With Section 12h of the German Energy Industry Act (EnWG), Germany has taken an important step towards more efficient voltage control in the power grid. The market-based procurement of reactive power has been launched, and the first tenders have been completed—showing clear momentum, while also revealing that the market is still in its early stages.

Untapped potential

Our analysis indicates that the available potential has not yet been fully utilized. In principle, the necessary conditions are already in place—provided that the framework conditions are further refined in a targeted manner.

A key reason lies in the current market design: for many potential providers, market access is still associated with considerable uncertainty. Two factors in particular are holding back development:

• Limited standardization and a lack of transparency make participation more difficult.
• Uncertain call-off volumes combined with high fixed costs create disincentives for investment.

As a result, competition is not yet reaching its full potential.

What is needed now

The market can be improved with relatively moderate interventions—across three time horizons:

• In the short term, greater transparency could enhance planning reliability, for example through the publication of expected call-off volumes.
• In the medium term, mechanisms could be introduced to better safeguard investments—such as guaranteed minimum call-offs.
• In the long term, a robust data and research base will be essential to enable well-founded decision-making.

Reactive power as a pillar of the energy transition

As the share of renewable energy grows, the importance of an effective reactive power procurement mechanism for grid stability will continue to increase. The market has been launched—now it is crucial to steer it in the right direction.

For deeper insights and concrete policy recommendations, see the article “More Efficiency in the Market-Based Procurement of Reactive Power” by Dr. Henrik Schwaeppe, Jennifer Büter and Gerald Blumberg (E-Bridge), together with Sebastian Rohe, Philip Goldkamp and Tammo Fleßner (Alterric), published in the latest issue of the German energate magazine emw.

Here you can find the German article: emw_3_26_Mehr Effizienz in der marktgestützten Beschaffung von Blindleistung