite an increased share of renewable energy sources, conventional energy sources are still the backbone of the German energy supply.

Germany has a joint electricity market area with Austria. However, with effect on 1 October 2018, the common German–Austrian price zone shall be split. Appeals against this decision, which results from a recommendation of the Agency for the Cooperation of Energy Regulators (ACER) are currently pending before the Court of the European Union. Austrian stakeholders argue that the German–Austrian interconnector itself is not congested and that congestion within Germany and loop flows to neighbouring countries should be mitigated otherwise.

Germany has two separate dual-quality (high caloric and low caloric gas) gas market areas: NCG and GASPOOL. Within these gas market areas, gas can be traded without capacity restrictions at virtual trading hubs through matching buy and sell orders between two balancing groups. Owing to the decreasing production of low caloric gas in Germany and the Netherlands, until 2030 all grids and customer units will consecutively be transferred to comply with high caloric standards.

The European Energy Exchange AG (EEX) in Leipzig operates organised markets for trading in electricity, natural gas, oil, coal, carbon dioxide emission allowances and guarantees of origin. EEX offers trading of electricity futures for delivery in the market area Germany–Austria and trading of gas futures and short-term gas contracts for delivery in the two German market areas GASPOOL and NCG. The electricity spot market for Germany–Austria is operated by EPEX SPOT SE in Paris.

Prices on the spot and futures markets are based on bids by generators and customers. The order of the bids is determined by the short-run marginal costs of the power plants (merit order). Owing to the statutory priority of feed-in of renewable energies ('produce and forget'), electricity from renewable sources is always first in line in the merit order, usually followed by nuclear energy and coal-fired power plants. The prices on the spot and forward markets are the benchmark for wholesale prices and over-the-counter trades.

The spot and futures markets are energy-only markets (i.e., there are no capacity payments). The increase in generation from renewable energies has led to a decrease of wholesale prices and has pushed conventional generation capacity out of the merit order, in particular flexible gas-fired power plants.

In order to guarantee security of supply, the Electricity Market Act of 2016 implemented several capacity mechanisms without, however, introducing a real capacity market. The 'network reserve' is composed of 'system relevant' power plants, mainly in Southern Germany, that would otherwise be decommissioned, providing additional redispatch potential if necessary. The 'capacity reserve' shall be provided by power plants outside the energy market being remunerated for the provision of capacity via a tendering process. Until 2023, the function of the capacity reserve will mainly be served by lignite-fired power plants that are being transferred to 'security standby mode' before being decommissioned four years later.

ii Energy market rules and regulation

The energy market operated by EEX is subject to the Exchange Act. Under the authority of the State Ministry of Economy, Labour and Transport in the German state of Saxony, an independent market surveillance body continuously supervises trading activities in order to prevent market manipulation.

Under the EU Regulation on wholesale energy market integrity and transparency (REMIT), market participants are required to publish inside information in an effective and timely manner. REMIT also prohibits market abuse in wholesale energy markets in the form of market manipulation and insider trading. Since 2015, market participants have to register with BNetzA and report details of wholesale energy transactions executed at organised market places to ACER.

Since 2014, all EU-based entities that enter into derivatives transactions are required to report details of these transactions to a trade repository under the European Marketing Infrastructure Regulation (EMIR). There is also an obligation to report certain existing and historical derivatives transactions, although deadlines for this vary. Furthermore, EMIR established a central clearing obligation for certain over-the-counter derivatives and the application of risk mitigation techniques for non-centrally cleared over-the-counter derivatives.

iii Contracts for sale of energy

In principle, there are no regulatory limitations as to the entering of individual contracts for the sale of energy, both at wholesale and retail level. However, household customers have a right to be supplied at standard (but not regulated) tariffs by the local supplier with the most household customers within a network area (supplier of last resort). Energy supply contracts with household customers also have to comply with certain transparency and information requirements.

While there is no ex ante price regulation of wholesale or retail energy prices, regulated network charges, taxes and surcharges (such as the surcharge for renewable energies) meanwhile account for more than half of the final energy prices. Competition authorities may review energy prices (except the regulated components) and prohibit dominant suppliers from charging prices that unreasonably exceed costs or that are lower than on comparable markets.

In recent years, price increases for final customers based on the passing-on of input costs (e.g., increase in fuel cost for electricity generation) have frequently been annulled by the courts, arguing that these were not justified or that provisions in energy supply contracts enabling such price increases were not sufficiently transparent. Following landmark decisions of the European Court of Justice and the German Federal Court (BGH) in 2013 and 2014, according to which a standard clause for price adjustments that was widely used in supply agreements is invalid, network operators have to provide information on the scope, reasons and preconditions for the adjustment.

iv Market developments

The large German utilities are increasingly adapting their business to the changing market environment by divesting or consolidating their conventional power generation facilities and investing in renewable energy sources, grids and new forms of energy supply and customer solutions. In 2016, RWE transferred its renewables, grids and supply business to its subsidiary, Innogy, while E.ON spun off its conventional generation and trading business into a new listed company (Uniper). In January 2018, E.ON sold its shares in Uniper to the Finnish energy supplier Fortum and in March 2018 E.ON announced that it would acquire RWE's majority stake in innogy and in return E.ON would transfer to RWE most of E.ON's renewables business. Thus, in the future, RWE would focus on conventional and renewable generation while E.ON would concentrate on energy networks and customer solutions.

V RENEWABLE ENERGY AND CONSERVATION

i Development of renewable energy

Reform of the EEG and Offshore Wind Farms Law

In 2017, a major reform of the EEG, the law governing the development of renewable energy sources, entered into force. The main aim of the reform was to control the cost increase for electricity generation from renewable fuel sources. It is aiming to move away from 'produce-and-forget' guaranteed feed-in tariffs towards market-based mechanisms for their remuneration. Therefore, the EEG 2017 introduced auctions as the basic mechanism to determine the remuneration for electricity from onshore and offshore wind power, photovoltaic power and biomass, subject to a number of exemptions; for example, for smaller facilities, for which remuneration remains fixed by law. Auctions for other renewable energy sources, for example, geothermal energy, may be introduced at a later stage. The technology-specific auction volumes are limited to:

  1. 2,800MW/year from 2017 to 2019 and 2,900MW/year as of 2020 for onshore wind;
  2. 600MW/year for solar;
  3. 150MW/year from 2017 to 2019 and 200MW/year as of 2020 for biomass; and
  4. 6.5GW until 2020 and 15GW until 2030 for offshore wind.

The first auction carried out for 1,500MW offshore wind power in March 2017 resulted in an average remuneration of only 0.44 cents/kWh with most of the capacity being awarded for no subsidies at all. This has been a shock for the industry that will change future calculation and financing of renewables projects. Recent auctions for solar and onshore wind saw prices converging around an average price level of approximately 4.3 cents/kWh (February 2018). In addition, BNetzA will carry out technology neutral auctions for onshore wind and solar power together in the amount of 400MW/year from 2018 to 2020.

In addition to the EEG 2017, a new Offshore Wind Farm Act has been adopted that sets out rules for the planning, tendering and approval of offshore wind farms (OWFs). The main aim of the law is to better harmonise the construction of OWFs and their grid connections to the onshore grid. As a main feature, the new law introduces a central planning model in which the Federal Maritime and Hydrographic Agency instead of the developers identifies suitable areas for the construction of OWFs. The law applies to OWFs in the German exclusive economic zone that will be commissioned from 1 January 2021.

State-aid proceedings and support for energy-intensive industries

In November 2014, the European Commission closed its in-depth investigation to examine the compatibility of the EEG 2012 support scheme with EU state aid law. The Commission considered that the EEG 2012 constitutes state aid, but found it, in principle, to be in line with its Guidelines on State Aid for Environmental Protection. However, the Commission considered the reduction of the EEG surcharge for those companies in energy-intensive industries that do not fulfil certain criteria as set out by the Commission in its decision to constitute state aid incompatible with the internal market and ordered Germany to recover such aid immediately. Meanwhile, Germany has appealed against the Commission's decision before the Court questioning the qualification of the EEG support scheme as state aid, but the Court confirmed the Commission's decision in May 2016. Germany's appeal against this decision is currently pending before the European Court of Justice.

As regards the EEG 2014, the Commission in July 2014 confirmed that it is compatible with EU state-aid rules. In December 2016, the Commission also considered the EEG 2017 to be compatible with EU state-aid law.

ii Energy efficiency and conservation

Following the 2015 Paris agreement to limit global warming to well below 2 degrees above pre-industrial levels, the German government in 2016 adopted a national Climate Action Plan 2050 according to which Germany is to reduce its greenhouse gas emissions by at least 55 per cent compared to 1990 by 2030 and to at least 70 per cent by 2040. However, Germany is about to miss its goal to reduce emissions by 40 per cent in 2020 compared to 1990. Germany is also about to miss its goal to reduce gross energy consumption by 20 per cent in 2020 compared to 2008. In 2017, the decline was only 6 per cent compared to 2008. In reaction to that, the new German government intends to formulate a cross-sector energy efficiency strategy based on the 'efficiency first' principle. Based on the results of BMWi's green paper on energy efficiency, the National Action Plan Energy Efficiency shall be further developed and implemented

iii Technological developments

Driven by the need to store the surplus electricity from renewable energy sources, the installation of power storage facilities, both at household and at commercial level, is developing very dynamically. Storage facilities are based on a large variety of technologies, such as battery storage, power-to-gas, power-to-heat or power-to-liquid.

Also, e-mobility picks up speed; however, from a low level. In 2017, sales of electric vehicles doubled compared to 2016 to approximately 55,000 cars. The government wants to promote this development by providing public funding beyond 2020. Various market players have announced that they will invest into the charging infrastructure and the government aims to have an additional 100,000 charging points installed by 2020.

Another trend is blockchain, a technology based on continuously growing lists of digital records (blocks) that are linked and secured using cryptography. Recently, several platforms have been launched where market players may trade peer-to-peer using blockchain technology.

In relation to smart meters, the EU has set a non-binding target of rollout to 80 per cent of all consumers by 2020. In 2016, the Act on the Operation of Measuring Points (MsbG) entered into force, which provides for the introduction of smart meters, including rules on data protection, data access, rollout and financing of the rollout. Due to the high standard on data protection, the certification of the central element, the smart meter gateway, has been delayed. The rollout is expected to start in 2018. The MsbG establishes maximum price limits for the installation and service of the smart meters depending on the individual consumption. Provided the maximum price limits and the outstanding certification requirements are met, the installation of smart meters will be mandatory for consumers with a consumption above 10,000kWh per year (as of 2020, more than 6,000kWh/year). The installation of smart meters for consumers with an annual consumption below 6,000kWh/year is optional. The goal is to complete the smart meter rollout in 2032.

VI THE YEAR IN REVIEW

The fundamental reform of the EEG, introducing auctions as the basic mechanism to determine the remuneration level for the support of power from renewable sources, has proved successful in countering a further cost increase. The increased share of intermittent renewable generation, however, puts further pressure on the viability of conventional generation facilities. This induced the large German utilities to accelerate the restructuring and consolidation of their generation portfolios. E.ON even announced to withdraw (nearly) completely from the generation business and to focus on grids and customer solutions.

At the same time, the German energy market saw an increased entry of new market players. These are both start-ups promoting new technologies such as blockchain or e-mobility and companies from other sectors, such as IT and telecoms, driving forward the digitalisation of the energy sector.

VII CONCLUSIONS AND OUTLOOK

Following six months of standstill after the election of parliament in September 2017, the new German government in February 2018 announced its aim to intensify its efforts to reform the German energy market without endangering Germany's international competitiveness and security of supply. However, in order to ensure that Germany reaches its 2030 climate goals the government will have to further specify the necessary policy measures, including in particular a plan on how to progressively reduce the generation of electricity from coal to ultimately zero as well as a coherent strategy for the integration of renewable energies into the heating and transport sector.

New policy measures will strongly depend on the route European legislation will take in the field. The European Commission's Clean Energy Package inter alia promotes the interdependence of the Member States' energy markets and foresees stronger regional planning of policy measures, also involving stronger cooperation between grid operators, both on distribution and transmission level.